Five ways to get more people back into work after the budget

In Wednesday’s budget, the government unveiled a series of measures aimed at tackling economic inactivity and getting more people into work. Among the key initiatives, £1.5bn will be invested over the next three years in the Youth Guarantee and the Growth and Skills Levy to help young people earn or learn.

Chancellor Rachel Reeves also claimed that reforms to universal credit would get 15,000 people back into work.

One in five working-age adults in the UK are now out of work and not looking for employment, according to the recent Keep Britain Working Report. Separate figures from the Office for National Statistics show that almost 1 million 16-to-24-year-olds are currently not in employment, education or training (NEET), meaning one in eight young people are classed as “NEETs”.

So what’s behind this surge in economic inactivity – and what else needs to be done to help people into work and stop more from stepping away?

A major factor behind the rise in economic activity is the sharp rise in long-term ill health. Many people now live with conditions that limit their ability to work, particularly if employers don’t provide adequate support.

Although this has been a long-term trend, the big shift came after the Covid-19 pandemic, says Alice Martin, head of research at the Work Foundation at Lancaster University.

“The country’s underlying health trends have worsened. Our population is ageing, and people are sicker for longer periods of their life now,” she explains.

“At the same time, rates of mental ill-health have risen sharply, alongside chronic conditions. These pressures collectively mean more people are too unwell to work – and this is worsened by the fact that many jobs available are difficult to take on if your health isn’t 100%.”

Jack Kellam, head of communications at the Autonomy Institute, says insecurity is at the heart of why many people are stepping away from work. Whether it’s unstable income, poor working conditions or a lack of support when health or personal circumstances change, many people have no safety net.

“We could address this by building a foundation of economic security both within and outside work,” he says. “Some form of stable income floor, such as a universal basic income, would leave people less fearful about reporting health concerns, requesting adjustments, reducing hours temporarily, or retraining when needed.”

ONE EDITORIAL USE ONLY. NO SALES. NO ARCHIVING. NO ALTERING OR MANIPULATING. NO USE ON SOCIAL MEDIA UNLESS AGREED BY HOC PHOTOGRAPHY SERVICE. MANDATORY CREDIT: House of Commons Handout photo issued by the House of Commons of Chancellor of the Exchequer Rachel Reeves delivering her Budget in the House of Commons, London. Picture date: Wednesday November 26, 2025.

In the autumn budget, chancellor Rachel Reeves unveiled a series of measures aimed at tackling economic inactivity and getting more people into work. · House of Commons, PA Images

For many disabled people and those living with long-term health conditions, the biggest obstacle to staying in work is a lack of flexibility in available jobs.

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And the challenge is growing. Recent data from the Department of Work and Pensions shows that nearly half (45.8%) of young people who are not in employment, education or training are now classed as disabled – a jump of 24.3 percentage points since 2013/14.

The long-term consequences are stark. According to the Keep Britain Working Report, a 22-year-old who leaves work due to health problems could lose more than £1m in earnings over their lifetime.

“Disabled workers are 1.5 times more likely to be in severely insecure work, and many workers with health conditions end up in insecure roles in service sectors such as hospitality, social care, retail and logistics, where a lot of entry-level roles are,” says Martin.

“This presents a risk for people trying to re-enter work after a health setback as they may be more likely to find themselves in precarious and poorly paid work which is hard to sustain.”

It’s widely agreed that a psychologically safe environment reduces stress, burnout and turnover rates in workplaces, while boosting teamwork and performance. Essentially, it’s the belief that you can speak up with ideas or speak openly about professional or personal issues, such as a health problem, without fear of repercussions.

In fact, 89% of employees believe psychological safety is essential at work. Yet, a recent survey of 2,000 employees by MHFA and Henley Business School found that only 42% feel they can bring their authentic selves to work.

“Psychological safety plays a major role in keeping people in work. Our research shows nearly half of low-income workers saying they would not feel comfortable raising health concerns with their employer,” says Martin.

“Improving trust, communication and workplace culture is crucial, and good working conditions set the groundwork for this.”

Britain’s trade-union laws are among the most restrictive in Europe, forcing unions through strict ballots and legal red tape before they can act. This means workers, particularly in low-paid or insecure roles, have far less power to push for better pay or conditions.

Kellam suggests that improving job quality also means rethinking the rules that govern working life.

“Our restrictive trade union laws directly affect job quality, worker voice and the ability to resolve issues before they escalate. Strengthening collective bargaining, widening access to union representation – and ensuring workers can organise without undue legal barriers – would create healthier and more resilient workplaces. The Government’s reforms in the Employment Rights Bill are a good first step, but we need to see further movement on this,” he says.

There’s a growing divide in job quality, with those most in need of high-quality jobs often in the roles least able to sustain their health – increasing the chances they will have to leave the workforce entirely.

“While many workers have ‘good’ jobs, a substantial minority do not. The report shows that workers in poor health are far less likely to have autonomy or supportive environments at work,” says Kellam.

The UK has long been propping up poor-quality work, awarding public contracts to employers offering low pay, unstable hours and little support for workers who fall ill. Councils, NHS trusts, and other public bodies spend billions on procurement every year, but if that spending were consistently directed toward high-quality jobs, it could transform the labour market.

“Public-sector employers should be using procurement not simply to buy services at the lowest price, but to set clear expectations for decent work: fair pay, secure hours, access to trade union representation, and meaningful support for workers’ health,” Kellam says.

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Five ways to get more people back into work after the budget

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