Britain sliding ‘into economic crisis’ over £85bn sickness bill, ex-John Lewis boss warns

The number of sick and disabled people out of work is putting the UK at risk of a “crisis of economic inactivity” that threatens the country's prosperity, according to a new report.

There are now 800,000 more people out of work due to health problems than in 2019, costing employers £85 billion a year, according to a review by former John Lewis boss Sir Charlie Mayfield.

Without intervention the problem could get worse but Sir Charlie, who will lead a task force aimed at helping people get back to work, said it was “not inevitable”.

The move was widely welcomed, but some business groups said Labour's labor rights bill included some barriers to hiring people with pre-existing conditions.

One in five people of working age were unemployed and not looking for work, according to the report, which was commissioned by the Department for Work and Pensions but produced independently.

Without intervention, another 600,000 people could leave work for health reasons by the end of the decade.

Sir Charlie said illness costs employers £85 billion a year through issues such as lost productivity and sick pay, but it also damages the wider economy.

“Work is generally good for health and health is good for work,” he told BBC Breakfast.

He added that the rise in cases was being driven by a “spike” in mental health problems among young people and musculoskeletal problems, aches and pains in older people, causing them to leave work.

“For employers, illness and turnover bring disruption, cost and loss of experience,” he said. “For the country this means weaker economic growth, higher social care costs and more pressure on the NHS.”

By some estimates, inactivity due to illness costs the UK economy £212 billion annually, or almost 70% of income tax, through lost output, increased welfare payments and additional burden on the National Health Service.

Independent Office for Budget Responsibility predicts health and disability benefits bill only for working-age people this is expected to rise to around £72.3 billion in 2029–30..

He said people could be encouraged to continue working if health was seen as “a shared responsibility between employers, workers and health services”.

Sir Charlie added that his taskforce will work with GPs, who say they find it difficult to judge whether a person is fit to work while they are ill, but patients are asking them to issue sick leave.

The report comes as the Government tries to move forward with the Employment Rights Bill, which some businesses say it will curb growth.

The proposed new law includes the right to guaranteed working hours and tightens zero-hours contracts without a job offer.

Retailers understand the importance of supportive workplaces, British Retail Consortium chief executive Helen Dickinson said, adding that many were already investing in programs to support workers with ill health or disabilities.

However, she said the government's goals and policies such as the workers' rights bill were “conflicting with each other.”

“By encouraging employers to invest in workforce health and provide flexibility, they risk making it more difficult,” she said.

“As it stands, the Work Rights Bill will make it difficult for retailers to continue to offer as many important flexible jobs as possible.”

Chancellor Rachel Reeves is also committed to guaranteed paid work young people who have been unemployed for 18 months.

Those who do not accept the offer may be denied benefits.

Loz Sandom has mental and physical health problems that make it difficult for him to find work, and the last time they worked was a year ago.

“I'm ready to do this job, and I want to. I want to get a job,” said the 28-year-old, who has a degree in illustration and previously worked as a digital marketing executive.

With the support of the charity Scope, Laws is looking for an employer willing to make the changes they need in the workplace.

Laws said part of the problem was that employers did not realize they had a “responsibility to make reasonable adjustments.”

“It's such a shame because they are missing out on so many wonderful people with disabilities who can do amazing work.

“And I don’t blame employers entirely. They need support too,” Laws added. “There are things that can be done to help employers, to help save people.”

In response to the report, the government announced a major partnership with more than 60 companies, many of them large employers, to “tackle the rising tide of ill health that is pushing people out of work.”

Companies include Tesco, Google UK, Nando's and John Lewis.

Over the next three years, they will “develop and improve approaches to workplace health” that aim to “reduce sickness absence from work, increase return to work rates and increase disability employment rates.”

The government intends to turn these changes into a voluntary certified standard by 2029.

Speaking to the BBC, Work and Pensions Secretary Pat McFadden said the report was “a win-win for employees and employers as it aims to keep people with illness or developing disability issues in work.”

“It's in the interests of employers because they are good, experienced staff, and it's also in the interests of employees because most people want to stay in work if they can.”

Ruth Curtis, chief executive of the Resolution Foundation think tank, said: “The review pinpointed a culture of fear, lack of support and structural barriers to work as key challenges that must be overcome to turn the tide on the UK's problem of economic inactivity, which is currently heading in the wrong direction.”

The CIPD, which represents HR professionals, has welcomed the government's vision for a preventive approach to illness in the workplace.

But its chief executive Peter Cheese said: “The success of the report will depend on the extent to which these recommendations are understood by businesses to achieve positive results and supported by policymakers at national and regional level.”

Dr Roman Raczka, president of the British Psychological Society, welcomed the shift towards “rehumanising the workplace” but noted that “not everyone will be clinically well enough to consider returning to work”.

“While employment can improve a person's mental health and wellbeing in certain circumstances, it is vital that we take a thoughtful approach to those who are too ill to work.

“The workplace itself can be a major cause of poor mental health.

“Those who become ill deserve timely access to safe and compassionate care supported by psychosocially informed mental health professionals.”

With additional reporting by Erica Witherington.