Welfare Reform Bill: FSB comment

The Federation of Small Businesses is the UK’s leading non-party political lobbying group for UK small businesses existing to promote and protect the interests of all who own and/or manage their own businesses.  With 200,000 members, the FSB is also the largest organisation representing small and medium sized businesses in the UK.

Introduction

The FSB welcomes the vision set out in the Welfare Reform Bill to increase the number of people participating in the UK economy.  Britain’s small businesses would benefit from skilled people entering and remaining in the labour market, be they lone parents, older workers or those in receipt of incapacity benefits. 

This is no small consideration given that small and medium-sized enterprises (SMEs) are integral to the health of our economy, employing 58% of the UK private sector work force, almost 13 million people. Of these, 2 million are employed by FSB members.

Difficulties in recruiting appropriately skilled staff are currently acting as a barrier to small business growth.  The FSB’s biennial membership survey Lifting the Barriers to Growth 2006, found that a quarter of businesses reported encountering one or more skill barriers when seeking to recruit new employees. 

However, the Government must therefore ensure that in its drive to get more people back into work, it does not neglect to consider the impact proposals will have on SMEs.  Placing more burdens on businesses will mean that the desired benefits to the economy will not be achieved.  These concerns, and comments on other proposals, are set out below.  

Part One: The Maternity and Adoption Leave Regulations Helping the Ill or Disabled People

We agree with the aim of reducing the number of people on incapacity benefits and changing a system that too often has provided incentives for incapacity benefit claimants to permanently remove themselves from the workforce.  We have been proponents of the strong business case for employers retaining suitably skilled disabled people and have supported the Disability Rights Commission Employment campaign.
Developing healthy workplaces
The FSB supports the Government’s current Health, Work and Well-being agenda for action through a partnership approach, which includes SME representation, to improve workplace health by improving access to good-quality occupational health support and facilitating better absence management, early intervention and rehabilitation. 

Employers consider engaging with GPs to be an important part of this agenda and the FSB views the roll out of pilot employment advisers in GPs surgeries as a welcome initiative, together with a review of medical certificates to encourage the provision of more comprehensive fitness-for-work advice to employers.  We would like to emphasise however, that no responsibilities for the medical assessment of employees should be placed on employers.  They cannot reasonably be expected to make evaluation on health matters when they are not medically qualified.  Some illnesses, such as depression or stress would be very difficult to accurately assess.

We are particularly supportive of the new Workplace Health Connect scheme, which provides a free advice line on workplace health and return-to-work issues and recognises that it is an important resource for businesses.  We are already working with the Workplace Health Connect regional stakeholder councils to promote the advice line and workplace visit service to the FSB membership.

Incentives- Employers’ Liability Compulsory Insurance

More needs to be done to change the focus of the present system of Employers’ Liability Compulsory Insurance and ensure that it has at its core the prevention of ill health and accidents.  The FSB is concerned that smaller businesses are still not reaping the rewards of better health and safety management through their insurance premiums.  A survey carried out by the EEF of its membership in 2005 showed that smaller businesses are missing out on reduced premiums in comparison with larger organizations.  According to the report, the smaller businesses (1-10 employees) fared worst in securing a reduction and showed that these types of businesses are more likely to experience an increase in costs.  Reduced premiums must be the reward for businesses putting in place the right health and safety systems.

The FSB is supporting this agenda through working with the Health and Safety Executive on the Health and Safety indicator for SMEs, to make it more applicable to micro businesses employing fewer than 10 employees.  The indicator, designed to help insurers identify good health and safety practice, was originally not tailored to such small businesses, thus often giving them skewed and inaccurate results.

Incentives for employers to provide increased health support for their workforce

There are two options the FSB would like the Government to consider:

• Tax incentives for employers to provide rehabilitation for employees, as also proposed by Association of British Insurers in their recent 'Care and Compensation' initiative.  This applies particularly when an employer pays for an employee to have private medical care for quick treatment in order to aid rehabilitation and speed up the return to work. Currently the employee pays tax on the cash value of the benefit and the employer also currently pays 12.8% employers National Insurance.  This should be reformed so that such a scheme is no longer considered a taxable benefit for employees and can be provided by the employer tax free.

• Tax relief on gym membership for employers to encourage their workforce to lead more active lifestyles.  This should also extend to all workers, including the self employed. Larger organizations should create partnerships with smaller businesses in their supply chain to allow access to gyms and wider occupational health services, which those organizations are already benefiting from. 

Statutory Sick pay reform

The FSB had several concerns about the initial Green Paper SSP reform proposals and welcomed the Government’s decision to drop these proposals and “go back to the drawing board”. The original proposals include abolishing the 3 waiting days before paying Statutory Sick Pay, abolishing the link periods of no more than 8 weeks, as well as the proposal to abolish the percentage threshold scheme.
 
The FSB is of the view that, if small businesses are to be allowed to thrive, the statutory 3 waiting days must be retained.  Paying SSP from the first day of sickness absence would clearly remove the incentive for employees to return to work quickly and inflate the amount of SSP an employer must pay out, in turn affecting the business’ cash flow, productivity and profitability. 

 

Helping Older Workers

The FSB welcomes the commitment to extend working life and increase the employment rates of older workers. We have supported the ‘Age Positive’ campaign and the removal of mandatory retirement ages.   Small businesses are fully aware of the value of older workers to the economy, with a survey of FSB membership in 2004 finding that only 10% of respondents believed a flexible retirement age would have a negative effect.

Flexible Working

Small businesses are the original flexible employers and have generally always been flexible around childcare, elderly or other individual needs wherever possible. Flexible working is a clear case of where business practice is already ahead of legislation, although small businesses do have a finite capacity to accommodate flexible working requests.  It is for this reason that we would not welcome further flexible working legislation.

For further information please contact at the FSB:
Telephone 020 7592 8100
Email: Lucie.Goodman@fsb.org.uk