This year’s party conference is taking place in a city where Covid and austerity have led to high levels of economic inactivity
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Wes Streeting, the health secretary, addressing the conference on Wednesday. Photograph: Gary Roberts Photography/Rex/Shutterstock

Wes Streeting was in the right place when he announced plans to prioritise cutting NHS waiting lists in areas with the highest numbers of people out of work due to ill health. Liverpool, where the health secretary was speaking at Labour’s annual party conference on Wednesday, is top of the list.

More than a decade of austerity, an ageing population, and the impact of the Covid pandemic have left Britain with deep problems with ill health. Economic inactivity – the number of working-age adults neither in a job nor looking for one – has risen sharply, reaching more than 9 million, with about a third of those cases a consequence of record levels of temporary and long-term sickness.

On Merseyside, the challenges are particularly acute. Four of the top 10 parliamentary seats in England and Wales with the highest health- and disability-related inactivity rates in the 2021 census were in the region, according to the Health Foundation thinktank. Liverpool’s inner-city Walton constituency – walking distance from Labour’s annual conference, and among the party’s safest seats – ranked first, with about one in 10 of the local over-16 population inactive.

Tackling the issue was a top priority for the previous government, but with considerably more focus on toughening up the benefits system, alongside tax cuts and childcare reforms designed to promote work.

Labour, however, has been readier to accept that a crumbling health service and wider decay in the public sector are among the key issues to address – both for reasons of social justice and rebooting economic growth.

Figures published this month show a total of 7.62 million people nationwide were on NHS waiting lists in July, with more than 40% having waited more than 18 weeks. On Merseyside, the number is almost 300,000.

Although proving a direct connection is not straightforward, it does not take a huge leap to draw the line between these sky-high waiting lists and record health-related inactivity. Some experts, including Andy Haldane, the former Bank of England chief economist, have done so.

Streeting’s plan to target hospital waiting lists in areas with the highest rates is a clear recognition of this. Still, experts warn the problem will need more than just a flying squad of senior doctors to fix.

As Rachel Reeves’s first budget at the end of next month looms, it is clear the government is aware of the challenge. The chancellor, speaking at a fringe event at Labour’s conference on Tuesday, said rebuilding the NHS would be a core priority in her tax and spending decisions.

“One of the things we’re looking at is reducing economic inactivity,” she told the event, which was hosted by the IPPR thinktank. “There’s something going badly wrong, both in our welfare state, which doesn’t encourage work sufficiently, but also in our health system – both mental and physical health – that there are too many people locked out of the workplace.”

The economic prize from tackling inactivity would be considerable. The IPPR estimates Britain’s loss of 900,000 people from the labour force since the pandemic will this year cost HMRC £5bn in lost revenue, while better health would save the government £18bn a year by the mid-2030s.

Streeting’s announcement in Liverpool is the first step of a plan that will encompass the whole of government, in probably the clearest example of Keir Starmer’s “mission-driven” approach to get all parts of the Whitehall machine pointing in the same direction on certain issues.

The prime minister told the BBC on Wednesday that people on long-term sickness leave and claiming benefits would need to get back into the workplace “where they can”, adding that he wanted more schemes to support people to find a job.

The work and pensions secretary, Liz Kendall, is consulting with labour market experts, businesses and unions to draw up plans to support his aim, due to be published this autumn. The process is expected to focus on health, education, and employment support, and will include a new youth guarantee for 18- to 21-year-olds, and the overhaul of jobcentres by merging them with a national careers service.

Not everyone in health-related economic inactivity will be in a position to work, which ministers say they accept. But there is also concern that the benefits bill is rising unsustainably. On current trajectories, the Office for Budget Responsibility forecasts that the bill for sickness and disability benefits will rise by £30bn in the next five years.

Still, alongside helping those who cannot work, the benefits system will remain crucial for helping those wanting to find a job. Reforming jobcentres to offer more active assistance – rather than simply policing the benefits system – will be key, as will getting employers to provide more flexible working arrangements and training opportunities.

There are clear reasons why it is a priority. Without strong foundations in health, Britain’s economy could struggle.