Wes Streeting’s plan to attack economic inactivity with better health might work! That’s according to a leading economist.

In his speech at Labour’s conference, the Health Secretary announced a plan to boost employment by getting patients treated faster in areas that have suffered high long-term sickness rates, especially since the Covid-19 pandemic.

It seems their work will involve surgery more than treatment for illness, with the teams including doctors who have developed ways of carrying out four times as many operations as normal (this may raise red flags for some readers).

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The principle is sound, apparently. Professor Simon Wren-Lewis explains in his latest Mainly Macro column:

The pandemic led to a rise in economic inactivity (those in the potential workforce not working) in many countries, but that rise was partially or completely reversed once the pandemic was over in nearly every country. The exception is the UK, where what had been a downward trend in inactivity became an upward trend. The report estimates that since the pandemic just under a million workers have left the labour force in the UK due to sickness (page 20 of the report). This is a huge number, and impacts on the prosperity of everyone in the UK.

The report debunks the idea that it is a ‘lifestyle choice’, by showing that the increase in inactivity is most marked among those with greater health needs or at greater health risk. My own guess would be that this is yet another consequence of the squeeze in resources going to health in the UK since 2010. The NHS was just about managing even though it was working beyond full capacity, but this meant that the UK health system was particularly vulnerable to a big health shock, and as waiting time data shows it has yet to show any signs of recovery from the shock of the pandemic.

The rise in those with long term health conditions doesn’t just lead to exits from employment, but also lower earnings (page 17) and productivity (page 26) for those who remain. Once again, the latter in particular has knock on effects on everyone else in the UK. For those who worry about this it also puts upward pressure on immigration. If I had to give two ways I was confident about how we could improve the UK’s growth and productivity performance, it would be through additional public investment and through improving UK health.

And the investment in improved health would pay for itself in improved economic performance.

Prof Wren-Lewis also supports the government’s stated aim of shifting the emphasis of the UK’s healthcare system to prevention rather than cure; stop people becoming ill and the economy stays healthy too.

Logically, this would be a kick in the teeth for private healthcare firms, that rely on a constant supply of sick people for their profits. We’ll have to see how that dialogue plays out with the Labour politicians to whom they have given such hefty donations in recent times.

And of course there is the question of how soon new policies can be implemented. Streeting has announced a 10-year plan for health – but he won’t be unveiling it until spring next year.

That is a long time to wait.

Source: mainly macro: Why improving health is an excellent investment in the economy

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