Introduction:
The latest report from the Office of Budgetary Responsibilities (OBR) provides a comprehensive overview of the nation’s economic health. While the report encompasses various concerns, this article focuses on the surge in long-term sickness and its impact on council tax administration, council tax reduction, and local welfare. We examine the historical context, challenges faced by local councils, the disconnection between government policy and reality, fiscal risks, and the need for new social policies to address the implications of long-term sickness on the economy and society.
Historical Context:
In the latter years of the 20th century, the Thatcher governments shifted individuals from the unemployment register to the long-term sick register. Subsequent efforts by Gordon Brown and George Osborne aimed to reintegrate people into the workforce, with varying degrees of success. The OBR report highlights this issue but lacks actionable social policy suggestions, leaving it to parliament to address these risks.
Skewed Perception and Council Challenges:
There is a politically influenced narrative depicts benefit claimants as ‘scroungers,’ amplified by right-wing media outlets. This perception exacerbates the difficulties faced by local councils in providing financial and health support, further compounded by billions of pounds of unclaimed benefits. Because people who have a genuine entitlement to financial support are simply not claiming it. This suggests that OBR’s report understates the problem of worklessness. If this trend continues, pressure on local services will intensify, stretching resources thin and potentially leading to service delivery lapses. Because there will be citizens not getting the support they need and that creates gaps in council tax collection.
The Disconnection and the Need for Social Policy:
The OBR report exposes the disparity between government policy and the reality of long-term sickness, emphasising the difficulties in managing sickness and unemployment alongside growing skills gaps in the labour market. This underscores the requirement for robust social policy to comprehensively understand and address these problems.
Impact of Long-Term Sickness and Economic Inactivity:
Post-pandemic, working-age labour market participation has declined due to health-related inactivity. Around 2.6 million working-age individuals are inactive due to health reasons, with older individuals, those with mental health issues, and low-skilled workers being the largest contributors. The financial pressures caused by this inactivity include escalating welfare spending, lost tax revenue, and increased healthcare spending.
Opportunities for Change and Future Scenarios:
The consequences of long-term sickness and economic inactivity are significant, but there are opportunities for change. The OBR report presents future scenarios where improved working-age participation could decrease borrowing, relieving pressure on public finances. To achieve this, there is a need to reconsider social policies, reshape narratives around benefit recipients, and create supportive frameworks for the long-term sick to reintegrate into the workforce.
Conclusion:
The urgent need for new social policies that bridge the gap between policy and lived experience is apparent. Without intervention, the strain on public resources will intensify, leading to increased debt and impeding recovery. It is crucial to act promptly to address the realities of long-term sickness and employment, ensuring a sustainable and inclusive economy and society.