Ministers should integrate health services into job centres to unlock a hidden workforce of around 3 million “economically inactive” people who are out of work, according to pioneering research that could provide a blueprint for government thinking on the labour market.
The report, billed as the largest in-depth study of long-term unemployment, argues that a system based largely on benefit sanctions has had little impact, and that any serious effort to tackle economic inactivity must offer personalised, health-based support.
NHS local integrated care boards should be tasked with working alongside regional mayors to help people get back into work in their areas, it says.
The Pathway to Work commission’s report will be published on Tuesday, but the Guardian has already seen elements of its findings in advance.
The study draws on data collected from more than 700 people in Barnsley, South Yorkshire, who are considered economically inactive, defined by the ONS as people without a job who have not looked for work in the last month.
Researchers also spoke to employers, experts and others as part of the project led by Alan Milburn, a former health secretary under Tony Blair.
Although the commission was set up by local and regional authorities, its likely resonance with the priorities of the national government is clear. Other members of the commission include Torsten Bell, the former director of the Resolution Foundation think tank and now a Labour MP, and the current and former Labour mayors of South Yorkshire, Dan Jarvis and Oliver Coppard. Jarvis is now an MP.
Milburn is also understood to have been in contact with Liz Kendall, the work and pensions secretary, and Wes Streeting, the health secretary, as Keir Starmer’s government seeks to tackle economic inactivity while promoting higher growth.
The year-long study found that around 2.8 million economically inactive people in the UK are unable to work due to long-term health problems, whether physical or mental, and that while the reasons behind this are complex, health must be at the heart of efforts to tackle the problem.
Currently, he argues, the employment and benefits system is too simplistically based on targeting people with sanctions if they cannot find work, and focuses on those who are looking for work rather than the much larger group – about twice as large – who are classified as economically inactive for health reasons.
According to a Commission source, policymakers have relied on “tightening welfare rules to address what is largely a health problem”, adding: “This is a legacy system that is stuck in the past.”
Too much of Jobcentre Plus staff’s work is focused on administering benefit rules and helping people into any type of job rather than career progression or better earnings, and ignores those who are economically inactive, the report says.
Instead, local authorities should provide tailored support and advice to people looking to work and employers looking for staff, with NHS care boards playing a central role.
Milburn said: “The comprehensive approach to sanctions in recent years has failed. The previous government aimed its public policies at the wrong target. Unsurprisingly, it missed the mark.
“With a new government in place and unemployment rates showing no signs of slowing, now is the time for a radical change in direction. The country cannot afford to condemn a generation of young people to a life without work or hope.”
Milburn remains influential within the Labour Party and chaired the Social Mobility Commission for five years from 2012.
The report comes as Starmer and his education secretary, Bridget Phillipson, were set to launch a body called Skills England on Monday, aimed at bringing cohesion to what has been described as a fragmented skills training system.
With Richard Pennycook, the former chief executive of the Co-operative Group, appointed interim chair, the organisation is tasked with bringing together central and local government as well as business, unions and training providers to deliver a post-16 skills system that is more relevant to the labour market.
Starmer said: “Our skills system is in disarray, which is why we are transforming our approach to meeting skills needs over the coming decades.
“They will help deliver on our core mission as government to boost economic growth, opening up new opportunities for young people and enabling British businesses to recruit more local talent.”
