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ALEX BRUMMER: Inactivity in the workplace costs us dearly


ALEX BRUMMER: Inactivity in Britain’s workforce will be a major problem for the next occupants of 10 Downing Street

BBC presenter Huw Edwards is far from alone in dealing with mental health issues. 

In its latest report on the prospects for Britain’s public finances, the independent Office for Budget Responsibility (OBR) homes in on the surge of mental health problems, arguing it is responsible for half the rise in medical-related withdrawal from the workforce since the pandemic.

Overall health-related inactivity in the workforce climbed to 440,000 in the three months to April 2023 and now exceeds the post-Covid level of 350,000.

There are an astonishing 2.6m working-age people (6.1 per cent of the population) outside the labour force for medical reasons.

The consequences are terrifying for the next occupants of 10 Downing Street.

Timebomb: Overall health related inactivity in Britain’s workforce climbed to 440,000 in the three months to April 2023 and now exceeds the post Covid-19 level of 350,000

Timebomb: Overall health related inactivity in Britain’s workforce climbed to 440,000 in the three months to April 2023 and now exceeds the post Covid-19 level of 350,000

It will contribute to chronic labour shortages (there are still 1m vacancies), drives up the wages of those in work and makes the battle against inflation harder.

Ill health will add £6.8billion to welfare bills in the 2023-24 fiscal year and deprive the HMRC of £8.9billion of tax income.

In what may be a shock to ginger groups demanding more cash from the public purse, the OBR suggests the generosity of the benefits system, from universal credit to disability and other benefits, has made it easier to sit on the sofa or walk the dog than face meagre income growth.

The combination of hefty NHS waiting lists – striking doctors please note – and an over-generous and easy-to-access benefits system means that for great slugs of the population work no longer pays.

The OBR fiscal report as a whole will not be very encouraging for Labour. It is fine for Sir Keir Starmer to promise fabulous new green jobs but if economic inactivity continues there will be no one, unless doors open to large-scale migration, to do them.

Looking at the OBR budget scenarios it is easy to see why Labour’s shadow chancellor Rachel Reeves is committed to an iron grip on spending.

The UK faces a triple whammy of an ageing population, lost fuel duties as the electric vehicle revolution gathers momentum, and higher defence budgets as tensions in Europe and the Pacific heat up.

Any hopes of reducing current debt levels, close to 100 per cent of total output and the highest in 60 years, look bleak.

The solution is to grow the economy by making investment and entrepreneurship more attractive by cutting taxes – and by delivering on post-Brexit pledges of game-changing free trade deals with the world’s fastest-growing economies.

Why are we waiting?

Home truths

Barriers to housebuilding in the UK should never be underestimated, which is why successive governments fail to meet aspirational targets.

Doubtless Sir Keir will meet the same fate even if he manages to smash planning barriers and concrete over the green belt. 

The late 1950s and 1960s Macmillan Tories managed to hit targets because of the German gift of bomb sites and the birth of tower blocks, many of which later became dysfunctional.

Just how intractable a problem housing has become is evident from the update by our largest residential builder, Barratt.

By historic standards, mortgages are no more expensive than before the 2008 great financial crisis and well below the late 1980s and early 1990s. 

Even with the withdrawal of best buy fixes the deals on offer are infinitely greater than when former building societies dominated.

Headlines about soaring two-year fixes as the Bank of England has ratcheted up interest rates have acted as a behavioural barriers. 

First-time buyers retreated at Barratt by 32 per cent in the year to June. It is not clear this is what the Bank of England intended.

It hoped to squeeze the consumer but the May GDP number, down 0.1 per cent, and buoyant June retail sales show limited impact.

Instead, Barratt is pulling back on its plans, and shares across the whole sector are plummeting. Not a great result.

Sterling bonus

In the great battle against inflation, the Bank of England has a new weapon.

Sterling has advanced from a low of $1.03 against the dollar to $1.31 in latest trading as traders back Britain’s resilience and the prospect of higher interest rates.

A stronger exchange rate means cheaper imports, especially oil and gas – all priced in dollars. Onwards and upwards.



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