Jeremy Hunt has launched a drive to halt an exodus from the British jobs market through a crackdown on benefit claimants.
The chancellor said the government would ask more than 600,000 further people on universal credit to meet a “work coach” so that they “can get the support they need” to increase their hours or earnings.
Companies and the public sector are wrestling with a chronic shortage of workers, which the Bank of England has said is harming the economy. There are now 630,000 more economically inactive working-age adults – neither looking for a job or in work – than before the Covid pandemic hit in early 2020.
Announcing a review of issues holding people back from participating in the job market, which is due to conclude early next year, Hunt said Britain was in dire need of more workers to boost the economy.
The number of missing workers has increased amid a sharp rise in the number of older people leaving the workforce and a dramatic increase in long-term sickness.
Hunt said he had asked the Department for Work and Pensions to conduct a “thorough” assessment of the barriers and incentives to work, while saying that a review of the state pension age would also be published early next year.
Economists have warned that underinvestment in public services over the past decade, particularly for health and social care, as well as the increasing NHS backlog since the Covid pandemic, has contributed to the rapid growth in long-term sickness among working-age adults.
Job vacancies are close to a record high, as employers struggle to find enough recruits across a wide range of jobs. Andy Haldane, the former chief economist at the Bank of England, has warned that the worsening health of the British people is holding back economic growth for the first time since the Industrial Revolution.
However, Hunt appeared to suggest that benefit claimants were among the key reasons behind the lack of available workers, while announcing £280m of fresh investment to crack down on benefit fraud and errors in the next two years.
“I am proud to live in a country with one of the most comprehensive safety nets anywhere in the world, but also concerned that we have seen a sharp increase in economically inactive working-age adults,” he said in his autumn statement speech on Thursday.
Official figures show about 9 million working-age adults are economically inactive, including more than 2.5 million with long-term health conditions, but also including 2.4 million students. However, far fewer people are on universal credit, at about 5.8 million, including 41% of claimants who are already in work.
According to the Office for Budget Responsibility, the rise in economic inactivity due to long-term sickness echoes a rise in new claims for disability benefits.
Ben Willmott, head of public policy at the Chartered Institute of Personnel and Development, said it was important the jobs market review considered issues around the flexibility and quality of work, as well as employment support.
“Evidence shows that working parents, carers and older workers particularly value, and are more likely to need, flexible working. This highlights the importance of the government meeting its previous commitment to help create more flexible workplaces.”