British government will revive active job support plans, minister says

By Andy Bruce

(Reuters) - Britain will revive active job market policies that hark back to past Labour governments to help boost employment and reduce inactivity, a sore spot for the economy, new employment minister Alison McGovern said on Wednesday.

McGovern, who took office in July following the landslide election win of Prime Minister Keir Starmer's Labour Party, told Reuters in an interview that she wanted to restore Britain's standing in the international labour market rankings.

At the end of last year, Britain was the only Group of Seven advanced economy to report a lower employment rate and a higher inactivity rate than its pre-pandemic level of late 2019, according to OECD data.

Labour aims to raise Britain's employment rate to 80% from under 75% now - something that has never happened in records dating back to the 1970s but has been achieved by some smaller economies like the Netherlands, Switzerland and New Zealand.

McGovern said the restoration of active employment policies - which means job placement and training services funded by public money - would be crucial in achieving this.

The Department for Work and Pensions is due to publish a paper outlining its legislative proposals in the next few months.

McGovern highlighted past Labour policies like Tony Blair's "New Deal" programme from 1998 and the Future Jobs Fund, introduced after the 2008 global financial crisis, as examples of policies that worked in the past.

The Conservative-led government that took over in 2010 achieved record-high rates of employment, but health service failures after the COVID-19 pandemic contributed to a sharp rise in inactivity due to ill health, hurting the jobs recovery.

"We need to design the right response for the time and the situation that we're in, but know our own history and understand what we've done before and how and why it worked," McGovern said.

Expanding the role of job centres will be a key pillar of the government's labour market agenda, she said, adding that empowering frontline staff and improving co-ordination with other local services would also feature.

"Our public employment service has been shrunk, like it's become about benefits processing rather than active support to get the right person in for the right job," McGovern said.

Some think tanks like IPPR North and the Fabian Society have proposed "invest-to-save" policies - where targeted support funded by public money helps people into work and more than pays for itself, partly by reducing the benefits bill.

Asked if this could be part of the answer, McGovern said: "Yes. If you look at our history, we once led the world in that sort of approach - active labour market policy, and we've fallen back."

(Reporting by Andy Bruce; Editing by Christina Fincher)