Economic inactivity is a major obstacle to the Midlands’ productivity and competitiveness.
As a business owner with over 30 years of experience in the region, I have seen firsthand how this challenge has intensified as the economically inactive population approaches 10 million nationally – almost 1 million more than pre-pandemic.
This includes nearly 3 million on long-term sick leave, an all-time high since records began in 1993, representing over a fifth of all 16-64 year olds. The good news is that within these high numbers are hundreds of thousands who want to work and could do so with proper support.
But for government, these numbers are alarming, as economic inactivity acts as a drag on productivity and growth. It creates an unsustainable benefits burden for the entire nation, with the combined cost of working-age incapacity and disability benefits estimated by the Office for Budget Responsibility (OBR) to hit £76 billion by the end of the parliament.
Recent research from Centre for Social Justice – ‘Going Dutch’ –,research highlights this significant increase in inactivity, and suggests a decentralised approach that has seen the Netherlands reduce economic inactivity at three times the UK rate.
Government schemes here have shown mixed success thus far, often targeting only the most accessible cases rather than tackling the more challenging but potentially more rewarding situations. As a business leader, I have repeatedly heard about thriving companies struggling to fill skilled positions while growing numbers of working-age adults remain disconnected from employment.
This presents an enormous financial burden: £28 billion annually in additional welfare payments, plus lost productivity and tax revenue. Equally concerning is the erosion of workplace skills among the long-term economically inactive, creating a downward spiral that worsens over time.
The ‘Going Dutch’ approach would provide holistic, person-focused support – something difficult to deliver from Whitehall. It would devolve employment support and adult learning budgets to better respond to local needs, requiring central government to embrace the risks of devolution and engage with grassroots organisations who understand their communities best. While in Norway, their so-called ‘social workers’ look more like our job coaches, but focus on the need of the person, not the services of the state. And in Denmark, they have experimented with giving local areas full autonomy in service design and delivery.
The good news is that these approaches would not require substantial new funding. As an advocate for local knowledge and networks, I have long supported greater devolution of skills and employment policies to regional authorities. The East & West Midlands Combined Authorities and East Midlands Councils understand our local labour markets in ways Westminster cannot. They know which sectors are growing, which communities face particular challenges and which interventions work in a local, grassroots context.
Devolving responsibility for employment support and adult education makes perfect sense from a business perspective. It would enable agile, responsive approaches that our dynamic regional economy demands, replacing one-size-fits-all national programmes with tailored interventions.
Perhaps the most crucial insight is recognising that health and employment are deeply interconnected. The growing number of people classified as long-term sick represents a failure to create appropriate pathways back to employment that accommodate health conditions. In my businesses over the years, we have found that flexible arrangements, graduated return-to-work programmes and workplace adjustments can enable many individuals with health challenges to contribute productively.
What is needed is a fundamental shift in how we view the relationship between health and work. The current system too often presents a binary choice of either ‘fully fit for work’ or ‘entirely incapable’ – when in reality most people lie somewhere inbetween.
The skills gap in the Midlands is not just about worker numbers, it is about equipping people with capabilities, which our evolving economy demands. In my experience, the most effective training programmes are those developed in partnership between employers and education providers. When businesses can directly shape curriculum content, specify skills needed and offer workplace experience, the results are transformative.
Economic inactivity is not just about monetary costs either, it is about community wellbeing and social cohesion. Employment provides not just income but purpose, structure and social connection. Companies are not just economic entities, they are social institutions that can directly strengthen their communities.
For business leaders, I call for greater engagement with local authorities and skills providers to help develop employment pathways for the economically inactive. Rather than lamenting skills shortages, we should be actively participating in creating the workforce we need.
For policymakers, I would urge bold implementation of such an approach, particularly further devolving employment and skills responsibilities to regional authorities.
And for our communities, I’d ask for renewed recognition of work’s value, not just as a source of income and prosperity, but as a foundation for individual dignity and collective prosperity.
The untapped potential represented by economic inactivity in the Midlands is not just a problem to solve, it is our greatest opportunity for future growth. By combining business innovation, policy reform and community engagement, we can create pathways back to employment that benefit us all.
So let’s try ‘Going Dutch’, or ‘Norwegian’, or ‘Danish’ as part of the solution to addressing our region’s most pressing inactivity challenges.
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