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Give us a break

Corporate IFAs could have something very exciting to talk to smaller employers about if early discussions between the Association of British Insurers and the Government on tax relief for small and medium-sized firms that buy health and well-being products bear fruit.

The prospect of a whole new tax-advantaged range of workplace wellness plans is exactly the shot in the arm that the group risk and healthcare sectors need.

ABI head of health and protection Nick Kirwan says while this is still some years from reaching the market, the industry is pushing against an open door in Whitehall on the subject of tax breaks for SMEs.

These tax breaks would be given for products that boost the productivity of staff by improving workplace health and employee engagement, reducing absence or helping staff get back to work after illness.

As every adviser knows, a tax break is one of the most persuasive marketing tools there is for getting a client to actually commit to buying a product. The fact that the Government has finally got to the point where it sees the value to employees, employers and the UK generally of products distributed by corporate IFAs should be a cause for much cheer.

Kirwan says before progress can be made on the development of tax breaks for workplace products, the Government wants to see the industry clean up its act on non-disclosure and payment protection insurance. Such a development is surely in the interests of everybody in the industry and will no doubt happen but I am surprised it has taken so long for the positive benefits that health and well-being products can bring to the UK’s workforce to be recognised by ministers. Productivity is one of the biggest problems the British economy faces and if workforces are neither healthy nor motivated, we all suffer.

A report from the Department for Trade and Industry in 2006 confirmed the seriousness of the productivity gap between the UK and its main industrial neighbours. It found that French productivity is 29 per cent higher than the UK on an output per hour worked basis while the gap between the UK and both the US and Germany is 16 per cent on an output per hour basis.

On an output per worker basis, US productivity is 27 per cent higher than the UK while French productivity is 11 per cent higher, showing that we are only able to close the gap by working more hours. The shocking truth is that French workers achieve in seven hours what the British do in nine.

Much of this productivity gap is down to investment in research and development, training and skills but the cost of poor health and motivation is huge for the nation’s employers. Figures from the Confederation of British Industry put the cost of sickness absence to UK employers at £12.2bn a year while Unum calculates that the cost of mental health alone to the wider UK economy is £10bn a year, with £6bn of that coming from the Treasury through a range of channels including incapacity benefits, lost tax revenue from those no longer able to work and healthcare costs.

Further evidence of the Government’s conversion to the wellness agenda came at its recent policy launch on health, where it revealed its intention to pay healthy food vouchers to persuade fat people to lose weight.

This sounds pretty close to PruHealth’s Vitality solution and shows ministers see the benefits of financial incentives to induce lifestyle changes. Transporting the concept to the finance and human resources directors of the nation’s employers has to be a good idea.

Getting smaller employers to prioritise workforce efficiency solutions is not easy. A recent report from Norwich Union Healthcare found that two-thirds of businesses believe that employee wellbeing has a direct impact on the productivity levels of their workforce, yet half of them said they would not invest more due to a lack of Government incentives.

The hope is that the added impetus of tax breaks is enough to tip the balance for more finance directors to spend resources on managing their people well. If and when such tax breaks are put into legal form, we can expect providers and advisers to come up with some pretty imaginative ideas to give all workforces, regardless of size, greater access to health and well-being solutions for their staff.

John Greenwood is editor of Corporate Adviser
Money Marketing
50 Poland Street, London W1F 7AX


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