Since the pandemic, much of the workforce have yet to go back to a physical office. More of a problem is that some have opted not to go back at all. Economic inactivity is a growing headache for the government, driven by people aged 50-64 leaving the labour market. Many of these older workers have based their decision on long-term health challenges, a frustration with jobs that were no longer fulfilling or early retirement. We need these workers back.
Tackling economic inactivity is not one big problem. Headline statistics at the national level disguise a range of hyper-local issues. The barriers to re-entering the labour market in post-industrial towns in the Midlands and the North differ hugely from coastal towns in the South. Even within areas there are big differences in the types of work available, the skills gaps that need to be filled, the long-term health challenges among the older population, and the types of support programmes that have a chance of landing well. What works in the former mining town of Mansfield in Nottinghamshire probably won’t work in wealthier West Bridgford, which is less than 20 miles away but has an average life expectancy almost seven years higher.
This is where local leadership comes in. Mayors and councils are uniquely positioned to design and commission services that respond to local challenges. They have strong networks with local employers, schools, colleges and health providers. They employ teams who live and grew up in the local area. They can experiment and innovate with smaller contracts and nimbler providers. And they have real skin in the game, given their long-term commitment to their place.
But local leaders are too often hampered by the “Whitehall knows best” approach. Jobcentre Plus branches take their direction from Westminster politicians instead of leaders rooted in their communities. Employment support programmes are commissioned based on national guidelines not local needs. Even “local” skills improvement plans still somehow need sign-off nationally, from the Secretary of State for Education.
In the last year the government has made great progress on devolution. New deals have been signed with areas including the East Midlands, North Yorkshire, and Cornwall. Just after Christmas another new deal was struck to create a Mayor for the North East, almost two decades after New Labour’s abandoned attempts to empower the region. In the early months of this year “trailblazer” deals will be announced with Andy Street in the West Midlands and Andy Burnham in Greater Manchester: a real example of levelling up in action.
Despite this, there is a risk that the potential of devolution to tackle economic inactivity isn’t fully realised. In previous rounds of negotiations to secure devolution deals, two departments have always been most reluctant to strike ambitious agreements: the Department for Education and the Department for Work and Pensions. Officials have been particularly nervous about ceding control over funding pots and diluting their ability to direct activity. Previous rounds of ministers have been too quick to heed their warnings and often pushed back against proposals from local areas.
This mindset misses the big devolution opportunity. Ministers in both the Department for Work and Pensions and the Department for Education, relatively newly appointed, have a huge amount to deliver before the next election. There is no way they can do it alone. Devolving power to local leaders isn’t a zero-sum game where power is ceded from the centre. It’s about bringing in reinforcements, with the levers to help achieve government goals.
Why not task Andy Burnham with tripling the number of over 50s in adult skills programmes across Greater Manchester over the next 18 months — and agree that he’ll be brought in front of the education select committee to report on progress? Or agreeing an ambitious plan with Andy Street to massively expand employment programmes to recruit older workers into healthcare, using expertise across colleges and universities in the West Midlands? Why not empower the new East Midlands deal even further so local leaders can genuinely change the employability landscape, raising the UK’s productivity and bringing money in to the Treasury as well as boosting life chances where it’s most needed?
If we’re going to combat economic inactivity, this is the radical pro-devolution mindset we need. Ministers need to consider how mayors and councillors can help them get things done, not see them as a hindrance. It’s the outcomes that matter, not who gets the credit.
Politicians in towns and cities across the UK have the capacity and understanding to get economic inactivity down and economic growth up — they just need Whitehall to give them the tools for the job.
Adam Hawksbee is Deputy Director of think tank Onward and Ben Bradley is Conservative MP for Mansfield and Leader of Nottinghamshire County Council
