Fixing Britain’s worklessness crisis will cost employers £6bn a year, report says

Employers have been told in a landmark government review that fixing Britain’s health-related worklessness crisis will require them to spend £6bn a year on support for their staff. In a major report before this month’s budget, Charlie Mayfield warned that businesses needed to play a more central role in tackling a rising tide of ill-health that is pushing millions of people out of work. The former chair of John Lewis, who was appointed by ministers to lead the government’s Keep Britain Working review last year, said that a drastic expansion in occupational health was needed to help prevent hundreds of thousands of people from falling out of the workforce each year. Related: A million young people aren’t in a job or training. Britain has a problem | Richard Partington “We need to fix this,” Mayfield told the Guardian. “What we are proposing is a fundamental reset in terms of how health is handled in the workplace. We’re saying we have to move from [a] situation where, for most people, health is for the individual and NHS – we have to move from that position to one where health becomes a true partnership between employers, employees and the health services generally. “That is not a small move, but a big move, and a fundamental shift.” Ministers have grown increasingly alarmed over a dramatic rise in the number of working-age adults falling out of the workforce due to health conditions over recent years, with young adults fuelling much of the increase. As many as one in five working-age adults – more than 9 million in total – are now in a position termed by statisticians as “economically inactive”, where they are neither in a job nor looking for one. For almost 3 million, the main reason is long-term sickness – the highest level on record. In his highly anticipated report, Mayfield said the overall cost to the UK economy from this “quiet but urgent crisis” was as much as £85bn a year, in a financial blow for the exchequer, businesses and individuals. Ministers have been focused on cutting a sharp increase in the cost of providing health-related welfare support. The report said the cost from economic inactivity due to ill-health was “unsustainable” for the state, through lost output, increased spending on welfare, and additional burdens on the NHS. However, the focus of Mayfield’s report is to tackle the rise in costs by helping individuals to stay in a job with help from a drastically improved system of workplace support. He said a new approach to health at work was required whereby the responsibility was shared between employers, employees and the government to help slash rates of sickness absence, improve return-to-work rates, and drive up the disability employment rate. The report found a potential benefit of up to £18bn a year for the economy and exchequer if the recommendations were applied across the workforce. The government said more than 60 employers – including household names like British Airways, Nando’s and Tesco – would take on Mayfield’s recommendations in a vanguard programme over the next three years. It said the scheme, which also involves regional mayors and dozens of small businesses from across the country, would act as early adopters to develop stronger approaches to workplace health. Asking businesses to take on a more proactive approach could however prove contentious at a time when business groups have sounded the alarm that Labour’s tax changes and employment policies have made it tougher to hire staff. Bosses have warned the chancellor, Rachel Reeves, against hitting firms with tax increases in her 26 November budget after her £25bn increase in employer national insurance contributions (NICs) last year. Mayfield acknowledged businesses were facing a tough environment, but said companies could see the benefits from investing in employee health and that growing provisions further was a “win-win” for firms and the economy at large. “Employers must be in the lead. Some may resist that message amid tight margins and slow growth. But many already recognise they are carrying the cost of ill-health every day,” he said. His report recommended firms were likely to face a cost of £5-15 per employee per month to provide improved levels of occupational health – at an annual cost of about £6bn when spread across the economy at large. For some firms, this would mark a sharp rise in spending. However, others, particularly larger employers, already spend significant sums on workplace health. Over time, Mayfield said he envisaged the workplace health schemes provided by employers becoming certified by the government, being integrated with the NHS app and reducing – or even replacing – the need for fit notes issued by healthcare professionals. Among other recommendations, Mayfield’s review also called on ministers to consider incentivising businesses to invest in workplace health through tax cuts and rebates for paying sick pay to employees.