The Department for Work and Pensions and Department for Business and Trade’s Keep Britain Working review seeks to tackle the sharp rise in economic inactivity due to health conditions.
Keep Britain Working: Discovery
Led by Sir Charlie Mayfield, former chairman of John Lewis, the discovery phase of the review reveals that nearly 800,000 more working-age people are now economically inactive for health reasons compared to 2019 – a 40% increase. The growth in inactivity is nearly 10 times faster than the growth of the working-age population.
The number of people with work-limiting health conditions has also surged by over 2 million since 2019, a 31% increase. One in five people of working-age now report such a condition, with particularly sharp rises among younger (16 to 34) and older workers (50 to 64). Mental health and musculoskeletal issues are among the leading causes. Additionally, the report states that once someone has been out of work for over a year, the likelihood of them returning drops dramatically.
Economic inactivity causes individuals to miss out on opportunities and fulfilment, whilst placing significant strain on the wider economy. It is estimated to cost employers £150 billion per year in lost productive capacity.
Whilst the discovery phase of the review identifies major structural challenges and emphasises the importance of the employer's role in prevention, retention and rehabilitation, it does not delve into the tax system’s role in enabling these aims.
The role of the tax system
The report offers little discussion of how tax policy could support employers to fund health-related interventions more effectively. However, tax measures that encourage prevention and early intervention could play a key role.
Current rules only exempt one health screening per year, and limited treatment costs (up to £500) recommended by occupational health professionals, where the treatment is necessary to help the employee return to work. Whilst not mentioned in the review, expanding tax exemptions to cover broader workplace health initiatives aimed at keeping staff in work – not just getting them back from sickness absence – would align with findings that prevention and early intervention are most effective. Employer-funded mental health and musculoskeletal treatment, in particular, could benefit from a targeted tax relief.
Next steps
The report warns of rising welfare costs and deteriorating outcomes compared to other OECD nations, so the pressure is on for the Government to act. The final recommendations of the Keep Britain Working review are due later this year, and both employers and policy makers will be looking for decisive action to reverse these worrying trends and provide meaningful support to both employees and employers.
If you would like to share evidence of your experiences either as an employer or an individual with health conditions or a disability, there is an online form available, which will be open until 30 May 2025.
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