Improving our nation’s health: a whole-of-government approach to tackling the causes of long-term sickness and economic inactivity

Introduction

The UK is at a crossroads when it comes to the nation’s health. In the aftermath of the COVID-19 pandemic, pressures on the healthcare system have continued to rise despite health spending being at record highs. 

The impact of this pressure is seen in the stark rise in the number of people out of the workforce due to long-term illness. While many countries saw this economic inactivity rise post COVID-19, the UK is alone among peers in seeing it continue to increase – all others have returned to their normal levels or below.

Many thousands of working-age people in England who might otherwise be in stable employment are out of the workforce entirely due to morbidities (in some cases as many as five), requiring coordinated and early intervention. To keep these people in work on their return, there needs to be a holistic and creative future approach to public policymaking that supports this aim. 

Why does this matter? 

Not only does economic inactivity due to ill health have serious impacts on individuals’ wellbeing, creating a social need for action, it also has significant economic and fiscal costs to the economy. As such, tackling the rise in long-term sickness and its impact on employment will undoubtedly be a priority for the next government, whoever may form it. This applies both in terms of what policy is developed as well as how this is delivered by the complex system of national, local and mayoral government. 

However, the solutions are not simple. It is not just a case of throwing more money at the issue, though investment will be required. Too often the public sector is set up to treat the symptoms of a problem rather than an underlying cause. Tackling these sorts of complex issues requires a new approach. The healthcare system alone cannot address the wide-ranging drivers of long-term sickness and ill health. Over 50 per cent of health outcomes are influenced by non-healthcare factors, such as environmental conditions, lifestyle and social networks.  ¹  Despite this, existing efforts tend to focus either on managing the symptoms, largely via clinical interventions, or tweaking the benefits system – neither of which deal with the fundamental drivers of the problem. 

This report surfaces fresh insights on the economic and fiscal benefits of reducing economic inactivity due to long-term sickness

To better tackle the root causes, a comprehensive whole-of-government approach (WGA) is required. This means looking at health as a priority across all areas of policy, with departments, agencies and partners taking a joined-up approach to health that is outcome-first focused. 

This interim report, produced in partnership by the NHS Confederation and Boston Consulting Group, sets out why a WGA to health is needed and how it can be taken forward by a new government. Based on analysis of data from the Office for National Statistics and Eurostat, including previously unpublished data and a detailed economic model, it surfaces fresh insights on the economic and fiscal benefits of reducing economic inactivity due to long-term sickness. It serves as a key example of the type of complex health and economic issues which cannot be tackled by the healthcare system alone. (You can view the full methodology).

This piece will be followed by a larger report, to be published in early autumn 2024, that will provide a series of recommendations across both the short and long term on how a WGA can help tackle complex health challenges across the public sector.

Why is change needed now?

There has been much recent attention on the impact of long-term sickness on employment. However, the conversation often blurs distinct issues and fails to unpack the underlying drivers. We will establish some key facts:

1. That it is sickness and ill health which have driven the rise in those out of the labour force.
2. The conditions and demographics driving these impacts are complex and impacted by several factors beyond traditional healthcare.
3. The UK’s large and persistent rise in those out of the workforce due to sickness is unique among peers.

UK economic inactivity has risen by 900,000 people compared to pre-COVID-19, 85 per cent of which can be put down to long-term sickness

Following a historic low prior to the pandemic, the number of people out of the workforce in the UK has risen by 900,000. There are now 2.8 million economically inactive long-term sick, representing around 30 per cent of the total inactive population. Crucially, while the early post-pandemic days saw a rise in those taking early retirement or remaining in education, these trends have reversed. Now, 85 per cent of this rise in economic inactivity is down to long-term illness (750,000). 

Given the speed and size of this rise, it is important to ask whether it is truly being driven by worsening health. While we will examine this more closely in our full report, there are two key points to note:  

1. First, we found that the rise in sickness is not confined to those out of work, with broader trends of rising reported illness among those in work as well as out of work. The rate of those reporting at least one health condition grew 4.2 per cent across the entire working-age population post pandemic, compared to 6.2 per cent for those who are long-term sick and economically inactive. Similarly, for the entire working-age population, those that report five or more health conditions grew by 8.9 per cent over this period, compared to 9.2 per cent for the same group within the long-term sick and economically inactive. This indicates it is not simply those who are long-term inactive reporting higher levels of sickness but a broader trend of rising sickness and ill health in the population.  
2. Second, the evidence suggests there has not been any obvious change in incentives from the benefits system which could explain the large rise seen in the long-term sick inactive. While we cannot definitively rule out benefits playing some role in the impact, the evidence suggests at the very least it is highly unlikely to account for the large and sustained rise. In fact, individuals receiving disability benefits are £2,800 worse-off a year under Universal Credit compared to the pre–Universal Credits benefits structure.  ²

Prevalence of multiple conditions, especially mental health and musculoskeletal issues, is driving long-term sickness

The rise in long-term sickness is causing people to drop out of the workforce, but what is driving the uptick in sickness, and who is it impacting most?

Two main groups have driven the recent rise in the population of long-term sick economically inactive: 18-24-year-olds and 50-64-year-olds, with the latter accounting for 55 per cent of all inactive long-term sick. The fact that the older group has been a key driver is not surprising (health deteriorates as people age), but the younger end of the spectrum is both surprising and concerning (given this should be the healthiest group in the population). 

Another feature of both groups is the rapid rise in those reporting multiple conditions. Over 40 per cent of the 50-64-year-old demographic report five or more conditions and have been the fastest growing cohort within that group since 2019. However, even more concerning is the rapid rise among those in the youngest age group reporting five or more conditions. This was the fastest-growing segment across all age ranges, seeing an 18 per cent compound annual growth rate (CAGR) between 2019 and 2023. 

In terms of conditions, musculoskeletal (MSK) and mental health issues account for around 50 per cent of all those reported by the long-term sick economically inactive. Data shows that growth in mental health conditions in this population extends beyond the pandemic impact, steadily rising since 2017/18 and remaining the most reported condition among 16-24 and 25-49-year-olds.  ³  The previously steady downward trend in MSK conditions reversed to growth post COVID-19, particularly driven by those age 50-64. 

The UK is an outlier, with rising economic inactivity compared to its peers

The final question posed by our analysis is whether all of this could be a result of COVID-19 and therefore common to many countries. However, the data and evidence show that this is not the case and that the UK is an outlier compared to similar countries. Figure 3 shows that while many European countries saw a rise in economic inactivity during the pandemic and in the immediate aftermath, they have all seen levels fall back to previous levels or below. 

Levels and drivers of inactivity vary from country to country (for example, by female and young people’s labour force participation), so there are nuances when comparing the UK to peers. For example, while Italy has higher inherent levels of inactivity (at 33 per cent), it is driven by high levels of female inactivity (42 per cent vs 29 per cent EU average) with an emphasis on ‘family’ as one of key reasons.  ⁴  Therefore, while the UK has one of the lowest levels of overall inactivity, this is not the best metric to look at as it is driven by ingrained wider social and cultural issues. This is also true when comparing historic levels in the UK. 

The UK now has the largest share of inactive due to sickness in the total population

While similar levels of inactivity were seen a decade ago, the key factor is not the absolute level but the marginal change, what has driven that change and therefore what it means for economic output. 

Since 2021, the UK has shown the fastest growth in both the overall level of economically inactive and those who are economically inactive due to long-term sickness (Figure 3). The UK now has the largest share of inactive due to sickness in the total population, at 7 per cent. These are trends and drivers which are not seen in any other peer country nor seen historically in the UK. 

Health goes beyond just the NHS and healthcare system

Solving this sort of challenge is complex. In his review, Fair Society, Healthy Lives’ (the Marmot Review),  ⁵  Prof Sir Michael Marmot noted: 

His review focused on what are now well-established social determinants of health, including:

• inequalities in early child development and education
• employment and working conditions
• housing and neighbourhood conditions 
• standards of living
• the freedom to participate equally in the benefits of society. 

It is widely accepted that across all domains of a person’s life and contribution to society, these determinants of health, most of which remain out of an individual’s control, will impact their quality of life and life expectancy. This can be through a direct impact of national or local policy (for example, poor or no housing), indirect impact (for example, in relation to how investment and training funding is allocated across regions) or consequential impact (given the impacts on a person’s choices, opportunities or behaviours that result from existing inequities). For example, the public sector already accepts that employment is one of the most important determinants of physical and mental health – the long-term unemployed have a lower life expectancy and worse health than those in work.  ⁶

There is much that affects an individual’s health which lies outside of the purview of both the NHS and the Department for Health and Social Care (DHSC). As such, improving the health of both an individual and the population requires a broader approach than the healthcare system alone. Economic inactivity driven by long-term sickness is a prime example of where the wider social determinants of health mean that solutions directed solely through the healthcare system (or the benefits system, for that matter) are unlikely to be successful. 

Example citizen journey highlights depth and breadth of cross-government touchpoints underpinning health

This is reinforced by the fact that when people engage with the public sector healthcare system, they touch a wide array of different departments and organisations, not just the NHS or DHSC.

To demonstrate this, we have developed two citizen journeys to highlight how someone who is long-term sick and economically inactive might interact with the healthcare system. We have drawn our examples from some of the fastest-growing segments of the long-term sick, economically inactive population: 50-64-year-olds with five or more comorbidities and 18-24-year-olds with a single health condition.

These citizen journeys highlight three key points:

1. Of the multiple factors that influence an individual’s health, many sit outside the direct control of the NHS or DHSC.
2. Frequently, the range of departments that provide services to long-term sick, economically inactive people can grow significantly over time (and, as such, so will the cost), meaning early intervention to prevent this is particularly important. 
3. It can be incredibly complex for the individual to know how to navigate the web of services provided by different departments, meaning they often fall through gaps or fail to properly make use of the help on offer.

Citizen journey 1

Citizen journey 2

Citizen Journey 1 illustrates the case of a 55-year-old with five comorbidities, detailing their journey as they leave the workforce and their health deteriorates. It highlights the rapid rise in their interactions with multiple services over time, revealing several critical inflection points. Early and integrated interventions at these points could potentially prevent further health decline. For example, identifying and upskilling an individual at high risk of digital exclusion could improve their access to health and other government services. Despite numerous services involved, they ultimately find themselves in secondary care with multiple comorbidities, further from the workforce than when they first engaged with employment services.

Citizen Journey 2 shows a 24-year-old with a single mental health condition. This example illustrates how even a single health condition, not adequately addressed for the individual, can escalate into more significant problems. For example, a lack of flexible working arrangements can exacerbate health issues and limit ability to fully engage with health services, representing an important inflection point. While their interactions with multiple services continue to rise, their reasons for ill health and inability to work are multifactorial, necessitating a coordinated approach across services. Providing the right support, from the right team at the right time, could allow effective intervention to alter the trajectory of an individual's journey and return them to full health and to the workforce.

Taken together, the journeys illustrate the interconnected nature of employment, housing, transportation and social support when it comes to those who are long-term sick economically inactive. Addressing complex issues such as the rise in long-term sick inactive requires a whole-of-government approach, in which various parts of the public sector work together to make timely interventions that improve health outcomes.

What are the economic and fiscal benefits of tackling the problem?

We estimate that reducing long-term sick inactivity could boost the UK’s GDP by £109-177 billion and fiscal revenue by £35-57 billion over the next five years.  ⁷  At this stage, these estimates demonstrate the ‘size of the prize’ for addressing the issue, rather than savings derived from a specific policy to tackle it.

These estimated benefits stem from two factors:

1. Reintegrating 0.3 to 0.6 million people who became long-term sick inactive from 2019 into the labour force.
2. Reverting long-term sick inactive growth rates back to their long-term trend of around 0 per cent, by preventing the active population from entering inactivity due to sickness.  ⁸

It is often noted that those who are long-term sick economically inactive have been part of this group for some time and as such it is hard to reintegrate them into the workforce. However, we believe that the last few years have seen a material change in the type of people becoming long-term sick inactive, partly due to the speed of the rise in this group. Based on ONS data, we identify a low, mid and high case for the number that could be credibly reintegrated into the workforce:

1. In the low case, we see 300,000 being reintegrated, covering those who have come into long-term sick inactive directly from the workforce or from being temporarily sick in the past few years.
2. In the mid case this rises to 450,000, through including those who were previously students or retired but shifted to long-term sick, suggesting this became the main reason for inactivity and that they could (and might want to) return to the workforce if it were tackled.
3. The high case sees the number rise to 600,000, by including those that became long-term sick from being inactive due to long-term caring responsibilities. Since long-term sickness became their primary reason for inactivity, solving this could see them return to the workforce, not least since they may not have continued their caring responsibilities while themselves unwell. 

Based on this we estimate that achieving the two aims of reintegration and prevention could unlock approximately £35-57 billion in fiscal funds over the next parliamentary term to 2029. This is a cumulative impact, with gains accelerating as more people are reached by the efforts to reintegrate and maintain in the labour force. By 2029, we estimate the annual impact to reach £19 billion in the mid-case scenario. These gains come primarily from:

• improved income tax receipts from getting more people into the workforce (£3 billion in year five)
• reduced benefits spending due to higher incomes and therefore less reliance on benefits (£8.5 billion)
• lower healthcare spend on this group since their health would have improved (£1.2 billion)
• wider secondary fiscal benefits from improved economic output boosting tax receipts (£6.8 billion).

If reintegration and prevention are maintained, then the fiscal benefit will continue beyond 2029. In such a scenario, we would see fiscal gains of at least £19 billion (mid case) every year thereafter.

It could also boost economic output by £109-177 billion over the next five years, subsequently generating an additional £62 billion in GDP annually from 2029 onwards in the mid-case scenario, representing 2 per cent of real GDP. This stems from:

• direct boost to economic output from having an additional 450,000 people in the workforce (£31 billion in year five)
• an indirect benefit from the knock-on effects of the increased economic demand from these additional workers (£20 billion)
• wider economic impact of reinvestment of fiscal savings (£11 billion).

The estimated ‘size of prize' of tackling long-term sick inactivity is significant in any context. However, in the context of a fiscally challenging outlook for the UK, it signifies a genuine opportunity to not only improve population health and the wellbeing of many, but also to improve the UK’s fiscal position and help drive economic growth. 

The estimated benefits also demonstrate a broader lesson – the fiscal and economic benefits of tackling some of the structural economic and health challenges facing the UK are likely to deliver larger benefits than tinkering with fiscal policy. They also highlight that some upfront investment – either in time, money or broader resources – would likely be worthwhile to enable this challenge to be tackled for both health and economic gains.

Barriers to cross-government working

While the estimated benefits of addressing this issue are clear, our focus now shifts to how it could be tackled. A whole-of-government approach (WGA) has long been recognised as a useful tool with which governments can drive change in complex, wide-ranging issues such as health. However, it is difficult to find a universally successful application of this approach, in the UK or elsewhere. There are plenty of reasons for this – not least, it often makes sense for government or the public sector to operate in well-defined silos. [9]

For WGA to be truly successful, it must traverse silos at both horizontal (within central government) and vertical (across levels of government) levels. This means overcoming a series of institutional and cultural barriers. Drawing from existing literature and insights from a series of expert interviews with senior stakeholders across the policy, healthcare and government space, we have mapped out the most common barriers. Details of these barriers and further context will be included in our full report, but can be summarised in three key themes:

Lack of common purpose: Often there is a lack of common purpose embedded across the public sector, with an absence of long-term vision, senior sponsorship or buy-in for objectives. For complex cross-government issues, there needs to be an accompanying common purpose to provide clarity on the role each part of the public sector is playing and the problems they are trying to solve. Without this, each part will focus on its own local priorities and delivering more immediate impact, as opposed to playing a smaller role in tackling a larger problem. For example, the multitude of departments which can potentially help to improve health outcomes will not do so unless they are given clear directives and shown how important their role is to a wider cross-government objective. There is also often a challenge around continuity. Politicians often move roles before objectives have been reached. A clear and consistent common purpose will help ensure continuity of aims and strategy when this happens. 
 

Poor collaboration: Too often there is little incentive for different parts of the public sector to collaborate on cross-cutting issues. As it stands, one part of the system has little reason to try to solve a problem (or part of a problem) which they see as someone else’s job. Perverse risk and reward systems disincentivise collaboration and mean organisations do not get credit for contributing to cross-cutting aims. For example, currently it is not obvious why one department would spend their budget on improving health outcomes when they see this as an issue for DHSC and NHS, even if they have the ability to drive impact in this space. Similarly, collaboration on smaller, impactful initiatives is also hampered by using a narrow lens to assess the role of each government department in the current system. This prevents quick wins which might combine multiple solutions across departments for greater impact – for example, reducing homelessness through employment as well as housing policy at local level in response to local needs. 
 

Funding and resourcing silos: The current funding approach is particularly ill suited to complex problems which span multiple parts of the public sector and often require sustained long-term investment to address. Overall, funding is not dynamic or linked to performance, impact or strategy. There is very little ability to pivot funding towards specific interventions (even if they might save money in the longer term), to move money between pots of funding according to results, or to redeploy funding locally. Despite this, we also find that often funding is too short term. For example, in health, there is a resource-intensive funding landscape that favours those able to bid, not those with highest need. As part of this, there is also a proliferation of small grants that are very specific and short-term, making funding strategic long-term programmes difficult. Poor data gathering and sharing means funding and resources cannot be deployed on need and effectiveness of interventions is not fully evaluated.

It is clear, therefore, that to drive a new whole-of-government approach across all levels of the public sector, actions should directly address these three themes. 

Chapter footnotes

9. Much work has already been done on where these silos exist and how government could be working collaboratively – see for example the Public Accounts Committee report on cross-government working and the National Audit Office’s ‘Cross-government working: Good practice’ guide.

Day-one action to institute a whole-of-government approach

Whoever forms the next government, tackling the rise in long-term sickness and particularly its impact on economic inactivity, needs to be a priority. The best way to do this is to drive a whole-of-government approach to invest resources most efficiently and intervene at the right stage. 

To ensure that cross-government work on health becomes a long-term success, the new government may need to take action from day one. Early steps can help to ensure the initiative is considered among other competing commitments that are prioritised at the formation of the government. At the same time, setting up whole-of-government collaboration and changing existing ways of working and culture will take considerable time – an earlier start could ensure earlier outcomes.

Below we set out three immediate steps to set up a whole-of-government approach to health. These aim to start resolving three key barriers to cross-government working: lack of common purpose, poor collaboration, and funding and resource silos. Combined, they could create the momentum and underpinning for the new government to introduce further operational solutions and policies over time. In our full report, we will set out a more detailed series of possible follow-up actions which ensure the initiative delivers results over the long term. 

Step 1 – Define a bold and ambitious goal to drive common purpose across the public sector

Aim: Instil the common purpose across stakeholders to get necessary traction and buy-in across the public sector to jointly solve the challenge. Clearly define long-term vision and near-term success, coupled with strong senior sponsorship to unite all levels across one goal. Illustrate the benefits of each department’s involvement and ensure the single vision is top priority for all. Establish the case for change and generate buy-in at all levels to try to jointly solve this challenge.

Step 2 – Institute new structures to change the way cross-government collaboration happens and help to deliver these new priorities

Aim: Drive better collaboration across government with novel accountability structures to ensure efficient delivery of cross-cutting objectives. Incentivise and reward collaborative working both horizontally and vertically and promote shared learning forums to disseminate and discuss best practices. 

Step 3 – Drive development of new evidence base to underpin the creation of more joined-up funding and resources

Aim: Break down the existing siloed and non-dynamic approach to funding and resourcing, which is cited as major blocker for cross-government working. Leverage and elevate, rather than dismiss, HMT’s unique position as one of the few exhibiting truly cross-government functions. Generate an HMT evidence base and proof of concept to underpin the establishment of novel funding mechanisms that allow longer funding horizons for comprehensive planning commitments and flexibility for necessary reallocations. In the future, these funding mechanisms could incentivise cross-governmental collaboration, allocating sufficient resources to support objectives. Identify departmental data held and formulate strategy for integration where beneficial to collaborative working.

Conclusion

The UK faces a complex set of health challenges. This is exemplified by the large, sustained and unique rise in people who are long-term sick and economically inactive. Addressing health issues such as these can deliver significant fiscal and economic benefits, but doing so requires a different approach. It means taking a truly whole-of-government approach targeted at better addressing the root causes of illness and finding a more effective point at which to intervene. Whoever forms the next government, it will be vital for them to take quick action on day one to get the ball rolling and seize the opportunity to both improve health outcomes and boost economic growth in the UK. 

About us

NHS Confederation

The NHS Confederation is the membership organisation that brings together, supports and speaks for the whole healthcare system in England, Wales and Northern Ireland. The members we represent employ 1.5 million staff, care for more than 1 million patients a day and control £150 billion of public expenditure. We promote collaboration and partnership working as the key to improving population health, delivering high-quality care and reducing health inequalities.

Boston Consulting Group

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