The report comes amid a growing debate about the impact of long-term sickness on the UK labour force.

Businesses want the government to offer tax incentives to invest in employee health as firms start to grapple with worsening health and an ageing population, a new report shows.

Research from the British Standards Institute (BSI) shows that 64 per cent of UK business leaders would support financial incentives to recruit older people, so they could be helped to work for longer.

Financial incentives could help ensure a larger share of the population stays in work even as it ages.

In 2021, over 11m people were aged 65 or over, up from 9.2m people a decade earlier. Age UK forecasts that the number of over 65s will climb by 10 per cent in the next five years and by 32 per cent by 2043, adding another 3.5m people to this cohort.

With a growing share of the population approaching retirement age, the International Longevity Centre suggests that the government needs to increase the retirement age to 71 in order to maintain the share of workers per state pensioner.

The survey showed that 50 per cent of business leaders thought the government needed to invest in mental health and well-being support for the population.

The report comes amid a growing debate about the impact of long-term sickness on the UK labour force. 2.8m people are now out of work due to ill-health, up from 2.1m before the pandemic, making the UK the only major economy where employment has not returned to pre-pandemic levels.

Worsening mental health has been a key driver of this increase. Half of those out of work report depression, anxiety or bad nerves.

In recent weeks, the government has taken a more aggressive tone to get people back into work, announcing major reforms which will make it more difficult for those with mental health issues to claim benefits.

The government announced on Monday morning that it was considering replacing regular cash payments with one-off grants for those on personal independence payment (PIP).

It has been suggested that payments for those with depression and anxiety could be stopped and replaced with other forms of support, such as therapy.

“There are those that have perhaps milder mental health conditions, or where perhaps there has been too great a move towards labelling certain behaviours as having certain conditions attached to them, where actually work is the answer or part of the answer,” Mel Stride, the work and pensions secretary, said in an interview with The Times.

PIP is a non-means tested benefit for people with a long-term illness or disability which compensates for the costs of disability. Growing mental health issues have driven up PIP awards significantly since the pandemic.

The government said this meant the cost of the benefits bill was rising at “an unsustainable rate”. PIP spending is expected to grow by 52 per cent from 2023/24 to £32.8bn by 2027/28.



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