Scottish ‘Health’ Offer National Forum Edinburgh 26 January 2012 Health at Work

1. Health Works Scottish ‘Health’ Offer National Forum Edinburgh 26 January 2012 Health at Work Dame Carol Black Expert Adviser on Health and Work Department of Health, England

2. Independent Sickness Absence Review Announced by PM 17 Feb 2011 Co-chairs: Carol Black, National Director for Health and Work David Frost, former Director-General British Chambers of Commerce. “ We simply have to get to grips with the sick-note culture that means a short spell of sickness absence can far too easily become a gradual slide to a life of long-term benefit dependency.”

3. Terms of Reference • to explore how the current sickness absence system could be changed to help people stay in work, reduce costs and contribute to economic growth • to examine whether the balance of these costs are appropriately shared between the state, individuals and employers • to make tangible recommendations for system change

4. Review established to consider the overall sickness absence system State (Worklessness benefits; foregone taxes; extra healthcare) Employers (SSP/OSP; costs of staff turnover; time spend managing absence; OH where offered) Individuals (Emotional and physical costs of ill-health, loss of income) Cost of sickness absence to UK economy c £15bn plus c £13bn in health-related benefits Employers pay around £9bn annually in sick pay

5. Some key basic principles • Workis - in most instances - good for health and wellbeing • Worklessness is – for most people – harmful • Much sickness absence and worklessness associated with common health conditions which are compatible with work (given right support) • There should be minimal delay in making assessment of people’s capability for work

6. The current journey Too few drivers in the journey keeping people in work. 39 weeks 28 weeks ESA benefit and support Work Sickness absence Work Capability Assessment Claim to Employment Support Allowance (ESA) Work Capability Assessment Claim to Employment Support Allowance (ESA) JSA benefit and support Work Inactivity Management of sickness absence by employers is inconsistent. Lower paid, lower skilled employees and those from smaller firms have less support. 85% of fit notes sign people off completely unfit. The State’s main interventions are focused on the after job-loss period. Huge delays in assessing benefit claimants’ work capability. Each year 140,000 ESA claimants come straight from work without a period of support from their employer.

7. But the real pathways are more complicated…. Claim to Employment Support Allowance (ESA) 650,000 Employees 24.0m 140,000 12-15 months after ESA claim 110,000 Economically active 340,000 Short time sickness absence Long-term sickness absence 11m 1m Self- employed 3.5m 80,000 Economically inactive 310,000 Out of work/ inactive 11.4m 320,000 Figures may not sum due to rounding.

8. System is broken • Poor advocacy guiding some individuals • Some employers lack confidence in medical evidence and legal rights/duties • The State is too slow to get the right support to individuals

9. Tax relief, public sector recommendations – managing absence in employment Job Brokering - helping people move jobs WORK 24m Short-term absence 11m Long-term absence 1m IAS - reducing flows into long-term sickness (2.9m off sick with GP’s certificate) 1.9m 0.5m 0.5m 0 8 days 4 wks 8wks 28 wks ESA reforms - reducing flows on to ESA from sickness (110k) ESA reforms - reducing flows on to ESA from work (140k) ESA Our recommendations address problems throughout the sickness absence journey

10. Recommendations Tax relief on Vocational Rehabilitation Independent Assessment Service Abolition of Payment Threshold Scheme in SSP Job Brokering Service Sickness Absence reduction Public Sector – Review of Sick Pay Changes to Employment and Support Allowance

11. Independent Assessment Service • The Fit Note is used to verify illness and fitness for work – GPs act as the entry into system. • A new Independent Assessment Service will provide an in-depth assessment of an individual’s physical and/or mental function. • This will act as a functional assessment for employers and employees as well as doctors seeking specialist occupational health advice • It should be supportive and early (after no more than 4 weeks of absence).

12. IAS - Referral system

13. Tax Relief on VR and medical expenditure • Early intervention key, yet tax system can discourage employers from investing in early medical intervention (classed as a benefit in kind) • Discouragement is particularly clear in the more marginal cases (lower paid, lower skilled workers) • We propose retaining tax relief for Employer Assistance Programmes and introducing tax relief on vocational rehabilitation and medical expenditure for basic rate taxpayers

14. A Job Brokering Service • Some people’s health condition may not be compatible with their current job but is compatible with different work • We propose that the State provides a job brokering service for anyone with a sickness absence period of 20 weeks or more • The service could be delivered as an extension of the Work Programme • Would keep people attached to labour market, save employers some sick pay, and save the state expenditure on benefits

15. Abolition of the Percentage Threshold Scheme (PTS) • Government currently reimburses around £50m of Statutory Sick Pay per year through the PTS. • We think that this is sending the wrong messages re managing sickness absence and could be better spent elsewhere – therefore propose abolition of the PTS • Alongside this we propose reducing admin burdens around SSP recording – this amounts to over £40m per year

16. Review of Public Sector Sick Pay • Overall, sickness absence is higher in public sector than in private sector • Low sickness absence is associated with good management practice. • We recommend that public sector employers take action to bring worst performers up to standard of best • Also recommend that government reviews public sector occupational sick pay

17. Reforms to ESA system • Concerns with the ESA system: • the length of wait before a Work Capability Assessment (WCA) is carried out • the large proportion of claimants for ESA who are, in fact, found ‘fit for work’ (over 50% even after appeals) • Assessment phase is wasteful and not fulfilling purpose – we recommend that the assessment phase for ESA should end altogether • People should go onto ESA only if: • they qualify after a WCA, or • as at present, they qualify to pass directly onto ESA without a face-to-face WCA. • JobcentrePlus should better direct people onto the right benefit – giving them the support they need

18. New Journey • More focus on employer support • Independent Assessment Service offers authoritative medical advice • Job Brokering Service provides a new pre-benefit intervention • Better benefit advice and early WCA to supply quicker more relevant support

19. New Journey - details

20. New flows…. (estimated, current figures in brackets) Outcome 12-15 months after ESA claim Claim to Employment Support Allowance (ESA) 350,000 (650,000) Employees 24.0m 120,000 (140,000) 30,000 (110,000) Economically active 140,000 (340,000) Short time sickness absence Long-term sickness absence Self- employed 3.5m 60,000(80,000) Economically inactive 210,000 (310,000) Out of work/ inactive 11.4m 140,000 (320,000) Figures may not sum due to rounding.

21. The Savings • We have been motivated, first and foremost, by the waste and damage, personal and financial, to those suffering ill-health • Our recommendations could also: • save £400 million a year for employers, • save £300 million a year for the State • boost economic output by over £1 billion

22. Detailed savings – impact of measures (£m pa) UK * this offset comes from the associated reduction in admin burdens

23. Conclusions • The current system lacks coherence and is wasteful of human and material resources • We made recommendations to: • support employees at work, to stay in work • improve the benefits system to offer better advice and support, towards work • tackle sickness absence through various interventions throughout the process