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Inside the economic impact of Britain’s long-term sickness

As government reforms and support systems fall short, the economic and personal toll grows, says Szu Ping Chan

The square green Job Center Plus sign attached to the outside wall of the office building

Six weeks. That’s all that workers have from the time they ask their GP for a sick note to being consigned to the employment scrap heap if they don’t see a path to getting better.

I deal with lots of statistics in my job – sometimes hundreds a day. But it’s this one cited in an interview I did with Dame Carol Black – the architect of the so-called “fit note” – that has stuck with me.

There are now just under 2.8 million people who are neither in work nor looking for a job owing to long-term sickness. Half of these people have been out of work for more than three years. Around half a million have never had a job.

While we should never write people off, nor should we underestimate the challenge of getting sick Britain working again.

All the focus of the Budget has been on taxes and spending, but Britain’s shrinking workforce is arguably the economy’s biggest problem.

Work saves us from more than just the three great evils that philosopher Voltaire identified: boredom, vice and need. It boosts our financial wellbeing and the wider economy. After all, if people aren’t working, that affects their living standards as well as tax revenues.

This also puts more pressure on the NHS and state spending. Every person who moves from welfare to work saves the taxpayer up to £15,300 per person in benefits, according to the Office for Budget Responsibility (OBR), the government’s tax and spending watchdog.

But too many people are running out of time, according to Dame Carol, whose statistic is echoed by other health and employment experts. NHS England data shows 41 per cent who obtained a sick note from their GP or another medic in the three months to April are signed off for five weeks or longer. That’s two-fifths all but consigned to the scrap heap right from the start.

Reaching the Government’s 80 per cent employment target means policymakers need to stem that tide and keep more people from dropping out of the workforce in the first place.

In a world where money is tight, the government must walk the tightrope between work incentives and not putting too much burden on business. That means tax breaks for businesses that invest in their staff’s health.

The CBI, the business lobby group, is calling for sweeping reforms to occupational health services so that business can do its bit. It wants the government to relax tax rules surrounding everything from private GP consultations to medical insurance and employee assistance programmes, which offer 24-hour helplines for staff who need mental health support.

“For every one person prevented from leaving the labour market due to ill health, this will save the public finances £20,000 per year in upheld tax receipts, reduced welfare payments and costs to the NHS,” the lobby group says in its Budget submission.

Those who do need time off work should be supported to get back as soon as possible.

With poor mental health driving more people out of the workforce, the previous government was right to expand access to help like talking therapies for anxiety and depression. The OBR reckons the previous government’s investment will reduce welfare spending by £100m and increase employment by roughly 10,000 by the end of the decade. In other words, the policy partly pays for itself.

The programme supports those with mild to moderate mental health conditions to enter the workforce, with all the evidence so far suggesting that those interventions are being made quickly: 92 per cent within six weeks and 99 per cent within 18 weeks, which is the NHS target for all treatments.

When people are ready, the Job Centre should be a place that welcomes them. I was struck by comments made by Manchester mayor Andy Burnham at an event last month. He lamented the fact that on a recent visit to Salford in the north of England, more people were queuing up to get help and support from a local charity than the job centre across the road. Many felt that they were treated with suspicion or that the centre could do nothing for them.

In fact, research by the Institute for Employment Studies shows the UK has the least well-used employment service in Europe, with four times as many jobseekers using the equivalent service in Germany. Getting more people through the door should surely be a priority.

The think-tank described Jobcentre Plus as little more than a police station for people on benefits, warning that its use by the unemployed had dropped “precipitously in the past two decades, mainly reflecting its effective closure to people not on benefit and the very limited job-seeking support (rather than claim monitoring) provided to many of those who do claim benefits”.

Where people need state support in the form of welfare they should get it quickly, but nobody should be allowed to languish on benefits. People who can work should be expected to engage and try work without penalty if they have been out of employment for some time.

The government must also avoid punishing employers who take a chance on someone who has been out of the workforce for months or maybe even years. Too many onerous rules in their worker’s rights bill would be a disaster. They should be rewarding them instead.

I’ll leave you with a few more sobering statistics. This time next year if nothing is done, another 300,000 people will drop out of the workforce due to ill health. That’s another 1.5 million by the end of this parliament.

Of those who leave, one in six will return to work after the first year. After that, the rate drops to one in 20. Prevention is surely better than cure. The prize of a healthier, richer society is one we must all strive for. Get it right and that six-week statistic will be a thing of the past.

Szu Ping Chan is economics editor of The Telegraph  

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