Fast-track NHS treatment and job support for people off work sick

## Summary The government would spend an extra £6bn a year from April 2027 on faster NHS treatment for working-age people with musculoskeletal and mental health conditions, and on occupational health, GP-based employment advice and safer Universal Credit rules for trying work. Helping sick people stay in or return to work would raise labour supply and so the economy's productive capacity. ## Objective Around 2.8 million people are economically inactive because of long-term sickness, and musculoskeletal and mental health conditions are the main causes. Long waits, weak workplace support and benefit rules that penalise failed work attempts push people out of the labour market. The policy would work mainly through **labour supply**, with a secondary effect on **productivity** through less presenteeism and lower absence. The programme's aim would be 500,000 fewer people inactive because of long-term sickness by 2030. This is a target, not an estimate of effect. ## Measures 1. **Ring-fenced NHS capacity (£3.0bn a year).** NHS England would receive £2.55bn a year for extra elective, community musculoskeletal and NHS Talking Therapies capacity, so that working-age patients (16–66) on those waiting lists are treated within 18 weeks of referral. The devolved governments would receive £0.45bn a year in Barnett consequentials. NHS England and the Department of Health and Social Care would administer the English element. 2. **Occupational health entitlement (£1.2bn a year).** Employees absent for 4 or more weeks, or with a fit note recommending adjustments, would gain a legal right to an occupational health assessment and return-to-work plan. The state would reimburse 50% of the cost for employers with fewer than 250 staff, up to £600 per employee per year, through accredited providers. The Department for Work and Pensions (DWP) would administer it in Great Britain. 3. **GP employment advisers and fit notes (£1.3bn a year).** - Around 7,500 employment advisers would be attached to GP practices across Great Britain at about £55,000 each including overheads, costing £0.4bn. - Fit notes would default to "may be fit for work with adjustments" unless the clinician records otherwise. - A phased-return payment of £150 a week for up to 12 weeks would go to employers of returning staff, costing £0.9bn and covering about 500,000 returns a year. 4. **Universal Credit "safe return" (£0.5bn a year).** Claimants with limited capability for work and work-related activity who start work would have their health element and assessment status restored automatically, without reassessment, if work ends within 24 months. DWP would administer it. ## Timing and phasing - **2027-28:** The NHS capacity, adviser recruitment (half of practices by April 2027, all by October 2027), the fit-note default, phased-return payments and the UC safe return would start in April 2027. The occupational health subsidy would open on a voluntary basis, and any underspend on advisers would be redirected to it. - **2028-29:** The legal occupational health entitlement would begin in April 2028. - **2029-30 to 2032-33:** All measures would run at steady state. Progress against the 2030 target would be reviewed in 2030-31, and the envelope would be held at £6bn. ## Cost and financing Figures are gross cost in cash terms, on top of the March 2025 baseline. The envelope would be capped at £6bn and not uprated. | £bn | 27-28 | 28-29 | 29-30 | 30-31 | 31-32 | 32-33 | |---|---|---|---|---|---|---| | NHS capacity | 3.0 | 3.0 | 3.0 | 3.0 | 3.0 | 3.0 | | Occupational health | 1.2 | 1.2 | 1.2 | 1.2 | 1.2 | 1.2 | | GP advisers/phased return | 1.3 | 1.3 | 1.3 | 1.3 | 1.3 | 1.3 | | UC safe return | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 | | **Total** | **6.0** | **6.0** | **6.0** | **6.0** | **6.0** | **6.0** | We assume the programme would be financed by **borrowing**. Measures 1–3 would score as resource departmental spending (DEL) and measure 4 as welfare spending (AME). The analyst should not net off any second-round benefit savings or tax receipts in the cost line. ## Delivery **Legislation:** - A Health and Work Bill would create the occupational health entitlement and the phased-return payment power. - The Social Security (Medical Evidence) Regulations would be amended for the new fit-note default. - The Universal Credit Regulations 2013 would be amended for the safe return. - NHS capacity would need no legislation, only a ring-fenced allocation and NHS England planning guidance. **Responsibility:** DWP would lead, jointly with the Department of Health and Social Care and NHS England. HM Revenue and Customs could make the phased-return payments to employers. **Main risks:** - Shortages of physiotherapists, psychological therapists and occupational health clinicians could add cost without adding capacity. - Ring-fenced capacity could be diverted to non-working-age patients. - Employers might under-use the subsidy, or the subsidy could pay for support they would have bought anyway (deadweight). - GPs might resist the fit-note default. - The UC measure could create incentives to game the rules. ## Relation to the baseline The March 2025 forecast already includes: - NHS spending within existing DEL totals, consistent with the 92% 18-week standard by March 2029; - the Get Britain Working trailblazers (£240m); - the Spring Statement 2025 welfare package, including about £1bn a year of extra employment support by 2029-30, a cut to the UC health element for new claims from 2026-27 and a legislated "right to try" work without automatic reassessment. Measure 4 should therefore be analysed only as the extra protection beyond the right to try, namely automatic reinstatement within 24 months. Measure 3 adds to, rather than replaces, the baseline employment support. Later changes, such as the Universal Credit Act 2025 and the withdrawn PIP restrictions, are outside the March 2025 baseline and must not be double-counted.

The proposal would add £6bn a year in cash, financed by borrowing, from April 2027. The money would go on faster NHS musculoskeletal (MSK) and mental-health treatment for 16–66 year-olds, a subsidised occupational-health entitlement, GP-attached employment advisers with phased-return payments to employers, and automatic reinstatement of the Universal Credit (UC) health element if a job ends within 24 months. For the demand impulse it maps to general government consumption (CGGPS/CGGPSPSF), subsidies on production (CGSUBPR) and social benefits (CGSB) within PSCE. For the supply effect it maps to higher participation (PART16, TRPART16) and slightly higher productivity (PRODH), equivalent to ≈80,000 more people in the labour force by 2032. Only the increment over the March 2025 baseline is scored; that baseline already includes the 92% 18-week standard, ≈£1bn a year of employment support and the legislated 'right to try'.

### Interpretation The proposal would add £6bn a year in cash, from April 2027, to a package aimed at stopping working-age people with musculoskeletal (MSK) and mental health conditions falling out of work, and at helping those already out to return. It has four parts: - ring-fenced NHS capacity to treat 16–66 year-olds within 18 weeks (£3.0bn, including £0.45bn of Barnett consequentials); - a right to a subsidised occupational health (OH) assessment (£1.2bn); - GP-attached employment advisers plus a £150-a-week phased-return payment to employers (£1.3bn); - a Universal Credit (UC) ‘safe return’ that would restore the health element automatically if a job ends within 24 months (£0.5bn). It would be financed by borrowing and held flat in cash to 2032-33. The March 2025 baseline already funds the 92% 18-week standard by March 2029, the Get Britain Working trailblazers, ≈£1bn a year of extra employment support and a legislated ‘right to try’ work. The costing therefore treats measures 1–3 as additional, and scores only the move to automatic 24-month reinstatement as the UC increment. It does not count the later Universal Credit Act 2025 or the withdrawn PIP restrictions. In the OBR model the four parts map onto different spending lines: - the NHS and adviser money maps to general government final consumption at current prices (CGGPS), together with its public-finances counterpart CGGPSPSF; - the employer payments map to central government subsidies on production (CGSUBPR), the treatment the ONS gave the Coronavirus Job Retention Scheme; - the UC change maps to central government net social benefits to households (CGSB). All of this sits within public sector current expenditure (PSCE), at ≈£1.5bn a quarter at steady state from 2027Q2. The programme's real objective, more people in work, has no direct lever in the demand equations. It is imposed off-model as a higher 16+ activity rate (PART16) and trend participation rate (TRPART16), ≈0.14 percentage points or ≈80,000 people by 2032, plus a 0.03% lift to productivity per hour (PRODH) from lower sickness absence. The 80,000 is an estimate of effect built from the evidence on each measure. It is about a sixth of the programme's 500,000 target, which is an aspiration rather than a forecast. ### How it works through the OBR model 1. **The cash lands first in three public spending lines.** Once the programme is fully running, CGGPS and CGGPSPSF would rise by ≈£850m a quarter (NHS £750m, advisers £100m), CGSUBPR by ≈£525m and CGSB by ≈£125m, with PSCE rising by the total so that the spending identities hold. Realised spending is profiled at ≈£3.15bn in calendar 2027, £5.35bn in 2028, £5.9bn in 2029 and £6.0bn a year after that. The ramp reflects two delays: the OH offer is voluntary in its first year, and UC reinstatements only build up as people who start work later lose jobs. Because the envelope is frozen in cash, the impulse shrinks from ≈0.18% of GDP in 2028 to ≈0.16% by 2032. 2. **Only part of the NHS money becomes extra treatment.** The equation for real government consumption (CGG) is dlog(CGG) = 0.0007 + 0.374·dlog(CGGPS) + 0.180·dlog(CGGPS(−1)) − 0.420·dlog(CGG(−1)). It passes only (0.374 + 0.180)/1.420 ≈ 39% of a sustained rise in cash spending into volumes, and the rest raises the government consumption deflator (GGFCD). The costing uses 55%. That is more than the equation implies, because the money is ring-fenced for extra activity that the ONS counts directly as health output. It is well short of 100%, because physiotherapists, psychological therapists and OH clinicians are scarce, so some cash would go on overtime, agency premia and independent-sector margins. The result is ≈£1.9bn a year of extra real public services, worth ≈0.05–0.06% of GDP. 3. **Employer and claimant payments add a smaller boost to demand.** Most of the £2.1bn of employer payments would reimburse support firms would have bought anyway, or reward returns that would have happened regardless. It therefore flows mainly into profits rather than new spending, and a multiplier of ≈0.3 is assumed. The UC money goes to low-income households who spend most of it, but a multiplier of only ≈0.5 is used, for two reasons. Imports absorb about a quarter of consumption (MC = 0.257·CONS), and consumption adjusts slowly. Together with the extra public services, the demand boost to GDP peaks at ≈0.09% in 2028. It then fades to ≈0.02% by 2032 as the Bank of England leans against it and the frozen cash envelope loses real value. 4. **Household income and consumption rise gradually.** Real household disposable income (RHHDI) rises with pay in NHS providers and their supply chains, with the UC payments and, increasingly, with the earnings of people kept in or returned to work, net of tax and withdrawn benefits. The gain is ≈£1.4bn in 2027, rising to ≈£2.3bn (≈0.1%) by 2032. The consumption equation responds sluggishly: - its short-run coefficient on income growth is only 0.10; - it closes 12.5% of the gap to a long-run income elasticity of 0.44 each quarter, with wealth terms making up the rest; - each 0.1 point fall in the unemployment rate (LFSUR) adds ≈0.08% in the quarter it happens. Consumption (CONS) therefore rises ≈0.03% by end-2027 and ≈0.09% by 2032. Households smooth their spending, saving much of a small income gain at first and spending it as their wealth builds. 5. **More people stay in or return to the labour market.** The labour-supply estimate is built up measure by measure for 2032: - GP employment advisers ≈25,000–30,000; - faster NHS treatment ≈20,000; - the OH entitlement ≈10,000–15,000; - the fit-note default and phased-return payments ≈10,000; - the UC safe return ≈5,000. After allowing for overlap the total is ≈80,000, or ≈0.14 points on PART16. Unemployment in the model is the 16+ population (POP16) times participation, less employment, so higher participation enlarges the labour force directly. Returners typically work ≈75% of average hours at ≈85% of average productivity. Each therefore adds ≈0.64 of an average worker's input, taking total labour input up ≈0.15% by 2032. Fewer absence days add a further ≈0.03% to productivity per hour. 6. **Output moves from a demand bump to a supply-led gain.** The demand effect on GDP at market prices (GDPM) is ≈0.07% in 2027 and 0.09% in 2028, fading to 0.02% by 2032. Meanwhile the supply effect builds from ≈0.01% to ≈0.13%. Extra labour raises output by labour's share of income (≈0.65) at first, and by more (≈0.82 by 2032) as firms add capital to equip the extra workers. Total GDP is ≈0.08% higher at end-2027, ≈0.13% in 2028 and ≈0.16% by 2032, ≈£6bn a year in 2032 money. The profile is flatter than for most fiscal packages, because the slowly building rise in potential output replaces the fading demand stimulus almost one for one. 7. **Business investment follows market-sector output.** Desired capital stock (KSTAR) is exp(log(MSGVA) − 0.4·log(COC) + 2.43). Each 1% rise in market-sector gross value added (MSGVA) therefore raises the capital firms want by 1%, while the user cost of capital (COC) barely moves. MSGVA rises ≈0.04% in 2027 and ≈0.14% by 2032; the extra NHS activity counts as government output, not market output. Two features of the investment equation then take business investment (IBUS) up ≈0.03% in 2027 and ≈0.13% by 2032: its accelerator, a coefficient of ≈1.0 on lagged MSGVA growth, and its slow error correction towards KSTAR. More workers need more desks, vehicles and machines, and firms buy them as demand for their output rises. 8. **Unemployment dips, then employment absorbs the new workers.** In the model, hours worked (HWA) are output divided by productivity per hour, and employment (ETLFS) is hours divided by average hours (AVH). Unemployment is the gap between the labour force and that employment. The usual rule of thumb linking output and unemployment, the Okun relationship, is taken as ≈0.45: each 1% of extra demand cuts the unemployment rate by ≈0.45 points. On that basis LFSUR falls ≈0.03 points in 2027–28 as the demand boost creates jobs. It drifts back to baseline by 2032 as the stimulus fades and returners, who take longer to find work, join the labour force. Employment ends up ≈80,000 higher. 9. **Prices edge up and gilt yields drift up by a couple of basis points.** In the private-sector earnings equation (PSAVEI), wages respond to unemployment with a short-run coefficient of −0.0096 on its change and a long-run effect of ≈1.4% per point. Unemployment 0.03 points lower therefore lifts pay ≈0.04% over time. That feeds through the retail cost index (RPCOST) and margins into the consumer prices index (CPI) and the consumer expenditure deflator (PCE), which peaks ≈0.03% above baseline. A tighter labour market typically lifts wages and prices; this is the Phillips channel. Bank Rate (R) is assumed ≈1bp higher in 2027–29. The 20-year gilt yield (RL) is ≈1bp higher at first and ≈2bp by 2030–32, as debt rises by ≈0.6% of GDP. ### Key assumptions - **Baseline and horizon:** The baseline is the March 2025 EFO, rolled forward to the 31 October 2026 analysis date and extended from early 2030 to 2032 at its final-year trend (real GDP growth ≈1.7% a year, CPI inflation ≈2%). Nominal GDP is ≈£3.45tn in 2029-30 and ≈£3.8tn in 2032. Public sector net debt (PSND) is ≈96% of GDP, ≈£3.65tn, at end-2032. - **Spending lines and baseline overlap:** DHSC resource spending runs at ≈£200bn a year, so the £2.55bn English NHS element is ≈1.2% extra. Measures 1–3 are treated as additional to the 92% 18-week standard, the trailblazers and the ≈£1bn a year of Spring Statement employment support. For UC only the extension from the baseline ‘right to try’ to automatic 24-month reinstatement is scored, taken at the proposal's £0.5bn; the demand-led cost of this element could be lower. - **Delivery profile:** Realised spend is ≈£4.4bn in 2027-28: NHS £2.8bn, OH £0.6bn (including redirected adviser underspend), advisers and phased-return payments £0.9bn, and UC £0.1bn. It rises to ≈£5.5bn in 2028-29 and the full £6.0bn from 2029-30, held flat in cash thereafter. - **Volume share of NHS and adviser cash:** 55%, against ≈39% implied by the CGG equation. The other 45% raises unit costs and the government consumption deflator. - **Demand multipliers:** ≈1.0 on extra public-service volume, ≈0.3 on employer payments and ≈0.5 on UC. In 2028–2032 these fade to 90%, 70%, 50%, 35% and 25% of the first-year effect as monetary policy offsets them. - **Labour-supply response:** ≈10,000 people in 2027, 28,000 in 2028, 46,000 in 2029, 60,000 in 2030, 71,000 in 2031 and 80,000 in 2032. That is about 16% of the 500,000 target, and is applied as PART16 and TRPART16 +0.14 points by 2032. - **Labour input per extra participant:** 75% of average hours at 85% of average productivity, or 0.64 of an average worker. - **Output elasticity and capital ramp-in:** 0.65 in 2027, rising to 0.82 by 2032. KSTAR rises one for one with MSGVA, and the capital stock (KMSXH) catches up at the investment equation's slow error-correction speed of ≈4% of the gap a quarter. 90% of the potential gain shows up in GDP each year. - **Productivity from lower absence:** PRODH +0.03% by 2032. Sickness absence is ≈2% of hours, and only a small fraction of it is assumed to be avoided. - **Monetary-policy reaction:** Bank Rate (R) is ≈1bp higher in 2027–29 and back on baseline after. RL is +1bp rising to +2bp as debt rises ≈0.6% of GDP, at roughly 3bp per 1% of GDP of debt. - **Unemployment response:** An Okun coefficient of 0.45 on the demand gap, plus a +0.01 point composition effect because returners search for longer. - **Fiscal feedback rates:** The rates applied are: - roughly a third on demand-driven nominal activity, including the NHS cost premium; - ≈27% on supply-driven output, reflecting lower-paid, often part-time jobs; - ≈£5,000 a year of benefit saving per extra worker; - ≈22% tax on the deadweight windfall from employer payments; - 4.25% marginal interest on extra debt. - **Devolved administrations:** Measure 1 already includes £0.45bn of Barnett consequentials. Measures 2–4 are GB-wide, with Northern Ireland parity of ≈2.9% (≈£0.08bn a year) costed outside the cap. These assumptions are estimates. The in-model coefficients are comparatively firm because they are estimated and published: the slow cash-to-volume pass-through in the CGG equation, the consumption function's 0.44 long-run income elasticity, the one-for-one link from market output to desired capital and the wage equation's response to unemployment. Most of the uncertainty lies in inputs taken from outside the model, and the labour-supply response matters most: - Each 10,000 people moves GDP by ≈0.017% and borrowing by ≈£0.2bn a year by 2032 (≈£0.65bn over the horizon). - At 40,000 people, GDP would be ≈0.09% higher in 2032 and cumulative borrowing ≈£27bn. - At 150,000 people, GDP would be ≈0.27% higher and borrowing ≈£20bn. Evidence from the Fit for Work service, the Health-led Employment Trials and NHS Talking Therapies points to modest effects. The risk is skewed to the downside if clinical staff cannot be recruited. Three further external judgements matter, in descending order: - **Volume share of NHS cash:** a value nearer the equation's 39% would cut the 2028 GDP effect by ≈0.02 points and weaken the employment effect of faster treatment. - **Deadweight in employer payments:** more deadweight means less demand, more corporation tax and fewer extra workers. - **Monetary-policy reaction:** if Bank Rate stayed exactly on its baseline path, the demand effect would fade more slowly, and GDP and prices would be a few hundredths of a point higher in 2029–30. The counterfactual baseline is a further source of uncertainty. If baseline employment support and the 18-week standard already reach many of the same people, the incremental effect would be smaller. ### Headline results Output (GDPM) would be ≈0.08% above baseline by the end of 2027, ≈0.13% in 2028 and ≈0.16% by 2032, ≈£6bn a year in 2032 money. The shape is unusual for a spending package. The demand boost from extra public services, employer payments and UC peaks in 2028 at ≈0.09% of GDP. It then fades as monetary policy offsets it and the frozen cash envelope erodes. The supply gain from ≈80,000 more people in the labour force builds steadily and takes over, so GDP keeps edging up rather than falling back. Consumption (CONS) rises slowly, from ≈0.03% in 2027 to ≈0.09% by 2032, because the consumption equation adjusts to higher income only gradually. Business investment (IBUS) tracks market-sector output, rising from ≈0.03% to ≈0.13% as firms equip the extra workers. The unemployment rate (LFSUR) is ≈0.03 points lower in 2027–28 while the demand boost is strongest. It then returns to baseline as the new entrants are absorbed, leaving employment ≈80,000 higher by 2032 with no lasting change in unemployment. Price effects are small. The consumer expenditure deflator (PCE) is at most ≈0.03% above baseline in 2029–31, easing to ≈0.02% by 2032 as extra labour supply relieves wage pressure. Bank Rate barely moves, and the 20-year gilt yield (RL) drifts up by ≈1–2 basis points as debt accumulates, too little to change the macroeconomic picture.

### Costing the policy - **Gross static cost (mechanical spending increase):** +£34.5bn. This is the proposal's £6bn a year envelope over the 23 quarters from April 2027 to the end of 2032, before any delivery profiling or feedback. It covers £3.0bn of NHS capacity (including £0.45bn of Barnett consequentials), £1.2bn of occupational health reimbursement, £1.3bn of GP advisers and phased-return payments and £0.5bn for the UC safe return. As current spending it adds directly to public sector net borrowing (PSNB). - **Delivery profile underspend (slower first-year take-up):** −£2.1bn. The occupational health offer is voluntary until April 2028, advisers are not all in post until October 2027, and UC reinstatements only build up as people who start work later lose jobs. Realised spending is therefore ≈£4.4bn in 2027-28 and ≈£5.5bn in 2028-29 before reaching the full £6.0bn. - **Northern Ireland parity / Barnett consequential (measures 2–4):** +£0.4bn. Northern Ireland runs its own employment and social security system, so the GB-wide DWP measures would need a parity consequential of ≈2.9%. That is ≈£0.08bn a year once running, outside the £6bn cap. - **Demand feedback (income tax, NICs and VAT on extra activity):** −£6.0bn. Taxes at roughly a third on ≈£18bn of extra nominal activity. Of that, ≈£10bn is real output from the demand boost, which peaks at ≈0.09% of GDP in 2028. The other ≈£8bn is higher pay and supplier income from the 45% of NHS cash that goes on unit costs. The row includes small savings on cyclical benefits as unemployment dips. - **Corporation tax on employer payments (taxable grant income):** −£1.2bn. Phased-return payments and OH reimbursements are taxable business income. Where they pay for returns or support that would have happened anyway (≈70% and ≈40% respectively), they add to profits, and ≈22% comes back in tax. - **Supply-side receipts feedback and benefit savings (higher labour supply):** −£5.1bn. The ≈80,000 extra participants and lower absence add ≈£14bn of output over the horizon. Taxed at ≈27%, because the new jobs are often part-time and lower-paid, that yields ≈£3.9bn. Each extra worker also saves ≈£5,000 a year in UC and other benefits, ≈£1.2bn in total. This row grows over time, reaching ≈£1.65bn a year by 2032. - **Debt-interest feedback (extra debt and slightly higher gilt yields):** +£3.7bn. About £2.7bn is interest at ≈4.25% on the accumulating extra debt. A further ≈£1.0bn comes from the 1–2bp rise in the 20-year gilt yield (RL) on refinanced gilts and the ≈1bp rise in Bank Rate on reserves and bills. - **Net cumulative PSNB change:** +£24.2bn. This is the sum of the rows above. Borrowing would be ≈£4.6bn a year (≈0.12% of GDP) higher by 2032. Before debt interest, the feedbacks recover ≈38% of the realised gross cost. ### Debt path Because the extra borrowing is not offset, public sector net debt (PSND) rises by roughly the cumulative change in PSNB: - ≈£2.4bn by end-2027; - ≈£10.6bn by end-2029; - ≈£24.2bn by end-2032, against a baseline of ≈£3.65tn (≈96% of GDP). On nominal GDP of ≈£3.8tn in 2032, the extra debt alone is ≈0.64% of GDP. But the policy also raises nominal GDP by ≈0.21%: real GDP is 0.16% higher and the GDP deflator ≈0.05% higher, mostly because the higher unit costs of NHS activity count in the government deflator. That larger denominator takes ≈0.20 points (96% × 0.21%) off the ratio, so PSND/GDP is ≈0.44 points higher by 2032. In 2027 the denominator effect outweighs the small rise in debt, and the ratio is ≈0.02 points lower. Debt overtakes from 2028. On the OBR's standard assumptions the package would not pay for itself. Rising tax receipts and benefit savings from extra workers narrow the gap over time, but by 2032 they still leave a structural hole of ≈£4.6bn a year, ≈0.12% of GDP. Because it is all current spending, it would bear directly on the current-budget rule. Self-financing would require ≈250,000–300,000 more people in work, roughly three times the central estimate.

### Overall pattern In 2032, with the programme at steady state, households would gain ≈£6.7bn a year in aggregate on this accounting, ≈£230 per household on average. The gain is made up of: - ≈£3.4bn of NHS treatment and employment advice, valued in kind at cost; - ≈£0.5bn of extra UC; - ≈£1bn of net earnings for ≈80,000 people kept in or returned to work; - ≈£0.9bn of OH support that employees receive through their employers; - ≈£1bn of post-tax windfall to the owners of firms receiving phased-return and OH payments. The £2.1bn of employer payments goes first to businesses. These are mainly firms with fewer than 250 staff in sectors with high sickness absence, such as care, retail, hospitality and manufacturing. Accredited OH providers and independent-sector healthcare firms would also see more demand. The pattern is progressive. The gain is ≈2.1% of income for the poorest tenth and ≈0.2% for the richest, because the health conditions that push people out of work, and UC, are concentrated lower down. In cash terms it is U-shaped: ≈£300–320 for the bottom two deciles, ≈£175–185 around deciles 7–9 and ≈£230 at the top, where business owners collect much of the employer-payment windfall. Future taxpayers would then pick up the ≈£4.6bn a year of extra borrowing, ≈£160 a household. On paper the average household is still a small net gainer, by ≈£70. But households in the top three deciles, who would pay most of any broad-based tax rise, would be net losers. Lower-income households, and those with a working-age member in poor health, would gain. ### Who gains - **People kept in or returned to work:** ≈£12,000 a year each, ≈40% of their household's income. About 80,000 people would be in work by 2032 who otherwise would have dropped out or stayed out. A typical case earns ≈£24,000 a year, often part-time, and loses ≈£3,000 in income tax and NICs and on average ≈£6,000 in withdrawn UC and other benefits. After allowing for spells out of work, that leaves them about £12,000 better off. This is a large gain concentrated on a small group. - **Working-age patients treated sooner:** non-cash; ≈1 million faster or extra treatments a year. People aged 16–66 on MSK, elective and NHS Talking Therapies waiting lists would be treated within 18 weeks, worth ≈£3bn a year at cost or roughly £3,000 per treatment. For most of them, less pain and an earlier recovery matter more than any effect on income. - **Universal Credit claimants with limited capability for work:** ≈£185 a year on average, ≈0.8% of income. The ≈£0.5bn a year is spread across ≈2.7 million households. In any year only ≈4% actually draw on reinstatement, which is worth several thousand pounds to them. For the rest it is insurance that makes trying work less risky. ### Who loses - **No direct losers, but higher borrowing:** ≈£4.6bn a year by 2032. Nobody would pay more tax or lose a benefit directly, but public sector net borrowing (PSNB) would be ≈£4.6bn a year higher by 2032, and future taxpayers would bear it, as set out below. Older patients could also wait longer if scarce clinical staff were drawn away from other NHS work; this is a risk rather than a costed effect. ### Paying for it and bond markets - **Future taxpayers:** −£160 a household a year, ≈0.36% of income. PSNB is ≈£4.6bn a year higher in 2032. Divided by ≈29 million households, that is ≈£160 per household each year, against average disposable income of ≈£45,000. It is an ongoing annual cost for as long as the programme runs, not a one-off or a total over the horizon. - **Future taxpayers (additional debt):** ≈£835 a household, one-off. Public sector net debt (PSND) would be ≈£24.2bn higher by the end of 2032, ≈£835 per household (£24.2bn ÷ 29 million), which future taxpayers must service or repay. Under the fiscal rules the extra borrowing has to be paid for eventually. If met by broad-based taxes, top-decile households would pay ≈£400–450 a year and bottom-decile households under £50. A deficit-financed package therefore has losers even though none are visible today. - **Mortgage borrowers:** −£30 a year, ≈0.05% of income. The 20-year gilt yield (RL) is ≈2bp higher by 2030–32. At ≈£1,400 a year per percentage point on an average ≈£140,000 mortgage, that adds ≈£30 a year once mortgages refix, a negligible amount. ### Across the income distribution As a share of income, the gains fall steadily from ≈2.1% in the bottom decile to ≈0.2% in the top. Three things drive this: - Working-age people with long-term MSK and mental health conditions are over-represented in low-income households, partly because ill health has already cut their earnings. - The UC element goes almost entirely to the bottom four deciles. - The ≈80,000 people who return to or stay in work are counted mostly in the bottom three deciles, where they would otherwise have been. In cash, the in-kind value of treatment and advice is spread more evenly, at ≈£80–150 a household across the distribution. The top decile's cash gain of ≈£230 is higher than that of the middle deciles. This is because owners and shareholders of small and medium-sized firms collect much of the deadweight in phased-return and OH payments, and that ownership is concentrated at the top. The decile averages also hide sharp differences within each decile. Pensioner households, a large share of deciles 2–5, gain almost nothing because the NHS capacity is ring-fenced for 16–66 year-olds. Households with a working-age member off sick or on UC health benefits gain far more than the average. ### Caveats The figures value NHS treatment, employment advice and OH support at cost. Because the costing assumes ≈45% of the NHS cash goes on higher unit costs rather than extra activity, this overstates the value to patients. The split of employer payments between employees and business owners is a judgement, and the ≈80,000 employment effect could plausibly be half or nearly double the central figure. These are static first-round effects for 2032. They exclude the small second-round macro effects shown above: jobs, prices ≈0.02% higher, and mortgage rates. Averages also mask wide variation within groups. The allocation leans on: - the ONS Effects of Taxes and Benefits on Household Income; - the Family Resources Survey and Households Below Average Income; - DWP Universal Credit caseload statistics; - NHS referral-to-treatment waiting-list data by age; - Labour Force Survey data on inactivity due to long-term sickness.