Employers should be offered tax breaks for taking on workers who are coming off long-term sick leave, according to a think-tank proposal backed by several business groups.
The idea, devised by the Good Growth Foundation (GGF), is designed to address Britain’s sick note epidemic and deliver a £1.1bn annual saving for the Treasury.
It would see employers given a national insurance holiday to provide an incentive to take a chance on those who have been languishing on benefits. The analysis behind the policy is modelled on a one-year holiday but it could vary.
The GGF, led by former Labour candidate Praful Nargund, says the idea has won the backing of a number of the party’s MPs.
Nargund said: ‘Britain needs a new deal between the business and the state – one that backs those who step up, not those who game the system.’
It is projected that just under 150,000 will rejoin the workforce as a result of the scheme, resulting in a net benefit to the state thanks to savings on welfare and the gain from income taxes from those who go back to work.
Labour staged a raid on employer national insurance in last year’s Budget
Polling showed public support for providing tax incentives for hiring people to get them off long-term sickness or disability benefits, the GGF said.
It said the proposal had won backing from business groups UK Hospitality, the British Retail Consortium and the Federation of Small Businesses.
Hospitality and retail firms have been particularly badly hit by Labour’s £25bn raid on national insurance in the previous Budget.
Nargund told the Mail the policy offered the chance for Labour ‘to deal with that issue – but also bring people who have been on long-term sickness back into work, two birds with one stone’.
He acknowledged that welfare reforms were also necessary to encourage people back to work.
‘But this is about sending a signal to business that this is an important thing that they need to be doing and precisely because NICs is an issue for many businesses, particularly retail and hospitality.
‘So we think this would have an effect in driving some changes in the short term.
‘It takes the pressure off that early part of being with an employer.
‘Clearly you do have a slightly subsidised employment – that allows this on-ramp which is particularly important for people who may have been on long-term sick.
‘Expecting them to be at exactly the same levels of productivity is unreasonable and you’re trying to transition back into work if they can work and this is where there could be that additional help.
‘This is just a generally sensible idea that lots of different people are getting behind.’
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