Switch £6 billion from Whitehall to town halls to get stay-at-homes back to work and restore social order - CSJ report

Some £6 billion of government money should be switched from Whitehall to local government across the country in a bid to tackle economic inactivity driven by the post-pandemic surge in people of working age quitting the labour market, according to a major new cross-party study by the Centre for Social Justice (CSJ). 
 
The money – one of the biggest ever transfers of cash from central to local government – would be used to bring employment support and adult educational services far closer to their potential users, with local job coaches and grassroots charities taking the lead in getting people suffering from physical and mental ill health into work. 
 
The proposal comes against the background of the August riots which led to more than 1000 arrests and engulfed around 20 towns and cities. CSJ research shows a strong link between violence and disorder and levels of deprivation.  
 
Two thirds of the riot areas would disproportionately benefit from the CSJ's devolution of employment support and adult education because they have higher numbers of economically inactive people who could or want to work (see chart 1 in notes to editors below). 
 
The number of economically inactive people has jumped 400,000 in the last year and now stands at 9.4 million 16-64 year olds.  Over 3 million of the total are people of working age signed off with temporary or long-term sickness, despite research by the CSJ revealing that nearer 700,000 people in this cohort, on inactive working age benefits, say they want to work.   
 
The proposal comes from the Social Justice Commission set up by the CSJ which is made up of leading figures from across the political spectrum, such as Labour mayor of Greater Manchester Andy Burnham, Government Minister Sir Stephen Timms MP, former Conservative MP Miriam Cates, former leader of the Liberal Democrats Tim Farron and former Bank of England governor Lord King. 
 
The Commission is chaired by Martin Ivens, former editor of The Sunday Times and its new report A United Nation is published today Sunday September 1, 2024 and will be presented at a press conference on Tuesday attended by the Commissioners at CSJ headquarters in London.
 
The Commission is backed up by a new CSJ report – Going Dutch - which shows how devolving employment support and associated services along the lines pioneered in the Netherlands could get 700,000 currently economically inactive people into work.
 
Mr Ivens said: “Getting people off sickness benefit and into work is a vital national priority. Our report centred a big cash switch from the centre to the provinces is the only way to make a difference.”
 
The Dutch approach, which largely splits employment support and welfare, is three times more effective than the UK in helping economically inactive people into work (See chart 2 below). 
 
Going Dutch also warns that unless action is taken to reverse the tide of people quitting the labour market for health reasons, the taxpayer will face a colossal bill of up to £12 billion additional spending over the next five years – of which up to £1.5 billion is made up of lost tax receipts. 
 
Late last year, in a prescient report entitled Two Nations: The State of Poverty in the UK, the Social Justice Commission warned that the UK was in danger of sliding back into the “Two Nations” of the Victorian era marked by a widening gulf between mainstream society and a depressed and poverty-stricken underclass. 
 
While violent attacks on the police, the public and property can never be justified, the CSJ believes that its Two Nations report prefigured much of the rioting that scarred the country for six days. 
 
It found millions of people leading lives marred by family fragility, stagnant wages, poor housing, chronic ill-health, and crime. 
 
It argued that the most disadvantaged in Britain are no better off than 15 years ago – the time of the financial crash – and cites evidence that sickness pays and for many, the jump from welfare into work is not worth it.  
 
The CSJ study also found that the pandemic lockdowns had a catastrophic effect on the nation's social fabric, especially for the least well off, where the gap between the so-called “haves” and “have nots” was blown wide open.  
 
Commenting on the Social Justice Commission's new report, A United Nation, Andy Burnham, Mayor of Greater Manchester, said: 
 
“If we want economic growth that benefits people and places, we can start by shifting power out of an overheated centre and back into the hands of local communities. 
 
“Greater Manchester is showing that when it comes to something like public transport, it not only makes sense to empower local decision makers – it delivers better results. Why can't we do the same with employment support, by tailoring a smarter, more humane approach to helping people back into work? The current system simply doesn't work for people, and often leaves them feeling worse, damaging confidence and self-esteem. You only need to look at the Dutch example to see the impact it can have – reducing economic activity three times faster than the UK. This kind of approach can change lives and lift communities.”

The Social Justice Commission's new report, A United Nation, offers a string of solutions to the country's economic and social ills. It is based on consultation with over 300 frontline charities, social enterprises and local organisations and polling of over 6,000 people. 
 
The reports key recommendations include: 
 
 Make work pay 

• Devolve employment support services and adult education to local authorities to help match those furthest from the labour market with jobs.

 Create Safe Streets 

• Increase the number of officers in Neighbourhood Policing back to 2017 levels, adding approximately 5,260 more officers across the country.  

 Build Stable Communities 

• Execute an ambitious, workable plan to significantly boost the supply of all types of homes and provide secure, appropriate, high-quality rented accommodation including in social homes that allows tenants to put down roots in the community. 

 Support Fragile Families 

• Introduce Family Credit, giving households more choice and flexibility when it comes to childcare options. Despite the large price tag to the current childcare system, it fails to put the best interests of children first or do what the majority of families want it to.  

 Champion the Lost Generation 

• Give every state-educated secondary school a Right to Sport of 2 hours of sport per week. This should be part of an extended school day of up to five hours extra each week for enrichment activities provided by community groups.

Underlining the importance of shifting resources from the centre to the grassroots, the report adds: 

 “Any solution must start with deep, trusted, community-based relationships, with local people, charities, businesses and agencies, working with people they know.  
 
 “There is no reason public money cannot fund Family Hubs set-up by charities. There is no reason Mayoralties, Combined and Local Authorities should not have complete control over the employment support and adult education services budget. There is no reason why public money cannot partner with private philanthropy to support youth infrastructure.  
 
“No-one comes away from the public sphere thinking we need to further centralise power. There is huge support for this radical humanisation of public service delivery.” 
 
Rt Hon Sir Iain Duncan Smith MP, Founder and Chairman of the CSJ, welcomed A United Nation: 
 
“This summer's riots have sadly proved the CSJ's belief that we live in one country but two nations.  Violence is never justified as a response, but what we have seen is a wake-up call to Westminster to listen to those who feel left behind and ignored.
 
“It is in these communities suffering from poverty and social breakdown, where the disenchantment with national politics is greatest.
 
“They want, as the CSJ has pointed out, not to be lectured or accused, but to be listened to and for politicians to act on the root causes of their concerns about the poor quality of their lives.   
 
“The CSJ's cross-party Social Justice Commission has done a great service. A United Nation, sets out a suite of recommendations to reunite our country. I am immensely grateful to the Social Justice Commissioners under the Chairmanship of Martin Ivens for their unflinching inquiry into what life is like for those who are struggling the most in our nation and what to do about it.” 
 
ENDS 

Notes to editors:

Chart 1 – 14 out of 20 places that had riots have a percentage of economically inactive working age people who could or want to work greater than the national average. All but one of the places that saw disturbances on the chart above rank in the top third of local authorities in Great Britain in terms of per cent of economically inactive working age people who could or want to work.

Chart 2 - UK vs The Netherlands: Cumulative change in rate of economic inactivity of 15-64 year olds, 2011-22.