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 ground-breaking research that could provide a blueprint for government thinking on the labour market.
The report, seen as the largest in-depth study of long-term unemployment, says a regime based largely on benefit sanctions has delivered little and that any serious attempt to tackle economic inactivity must include personalised health-based assistance.
Local NHS integrated care boards should be tasked with working with regional mayors to help people get back to work in their region, the report says.
The Pathway to Work Commission’s report will be presented on Tuesday, but the Guardian has already seen parts of its conclusions.
It is based on evidence from more than 700 people in Barnsley, South Yorkshire, who are considered economically inactive – defined by the ONS as people who are not employed and have not looked for work in the past month.
Researchers also spoke to employers, experts and others as part of the project led by Alan Milburn, the former health secretary under Tony Blair.
Although it was set up by local and regional authorities, its likely resonance with national government priorities is clear. Other members of the committee include Torsten Bell, the former head of the Resolution Foundation think tank who is 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 said to have been in contact with Liz Kendall, the Work and Pensions Secretary, and Wes Streeting, the Health Secretary, as Keir Starmer’s government looks to tackle economic inactivity and push for 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 conditions, both physical and mental. While the reasons for this are complex, health must be at the heart of tackling the problem.
Currently, the jobs and benefits system is too simplistically based on imposing sanctions on people who cannot find work, the report says, and focuses on those looking for work rather than the much larger group – about twice as large – who are considered economically inactive for health reasons.
Policymakers, a committee source said, had relied on “tightening the rules on benefits to address a problem that is largely health care related”, adding: “It is an outdated system that is stuck in the past.”
The report says that Jobcentre Plus staff spend too much of their time enforcing benefits rules and helping people into work, rather than pursuing career progression or better pay. They also ignore those who are economically inactive.
Local areas should instead provide personalised support and advice to people wanting to work and employers looking to hire staff, with NHS care boards playing a central role.
Milburn said: “The one-stick benefits sanctions approach of recent years has failed. The previous government aimed its policy ammunition at the wrong target. It is no surprise that they have consistently missed.
“With a new government in place and inactivity rates showing no signs of slowing down, this is the time for a fundamental change of course. The country cannot afford to condemn an entire generation of young people to a life without work and hope.”
Milburn remains influential within Labour and was chairman of the Social Mobility Commission for five years from 2012.
The report comes as Starmer and his education secretary, Bridget Phillipson, plan on Monday to set up an organisation called Skills England to bring coherence to what has been described as a fragmented system of skills training.
With Richard Pennycook, the former CEO of the Co-operative Group, appointed interim chairman, the organisation is tasked with bringing together central and local government, as well as businesses, unions and training providers, to develop a skills system for people aged 16 and over that is more relevant to the labour market.
Starmer said: “Our skills system is in shambles, which is why we are transforming our approach to meeting skills needs for decades to come.
“They will help deliver our core mission as a government: stimulating economic growth by creating new opportunities for young people and enabling British businesses to recruit more local talent.”