New government taskforce to tackle £13 billion cost of ill health welcomed

Article date: 19 June 2007

The new vocational rehabilitation task group set up by the government to help ill or injured people stay in or return to work was welcomed today by Norwich Union Healthcare as being pivotal in reducing the yearly £13 billion cost of absence to the UK economy.

In particular, the new taskforce will be looking at why businesses do not provide more return to work services and what needs to be done to increase understanding and ensure wider provision of support.  These moves were particularly welcomed by Norwich Union Healthcare who, last year, commissioned economic consultancy, NERA to look into why such services were not taken up by employers. The report found how market failure reduces the likelihood of employers offering services which could allow their staff to return to work quicker after sickness or injury.

This market failure, the report said, is caused by a number of factors:

  • No one stakeholder has an over-riding incentive to invest in early intervention through the workplace
  • The supply market for workplace health interventions and rehabilition (ie using physiotherapy and psychological therapies) is weak, partly because of low demand and lack of innovation in product design
  • Employers are well placed to provide workplace interventions but levels of investment remain low (as employers bear only part of the cost of absence - with society bearing the majority of the costs)
  • The benefits of early intervention accrue over long time period, so an employer investing now may not see a return on that investment if an employee switches jobs
  • The NHS does not prioritise return to work over and above other patients' needs. 85%1 of GPs believe provision for rehabilition and return to work services are poor.

The report suggests that fiscal incentives, for example match funding or tax credits could be an efficient and effective way of encouraging take up of activity which has a wider social and economic value. 

Gil Baldwin, managing director of Norwich Union Healthcare, said: "The cost of absence through illness has a huge impact across the board. It is a major issue that needs to be addressed. Norwich Union Healthcare fully supports this new governmental initiative. This task force should be welcomed by bosses and staff alike who should give it every assistance.

"Norwich Union Healthcare's own studies have shown that a third of GPs have noticed a dramatic increase in the number of people being signed off work for a week or more. Our interaction with employers tells us they want help in tackling the growing spectre of ill health at work and individuals want to be supported in their return to work. Norwich Union Healthcare's report last year on these issues clearly indicated that tax incentives would help to improve take up of return to work services. It is great news for individuals, for business and for the economy that the government is taking this issue so seriously."


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Notes to editors:
The full report was commissioned by Norwich Union Healthcare and undertaken by NERA Consulting. It can be found at

1 Norwich Union Healthcare commissioned Dr Foster Research Ltd to conduct research amongst approximately 250 practicing GPs from across the UK in September 2005.

About NERA Consulting
NERA provides practical economic advice related to highly complex business and legal issues arising from competition, regulation, public policy, strategy, finance, and litigation. Our 45 years of experience creating strategies, studies, reports, expert testimony, and policy recommendations reflects our specialization in industrial and financial economics. Because of our commitment to deliver unbiased findings, we are widely recognized for our independence. Our clients come to us expecting integrity; they understand this sometimes calls for their willingness to listen to unexpected or even unwelcome news.

NERA Economic Consulting (, founded in 1961 as National Economic Research Associates, is a unit of Mercer Specialty Consulting, an MMC company.

About Norwich Union Healthcare
Norwich Union Healthcare was founded in 1990 as the healthcare arm of Norwich Union and now provides a range of income protection and private medical insurance products that cover over 980,000 lives. It is one of the largest providers of income protection and private medical insurance in the UK.

Norwich Union Occupation Health, a sister company of Norwich Union Healthcare, provides Occupational Health Solutions services to a wide range of industry sectors. By utilising their large fleet of purpose built mobile clinics and approved medical centres, staffed by a team of experienced Occupational Physicians and nursing staff, the services are designed to meet the individual needs of clients.

Norwich Union Healthcare is authorised and regulated by the Financial Services Authority and is a member of the Association of British Insurers and the Financial Ombudsman Service.

Norwich Union's news releases and a selection of images are available from Aviva's internet press centre at

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