The economic cost of ill health among the working-age population
Ill health among working-age people presents a substantial and rising cost to the UK economy, individuals and taxpayers. Addressing this challenge is not only socially desirable but an economic imperative.
Oxera was asked by The Times to estimate the costs of ill health among the UK working-age population, to support the launch of The Times Health Commission.
The research conducted estimates that the total economic cost of lost output among working-age people due to ill health is around £150bn per annum, equivalent to 7% of GDP, with an additional total cost to the government (in terms of lost tax income, benefits payments and costs to the NHS) of around £70bn or £1,000 per person. To provide a sense of scale, if the government could avoid these costs it would be possible to pay for up to 1.8m additional nurses, equivalent to more than double the current number of registered nurses in the UK.
It is clear that the costs arising from the ill health of working-age people are substantial, and rising. Oxera estimates that these costs have risen by around 60% since 2016—the last time they were estimated by the Department for Work and Pensions and the Department for Health. To put this into context, the economy grew by only 1% in this same period.
Without adequate interventions of sufficient scale, there is a substantial risk of long-term scarring to the UK economy if more people fall into the downward spiral of declining health and leaving the labour market, which can further exacerbate health problems.
Oxera’s analysis demonstrates that the scale and nature of this challenge has changed substantially following the COVID-19 pandemic. It is therefore a pressing priority for the government to revisit its policy and level of expenditure on health and work, and ensure that they reflect the scale and nature of the future needs of our economy.