A report out this week finds the government is under fire again for failing to address the tax barriers to employers investing in health promotion and return to work interventions. Now that Dame Carol Black's recommendations demand early intervention to get people off sick and back to work and keep them there there, the government has run out of excuses not to change a system that is unfair and riddled with contradictions.
For example, if employees are exempt from tax when their employers provide an Employee Assistance Programme (EAP) (which allows staff to discuss health issues not related to their work), then why should an employee be taxed when their employer pays for them to join a private gym? Currently there is tax relief when a big employer provides a gym or sports facilities but employees in smaller firms are penalised if their employer pays for private gym membership. This is a barrier to smaller employers investing in the health of their staff. How can this tax regime be justified when the Black review points out that the vast majority of employees without access to occupational health are working for small and medium sized companies.
Then there is the issue of tax on employers who spend to get sick staff back to work. Even if the government baulks at introducing tax incentives for employer spending that promotes health among people who are not incapacitated, surely it should provide tax exemptions for all spending on vocational rehabilitation, regardless of whether the illness or injuries are solely work-related or not. Currently if an employer pays for an employee's treatment to get them back to work for reasons which are not solely work-related the employee has to pay tax on it. Yet there are often long waiting lists on the NHS meaning treatment is provided too late to stop the employee swelling the ranks of those on incapacity benefits. Taxing the employee completely contradicts the aims of Dame Carol Black's recommendations.
Realistically, employers may prove reluctant to help fund a national OH service without any financial support.The government should consider reinvesting some of the money it plans to save by cutting the numbers on incapacity benefits to support employers who are expected to foot the bill for getting sick employees back to work. This may have to be done through private medical insurance (PMI). However, up until now the government has had a very Old Labour suspicion of PMI despite its aim introduce more private sector investment into the NHS. The solution is to introduce tax exemptions on PMI and the use of private medical services only when they are used for the purposes of vocational rehabilitation. Surely that would be a more joined up way to achieve the government's objectives for the health of working age people.
The government is due to respond to the Black review in the autumn and if it fails to address the non-sensical tax system it will be failing employers, employees and itself.