Cornforth lies at the heart of Britain’s employment crisis. The former pit village on the defunct Durham coalfield feels “left behind”, with many of its residents wanting to work in the UK’s red hot labour market but trapped in a state of economic inactivity.
At the Cornforth Partnership, a charity helping people struggling with acute poverty or trying to find work, locals gathered to meet Jonathan Ashworth, Labour’s work and pensions spokesman, to discuss an issue rising to the top of the political agenda.
Chancellor Jeremy Hunt, in his Autumn Statement this month, announced a government review of how to tackle the growing tide of economic inactivity in the wake of the Covid pandemic, even when the British job market is overheating with 1.25mn vacancies.
“We have seen a sharp increase in economically inactive working age adults of 630,000 since the start of the pandemic,” Hunt told MPs.
Ashworth will set out Labour’s proposals in a speech on Tuesday, including giving local communities in England more control over budgets to help people back to work, and reducing a dependence on big outsourcing companies to oversee such programmes.
Both the Conservatives and Labour say “cheap labour” and immigration is not a politically acceptable answer to the employment crunch — even as net migration reached a record 504,000 in the year to June — and are now working out how to persuade more Britons to fill job vacancies.
The national problem is complex and manifests itself in different ways, from a young mother struggling with mental health issues as she seeks work, to a fiftysomething professional retiring early and living off asset and pension wealth.
But whatever the reasons for economic inactivity, the consequences are the same: unfilled jobs, wage inflation as employers fight for scarce labour, and a clamour from business for looser immigration rules.
In Cornforth, Ashworth heard from residents about a range of issues holding them back, but the problem was summed up by Tony Cutmore, chief executive of the Cornforth Partnership. “It’s not worth people going to work,” he said.
Locals calculate that increasing the hours they work would cost them more in welfare benefits than the extra wages they bring in. The loss of support for childcare and housing costs is a recurring theme, so too is mental and physical health.
Alan Hodgson, chair of the Cornforth Partnership, talked of an area that has been left behind. “It’s Category D by stealth,” he said, referring to an infamous 1950s local plan that decreed some pit villages should simply be left to die.
The charity, celebrating its 25th anniversary, offers mentoring, social activities and employment training, including learning skills to get jobs in the local construction sector.
At the Cornforth Partnership’s office, on a high street where only a handful of shops and takeaways survive, Ashworth told the Financial Times there was an economic and moral pressure on politicians to act.
Ashworth said Britain was the “sick man of Europe”, with increasing numbers of people forced out of the labour market by ill health. Some have attributed this to Covid-related illnesses or to the NHS backlog that has left many untreated.
The Office for Budget Responsibility said in its forecasts, which accompanied the Autumn Statement, that it had revised upwards by £7.5bn the costs to the state of health-related and disability benefits.
“This raises the caseloads for these benefits by 1.1mn (13.4 per cent) in 2026-27 relative to our March forecast,” said the UK fiscal watchdog. Ashworth noted that once people are on such benefits, their return-to-work rates are very low.
One of his answers is to break the hold of outsourcing companies and to give control over national budgets in England — such as the Restart scheme for the long-term unemployed and the work and health programme — to local mayors and councils.
Ashworth said Labour would see what could be effectively devolved in the area of employment and skills. “There is around £20bn spent across 49 different schemes from nine different departments,” he said, citing Local Government Association figures.
Labour’s aim would be that bodies such as the Cornforth Partnership — embedded in local communities and with close personal relationships with clients — have a bigger role in delivering services.
Ashworth, in his speech on Tuesday, will also propose a big change in the role of the government’s jobcentres, which he claims have become a “frightening” place for many people trying to get back into the workplace.
He said jobcentres had become associated with “the heavy handed policing of people on benefits”, setting tests, making demeaning demands and handing out benefits sanctions for those failing to meet the rules.
While Ashworth said Labour would still impose conditionality on people receiving benefits — “we have to protect the taxpayer” — he wanted jobcentres to become a place with “an open door to help people into a job”.
The final strand of Ashworth’s plan is to seek to persuade people aged over-50, many of whom gave up work during the pandemic, to return to work, partly by improving the training offer to them to secure new skills.
“Our ambition should be to aim for the highest employment rates in the G7,” said Ashworth. Hunt’s review into what is holding back workplace participation will report early next year.
But the case work of the Cornforth Partnership suggests that solving the problem of economic inactivity is a sensitive and multi-layered task requiring interventions across the board over many years.