Jeremy Hunt warned he is ‘barking up the wrong tree’ with bid to lure over-50s back to work to solve rise in economic inactivity as ex-pensions minister says he should focus on fixing the NHS because long-term sickness is the main problem
- Steve Webb said ‘short-term sick’ becoming ‘long-term sick’ due to NHS backlog
- Ex-Lib Dem minister said focus should be on improving the health service
Jeremy Hunt has been warned he is ‘barking up the wrong tree’ with attempts to lure people who have retired early back to work to help boost the economy.
The Chancellor is expected to use his Budget next month to unveil measures designed to get more than half a million ‘economically inactive’ people to return to the workplace.
Measures that have been flouted include exempting the over-50s from paying income tax for up to a year.
But a report led by a former Lib Dem pensions minister has warned that Mr Hunt should focus on improving the NHS so as to get those with ‘long-term sickness’ back into work.
The Chancellor is expected to use his Budget next month to unveil measures designed to get more than half a million ‘economically inactive’ people to return to the workplace
But a report led by a former Lib Dem pensions minister has warned that Mr Hunt should focus on improving the NHS so as to get those with ‘long-term sickness’ back into work
Steve Webb, who is now with the LCP consultancy, pointed to numbers showing that people previously deemed ‘short-term sick’ were now becoming ‘long-term sick’ because of delays in receiving treatment
Steve Webb, who is now with the LCP consultancy, pointed to numbers showing that people previously deemed ‘short-term sick’ were now becoming ‘long-term sick’ because of delays in receiving treatment.
‘There is a real risk of the Government ”barking up the wrong tree” when it comes to the growth in economic inactivity,’ he said.
‘Policy solutions which aim to reduce early retirement or to encourage the retired out of retirement are likely to have only limited effect in reversing recent trends.
‘Instead, the policy effort needs to be focused around understanding why flows into long-term sickness have grown and on early intervention to prevent people’s health from deteriorating.
‘Without action there is a risk of a growing core of people stuck in long-term receipt of sickness benefits with limited prospect of returning to paid work and damaged prospects for retirement.’
Mr Webb was pensions minister during the coalition government from 2010 to 2015, when he lost his Thornbury and Yate seat.
The report noted that almost half (45 per cent) of the 630,000 economically inactive (EI) are aged under 50 and early retirement ‘explains none of the increase in inactivity since the start of the pandemic’.
It suggests the EI number is now 516,000 but the number in the ‘retired’ category has actually fallen. Meanwhile the number of ‘long-term sick’ has risen by more than a third of a million (353,000).
The report noted: ‘The rise in long-term sickness seems to be because more people are ”flowing on” to long-term sickness, particularly those previously classed as ”short-term sick”.
‘This could reflect NHS pressures as those who would otherwise have been treated or had their chronic condition better managed and able to work now find themselves ”long-term sick” as they wait for treatment or live permanently in poorer health.’
The UK has some of its lowest unemployment figures in half a century but employment has also fallen, with a spike in people being classified as ‘inactive’
The number of people off work because of long-term sickness has increased by around half a million since early 2019, figures show
While the number of people economically inactive with posture-related problems has risen by 62,000, the number of people signed off with depression has returned to pre-pandemic levels, the ONS said.
The UK has some of its lowest unemployment figures in half a century, but employment has also fallen, with a spike in people being classified as ‘inactive’.
Disability claims are up 70 per cent since the pandemic, with estimates that the annual cost will rise to £8.2billion by 2027.
Speaking in central London at the end of January, Mr Hunt said a fifth of working-age adults are economically inactive and around five million people do not want to work.
‘If companies can’t employ the staff they need, they can’t grow,’ he said at an event hosted by Bloomberg.
‘So to those who retired early after the pandemic or haven’t found the right role after furlough, I say Britain needs you. And we will look at the conditions necessary to make work worth your while.’
He added that it was time for ‘a fundamental programme of reforms to support people with long-term conditions or mental illness to overcome the barriers and prejudices that prevent them from working’.
‘We will never harness the full potential of our country unless we unlock it for each and every one of our citizens,’ he said.
Those returning to jobs might also be able to keep their disability benefits to avoid ‘incentivising’ them to stay off work.
The ideas are being floated as part of a major overhaul of the system amid concern that millions of people have opted out of the labour market since the pandemic.
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