Tackling Economic Inactivity is a Moral Obligation and an Economic Imperative Too.

The last Conservative government didn’t just increase levels of disadvantage. They changed its nature. The number of children living in material deprivation rose sharply. So too did the impact of high housing costs on poor families. But perhaps the biggest change was in the number of people who completely dropped out of the labour market, becoming ‘economically inactive’ in the jargon. On the Conservatives’ watch and because of their failures, Britain is suffering a hidden epidemic of worklessness.

Today, a startling 1 in 5 adults are economically inactive. We are the only G7 country where the employment rate remains below pre-COVID levels. This explosion in inactivity has been driven overwhelmingly by increasing ill-health. 85% of those who have dropped out of the job market altogether since COVID have done so due to long term sickness.

The rise in this deep worklessness has been driven disproportionately by those over 50 and those aged 16-24. Young people not in education, employment, or training (NEETs) have risen by a third since 2021. The leading cause of ill-health among this cohort is mental illness.

The roots of this crisis run deep. The deterioration of the NHS at the hands of the last government has played a significant role. But so have low skills and the broader failings of the education and training system. Half of all people with no qualifications are economically inactive. Strikingly, 79% of 16-24 year olds who are inactive for health reasons also lack qualifications beyond GCSEs. So many of our young people are caught in a mutually reinforcing spiral of low skills, poor opportunities, low self-esteem, and poor mental health.

The statistics are striking. And behind each of them lies a heartbreaking human story of suffering, despair, and wasted potential.

We can’t let this carry on. Tackling this problem is a moral obligation. We know that long-term worklessness does potentially permanent damage not just to individuals’ life chances but also to their health. The Chief Executive of the NHS Confederation put it simply: “being economically inactive makes you sicker”. We cannot abandon those facing illness, increasingly often at a young age, to a life without opportunity or hope.

It is an economic imperative too. The impact of leaving this problem unsolved will be unbearable for the taxpayer, with the cost of sickness benefits projected to top £100 billion by the end of this parliament. Moreover, such high levels of inactivity also act as a drag on growth, reducing the UK’s productive workforce. If we want to build our shared prosperity, we need to cut inactivity.

That means focusing on moving people into the labour market and into sustained work. Simply offering support will not be sufficient. Countless studies tell us what we all instinctively know: people want to work. The evidence from projects like Pathways to Work in Barnsley suggest that there may be over 4.5 million economically inactive people who would like to work. And a study from University of Cambridge has shown moving from inactivity to even just 8 hours per week of paid work can reduce risk of mental health problems, such as depression and anxiety, by an average 30%.

This will require some tough policy choices. It’s right that all who are able should be required to participate in work-focused activities aimed at getting them into a job.

But, as the Government has said, it will also require DWP itself to change. All too often, previous initiatives to address this problem have failed to yield results. More of the same will not work.

That’s why the changes unveiled by the White Paper are so important.

We need to get the one million young people who have dropped out either learning or earning. The Youth Guarantee, offering every 18-21 not in education, employment or training a job, an apprenticeship or skills training will give young people who would otherwise be left behind access to opportunity and the skills they need to make their way out of inactivity.

Jobcentres need not just to focus more on work, but on providing tailored support not just to get people into work, but to help sustain them in work and help them get on. The creation of a new jobs and careers services will help deliver this.

Services need to reflect the contours of the local labour market far better, serving the unique needs of local people and employers. The proposals in the White Paper to back mayors to provide tailored services will help achieve this.

And critically, all of this needs to be supported by better integration with health services. The announcement of additional resources for the twenty areas with the highest levels of inactivity, as well as a number of focused programmes, is very welcome.

This crisis won’t be easy to fix. But the prize is great – for the economy, for society, but most importantly for the people whose lives can be transformed by the opportunity to work. For their sake and ours, we should grasp it.

If you enjoyed this piece, follow the link here to read a recent piece on the public sector reform agenda.

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