Failure to extend statutory sick pay a false economy even as government borrowing costs soar

If now is “not the right time” to reform statutory sick pay (SSP) and remove the low earnings limit (LEL), when is?

After a super-delta-plus-plus-plus coronavirus variant emerges to kill off half the population and cut costs that way? If scientists create a wonder drug so that nobody ever actually gets sick?

It’s the latter the government seems to be hoping for. Otherwise it’s answer appears to be “never”.

With the end of the parliamentary session in sight, it has been doing what governments have always done: sneaking out potentially controversial decisions in the hope that they won’t attract too much attention.

That includes not reforming statutory sick pay or addressing the fact that around 2 million workers, a majority of whom are women, don’t earn enough to qualify. The lower earnings limit currently stands at £120 a week.

The announcement of the decision to stand pat on that, and reform of the miserable level of £95 a week, emerged late on a day when everyone was focused on Dominic Cummings’s latest revelations about the callous things the prime minister was allegedly saying while Cummings was working in Downing Street.

The old adage of it being “a good day to bury bad news” was again proved; the sick pay decision wasn’t widely covered, although The Independent did when the TUC accused the government of “penny pinching” and “abandoning low paid workers” at the worst possible time.

I delved into the guts of the response to the Health is Everyone’s Business consultation – far from my favourite job of the day because it’s full of the sort of bilge that gives government a bad name – and found that by the its own reckoning 75 per cent of respondents agreed that sick pay should be extended to employees below the LEL.

The government also admitted that employers “felt that by extending SSP to those earning below the LEL, they would be better incentivised to reduce sickness absence for all of their employees”.

In other words, it would be a sound and sensible move to make even if we weren’t in the middle of a pandemic during which there has been clear evidence of people failing to self-isolate because they can’t afford to and where the support to enable them do so (cited in the response) is spotty, not widely understood, and difficult to access.

It isn’t hard to guess who decided that now is not the right time to change anything. The Treasury’s fingers were all over the document even if it was Department of Health & Social Care and the Department for Work & Pensions whose logos were on the masthead.

There are those who would argue that this was entirely appropriate.

The Institute for Fiscal Studies says the government is on track to spent between £14bn and £17bn less each year on a range of public services from April 2022 than would have been the case had the pandemic not landed.

Government borrowing fell £5.5bn to £22.8bn in June when compared to last year, which provided some good news for chancellor Rishi Sunak. The problem is that he had to spend £8.7bn on servicing the national debt, which is a record and more than three times as much as he spent this time last year.

This cause? Inflation. Inflation-linked debt is obviously more expensive to service when inflation is spiking. And it hasn’t finished rising yet.

Small wonder, then, that the Treasury is indulging in penny-pinching while casting a chilly eye on spending proposals across government, at a time when there is considerable pressure to do things like give nurses and other NHS workers a proper pay rise or fund catch-up classes for kids whose schooling has been devastated by the virus.

Economies, the chancellor will be telling colleagues, have to be made. The problem with statutory sick pay is that the failure to extend it is a false one in the middle of a pandemic that is still killing people.

The pingdemic is keeping substantial chunks of the workforce at home, but research has consistently shown that low earners have been reluctant to self-isolate and we know why that is: they can’t afford to.

Removing the LEL would help with that. It would also, according to the TUC, cost employers a maximum of £150m a year and the government less than one per cent of what it spent on its test and trace scheme to support them with those costs. It would also cost the exchequer less than the £200m being wasted on a new party boat for the royals.

The difference between shelling out for that ridiculous yacht and reforming statutory sick pay? The latter would be money well spent on supporting some of Britain’s neediest workers.