Statutory sick pay: Campaigners call for reforms to prevent workers from being pushed into poverty
For all its seaside delights, Margate in Kent is one of the most deprived parts of the UK. Amid the cost of living crisis, many families are struggling to make ends meet.
Falling ill can become a headlong plunge into poverty – as Kyra Lloyd, a 25-year-old shop assistant, discovered when she began experiencing agonising pain in her ankle and she was left unable to stand.
“I started getting some very horrible, horrible pains. My foot was completely swollen, I couldn’t move.”
Doctors told Kyra the metalwork holding her bones together since a childhood fracture had snapped – and without surgery she could end up permanently in a wheelchair.
During the long wait for treatment she was signed off work. But statutory sick pay barely covered half her rent – let alone any other living expenses.
“I’m in so much debt now because of it,” she says.
“I have about £3,000 in debt from borrowing from people and getting loans because I just couldn’t afford to live. I couldn’t pay my rent. It’s just not enough.
“It’s embarrassing to ask people when you can’t even afford to eat.
“I ended up having just gravy and bread for dinner because I just couldn’t afford it – the question was do I have a roof over my head or food? No one should have to choose.
“Even things like washing your clothes… I was having to wash them in the bath at one point because I just couldn’t afford to use that much electricity. It’s so difficult. It’s not right.”
Kyra has now recovered and has a new job, but she’s constantly worried about the pain coming back.
“Every time I feel a slight twinge in my foot, I think – I can’t afford to go back on sick pay, I can’t afford another surgery. It’s a huge stress.”
Statutory sick pay will only cover a quarter of Christopher Balmont’s normal income
Christopher Balmont, 57, has been working as a head chef in a restaurant for more than a decade. His partner is unable to work as she cares for their daughter, who has special educational needs.
Earlier this week, he was signed off work with depression and anxiety. Statutory sick pay will only cover a quarter of his normal income – and the stress of how to pay the bills is making his condition worse.
“I don’t sleep, I feel anxious most of the time, and this makes me even more anxious,” he says.
“I’m worried about the whole situation and the amount you get. I would have thought it would be more. I haven’t had to claim it before, so it’s just a bit of a shock. And I had no choice. If I had a choice I’d be at work.
“It’s not just me that’s suffering from my illness, it’s my family as well.”
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Call for more help to get millions of long-term sick back into employment
While around half of workers are offered more generous levels of sick pay by their employers, a third are only entitled to the legal minimum.
What is statutory sick pay and how does it work?
Statutory sick pay is currently £109.40 a week, which works out at around a third of the minimum wage.
It is only paid from the fourth consecutive day of illness – during COVID this was temporarily changed so workers were entitled to support from day one, but that stopped last year.
Your employer does not have to pay if your average weekly earnings are less than £123 a week.
This means two million of the country’s lowest paid workers receive no sick pay at all – a situation which particularly affects those in jobs like cleaning, caring and security where zero-hours contracts are common and staff often work shifts for multiple employers. Self-employed people are not covered either.
In 2019, the government pledged to improve and expand statutory sick pay to cover all low-paid workers for the first time.
The idea was strongly supported in the resulting public consultation, with 75% of respondents in favour, including large and small employers. But during the pandemic that promise was abandoned.
Research on minimum income standards
Matt Padley, from Loughborough University’s centre for research in social policy, has calculated the impact of falling ill and relying on statutory sick pay in the light of his research on minimum income standards.
He and his team produce the annual minimum income standard calculation, which determines the weekly budget needed by households to maintain a socially acceptable standard of living in the UK.
For a single person living outside London that figure in 2022 was £489.20 a week.
Under statutory sick pay, a worker’s earnings are less than 25% of what they would need just to meet that minimum standard.
In the first week of illness, when payment only begins from the fourth day, that figure is 10%.
Within a month, a single adult previously on average earnings of £630 a week would face a shortfall of £1,230 – in three months, it’s £3,862.
“Without any other support from the state, all workers receiving statutory sick pay or no sick pay would fall well short of what they need for a minimum socially acceptable standard of living,” Mr Padley says.
That equates to more than 12 million people.
People are being forced onto benefits system
The campaign group Safe Sick Pay, a coalition of charities and trade unions, is calling for statutory sick pay to be increased in line with the minimum wage, for all employees to be covered, and for payments to begin on the first day of illness.
“Currently if these workers fall sick, they either have to go into work sick – making their condition worse and potentially infecting other people – or they stay at home and do the right thing, but then they’re left unable to pay the bills,” says campaign director Amanda Walters.
She argues low rates of statutory sick pay are forcing people onto the benefits system – as levels of support are significantly higher.
“If you fall sick and you only get the legal minimum sick pay then very quickly you’re going to fall out of the workforce, going onto benefits and to universal credit. And the longer you’re on universal credit, the harder it is to get back into the workforce.
“That is why we want to see a link between those that are sick and their employer not pushing them onto universal credit.
“A lot of these people want to remain in work. They don’t want to go onto universal credit. And at the moment, the current system is costing the taxpayer £55bn.”
‘Sick pay reform is overdue’
Encouraging people to return to employment after a period of long-term sickness was a key priority of the chancellor’s “Back to Work” budget in March.
But statutory sick pay was not mentioned, and some senior Tories, including former cabinet minister Sir Robert Buckland, argue sick pay reform has to be part of the strategy.
Sir Robert Buckland is calling for sick pay reform
“Now’s the time for action,” he says.
“We’re talking about hundreds of thousands of people who, through no fault of their own, might get ill and who end up staying off work for longer because of the disincentives that are caused at the moment by the lack of reach of statutory sick pay.
“We need a range of measures to combat economic inactivity and lack of productivity. And it seems to me that a reform to stop sick pay is overdue.
‘A win-win for employers’
“It’s not just a compassionate move, it’s a common-sense move. It’s a pro-business move. It’s a productivity enhancing move.
“It’s a win-win for employers, because at the moment there’s a disincentive to even announce any illness at all, and that can lead to further problems down the line. And very often longer-term absence is disastrous for small employers who really get hit hard by that.”
A Department for Work and Pensions spokesperson said the government has a “strong track record” of getting people off benefits and back into work, and that the number of people who are economically inactive is going down.
“We are implementing a range of initiatives supporting disabled people and people with health conditions not just to start, but to stay and succeed in work,” they added.
Business
Donald Trump’s tariffs will have consequences for globalisation, the US economy and geopolitics
For decades, trade and trade policy has been an economic and political backwater – decidedly boring, seemingly uncontroversial.
Trade was mostly free and getting freer, tariffs were getting lower and lower, and the world was becoming more, not less, globalised.
But alongside those long-term trends, there were some serious consequences.
Trump latest: US president announces sweeping global trade tariffs
Mature, developed economies like the UK and US became ever more reliant on cheap imports from China and, in the process, saw their manufacturing sectors shrink.
Large swathes of the rust belt in the US – and much of the Midlands and North of England – were hollowed out.
And to some extent that’s where the story of Donald Trump’s “Liberation Day” really began – with the notion that free trade and globalisation had a darker side, a side he wants to remedy via tariffs.
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Trump’s tariffs: Ed Conway analysis
He imposed a set of tariffs in his first term, some on China, some on specific materials like steel and aluminium. But the height and the breadth of those tariffs were as nothing compared with the ones we have just heard about.
Not since the 1930s has the US so radically increased the level of tariffs on all nations across the world. Back then, those tariffs exacerbated the Great Depression.
It’s anyone’s guess as to what the consequences of these ones will be. But there will be consequences.
Consequences for the nature of globalisation, consequences for the US economy (tariffs are exceptionally inflationary), consequences for geopolitics.
Imports from the UK will face a 10% tariff, while EU goods will see 20% rates. Pic: Reuters
And to some extent, merely knowing that little bit more about the White House’s plans will deliver a bit of relief to financial markets, which have fretted for months about the imposition of tariffs. That uncertainty recently reached unprecedented levels.
But don’t for a moment assume that this saga is over. Nothing of the sort. In the coming days, we will learn more – more about the nuts and bolts of these policies, more about the retaliatory measures coming from other countries.
We will, possibly, get more of a sense about whether some countries – including the UK – will enjoy reprieves from the tariffs.
To paraphrase Churchill, this isn’t the end of the trade war, or even the beginning of the end – perhaps just the end of the beginning.
Donald Trump has announced a 10% trade tariff on all imports from the UK – as he unleashed sweeping tariffs across the globe.
Speaking at a White House event entitled “Make America Wealthy Again”, the president held up a chart detailing the worst offenders – which also showed the new tariffs the US would be imposing.
“This is Liberation Day,” he told a cheering audience of supporters, while hitting out at foreign “cheaters”.
Follow live: Trump tariffs latest
He claimed “trillions” of dollars from the “reciprocal” levies he was imposing on others’ trade barriers would provide relief for the US taxpayer and restore US jobs and factories.
Mr Trump said the US has been “looted, pillaged, raped, plundered” by other nations.
Pic: AP
His first tariff announcement was a 25% duty on all car imports from midnight – 5am on Thursday, UK time.
Mr Trump confirmed the European Union would face a 20% reciprocal tariff on all other imports. China’s rate was set at 34%.
The UK’s rate of 10% was perhaps a shot across the bows over the country’s 20% VAT rate, though the president’s board suggested a 10% tariff imbalance between the two nations.
It was also confirmed that further US tariffs were planned on some individual sectors including semiconductors, pharmaceuticals and critical mineral imports.
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Trump’s tariffs explained
The ramping up of duties promises to be painful for the global economy. Tariffs on steel and aluminium are already in effect.
The UK government signalled there would be no immediate retaliation.
Business and Trade Secretary Jonathan Reynolds said: “We will always act in the best interests of UK businesses and consumers. That’s why, throughout the last few weeks, the government has been fully focused on negotiating an economic deal with the United States that strengthens our existing fair and balanced trading relationship.
“The US is our closest ally, so our approach is to remain calm and committed to doing this deal, which we hope will mitigate the impact of what has been announced today.
“We have a range of tools at our disposal and we will not hesitate to act. We will continue to engage with UK businesses including on their assessment of the impact of any further steps we take.
“Nobody wants a trade war and our intention remains to secure a deal. But nothing is off the table and the government will do everything necessary to defend the UK’s national interest.”
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Who showed up for Trump’s tariff address?
The EU has pledged to retaliate, which is a problem for Northern Ireland.
Should that scenario play out, the region faces the prospect of rising prices because all its imports are tied to EU rules under post-Brexit trading arrangements.
It means US goods shipped to Northern Ireland would be subject to the EU’s reprisals.
The impact of a trade war would be expected to be widely negative, with tit-for-tat tariffs risking job losses, a ramping up of prices and cooling of global trade.
Research for the Institute for Public Policy Research has suggested more than 25,000 direct jobs in the UK car manufacturing industry alone could be at risk from the tariffs on car exports to the US.
The Society of Motor Manufacturers and Traders (SMMT) had said the tariff costs could not be absorbed by manufacturers and may lead to a review of output.
The tariffs now on UK exports pose a big risk to growth and the so-called headroom Chancellor Rachel Reeves was forced to restore to the public finances at the spring statement, risking further spending cuts or tax rises ahead to meet her fiscal rules.
Read more:
What do Trump’s tariffs mean for the UK?
The rewards and risks for US as trade war intensifies
A member of the Office for Budget Responsibility (OBR), David Miles, told MPs on Tuesday that US tariffs at 20% or 25% maintained on the UK for five years would “knock out all the headroom the government currently has”.
But he added that a “very limited tariff war” that the UK stays out of could be “mildly positive”.
He said: “There’s a bit of trade that will get diverted to the UK, and some of the exports from China, for example, that would have gone to the US, they’ll be looking for a home for them in the rest of the world.
“And stuff would be available in the UK a bit cheaper than otherwise would have been. So there is one, not central scenario at all, which is very, very mildly potentially positive to the UK. All the other ones which involve the UK facing tariffs are negative, and they’re negative to very different extents.”
Business
Donald Trump’s tariffs will have consequences for globalisation, the US economy and geopolitics
For decades, trade and trade policy has been an economic and political backwater – decidedly boring, seemingly uncontroversial.
Trade was mostly free and getting freer, tariffs were getting lower and lower, and the world was becoming more, not less, globalised.
But alongside those long-term trends, there were some serious consequences.
Trump latest: US president announces sweeping global trade tariffs
Mature, developed economies like the UK and US became ever more reliant on cheap imports from China and, in the process, saw their manufacturing sectors shrink.
Large swathes of the rust belt in the US – and much of the Midlands and North of England – were hollowed out.
And to some extent that’s where the story of Donald Trump’s “Liberation Day” really began – with the notion that free trade and globalisation had a darker side, a side he wants to remedy via tariffs.
He imposed a set of tariffs in his first term, some on China, some on specific materials like steel and aluminium. But the height and the breadth of those tariffs were as nothing compared with the ones we have just heard about.
Not since the 1930s has the US so radically increased the level of tariffs on all nations across the world. Back then, those tariffs exacerbated the Great Depression.
It’s anyone’s guess as to what the consequences of these ones will be. But there will be consequences.
Consequences for the nature of globalisation, consequences for the US economy (tariffs are exceptionally inflationary), consequences for geopolitics.
Imports from the UK will face a 10% tariff, while EU goods will see 20% rates. Pic: Reuters
And to some extent, merely knowing that little bit more about the White House’s plans will deliver a bit of relief to financial markets, which have fretted for months about the imposition of tariffs. That uncertainty recently reached unprecedented levels.
But don’t for a moment assume that this saga is over. Nothing of the sort. In the coming days, we will learn more – more about the nuts and bolts of these policies, more about the retaliatory measures coming from other countries.
We will, possibly, get more of a sense about whether some countries – including the UK – will enjoy reprieves from the tariffs.
To paraphrase Churchill, this isn’t the end of the trade war, or even the beginning of the end – perhaps just the end of the beginning.
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