Buried away in the sweeping proposals from the government commissioned review of how sickness absence from work should be handled is a small bombshell.
Alongside a new independent assessment service to which patients would be sent after 4 weeks on the sick, plus a new brokering service to help people swap a job they can’t do for one they can, is a proposal for tax relief on private medical insurance and private medical treatment aimed at getting people back to work.
This is a highly sensitive issue. In his determination to seal the NHS off as an electoral issue for the Conservatives, David Cameron, in one of his earliest acts as party leader ruled out tax relief for private medical care – declaring that “we should not use taxpayer’s money to encourage the better off to opt out”.
At the moment, if an employer pays for medical treatment to help get someone back to work, it is treated as a benefit in kind. The employee pays tax on the benefit, and the employer pays national insurance contributions on top.
The sickness absence review proposes that both those imposts should go. The relief should apply only to basic rate taxpayers, it says as a fair number of employers already provide private medical insurance for their higher paid employees. And the relief should only apply to “expenditure by employers targeted at keeping sick employees in work (or speeding their return to work”.
So the proposal is a distinctly limited one. Defining what is involved looks easy enough if the employer is paying for a one-off treatment that allows the employee to jump the NHS queue but which could get them back to work quicker – physiotherapy for a bad back, for example, a talking therapy or even an operation.
But it may prove somewhat harder to define in an insurance policy, where the benefit “would have to be clearly targeted at helping the employee return to work” while “excluding wider health treatments”. There could be many a loophole there that could make it look like relief for private medical insurance more generally – something the prime minister set his face against.
There is, of course, a case that it doesn’t make much sense for both the employer and employee to be hit with a tax bill if an employer is prepared to pay to get someone back to work quicker. Even so, the issue of tax relief for private medical insurance and NHS queue jumping is such a sensitive one that ministers will have to think long and hard about this idea when their critics are already attacking Andrew Lansley’s NHS reforms as “privatisation” of health care.