Helping those who are ‘economically inactive’ will be key to growth - Sir Stephen Houghton

Equally, growing existing businesses is problematic. All of these require a bigger workforce and one with the requisite skills.

Increasingly economists are saying the biggest obstacle to growth is not just the planning system it is that lack of a workforce. In Barnsley our headline unemployment figure is 2.9 per cent and for the first time since the pits closed it seems we have more jobs than those out of work.

So where are the workers coming from?

Following Brexit and without access to European labour markets, attention is turning to the so-called ‘economically inactive’. Across the UK some 22 per cent of adults of a working age are in that group. In Yorkshire and the Humber it is 24.2 per cent, in Barnsley it’s over 27 per cent, some 42,000 people. Those headline unemployment figures mask a different reality for many people and places.

It’s now recognised that if the Government is to achieve its growth ambitions, many of those currently described as inactive will have to be brought back into the labour market.

The problem thus far has been a lack of a serious understanding of the ‘economically inactive’ group and how to effectively and systematically help them into work and to sustain them there when they do. Thus, the programmes of support currently in place are not as effective as they could be and the use of benefit ‘sticks’ risks simply pushing people further into poverty or the shadow economy.

Over the last 18 months in Barnsley we have tried to research this issue in depth and to bring new solutions to the problem.

Chaired by former Labour Minister Alan Milburn, our Pathways to Work Commission, brought together leading experts from home and abroad alongside our own Council’s expertise.

Our report launched this month proposes substantial change both locally and nationally.

Our work segments that ‘inactive’ group and starts to understand their potential for a return to the workplace.

Once we narrow that down we estimate around 20 per cent, some 8,000 people could potentially come back into the labour market. Within those we have some 4,000 who are more than willing now to access employment and could be targeted early on.

Our work also recognises the complexity of challenges these people face, be they health or disability issues, caring responsibilities or skills and transport challenges, and in some cases all of these things.

It suggests which people to focus upon and how they can be supported effectively in a new system wide approach.

It also explains why current support programmes are not as effective as they could be. They are too short term, fragmented and not sufficiently client focussed and that we need to change to new system wide coordination and personalised health and skills support. The reports also recognises this as both a supply and demand issue. As well as supporting individuals we need to support business to change.

Many of the people we have met have complex needs and challenges. If they are to work, the ways they are recruited and employed will have to change and be flexible. That is not easy for business and we will have to help them.

We also need to ensure those currently in work don’t fall into inactivity if their health becomes an issue.

Crucially we need to work more closely with schools and communities to get our young people more work ready – to reduce the flows into inactivity as soon as possible. This is particularly true for our most deprived communities.

Government also needs to align health services to support employment and to create further work incentives in the benefit system.

So we have developed a new operating model which if the Government were to partner with us could bring the change we need.

In Barnsley we have set ourselves a target of getting two and a half thousand people into work over a four year period; if such a model could be delivered.

It sounds modest but if successful would reduce the benefits bill in Barnsley by £28m a year and put over £39m extra into the local economy.

In delivering a South Yorkshire model we believe well over 10,000 people could be returned to work over a similar period with even bigger fiscal and economic gains.

Repeating this nationally would make a significant impact on the Government’s growth ambitions and could save the exchequer up to £8bn.

Sir Stephen Houghton is the leader of Barnsley Metropolitan Borough Council.