A £60m national fund will invite businesses, charities, technology providers, public bodies, and other organisations to test new ways of helping disabled people and those with health conditions enter work or remain economically active.
The Pathways to Work Innovation Fund is expected to open for applications in September as part of a wider £3.5bn employment support package. Proposals may cover personalised support, workplace inclusion, job matching, skills development, retention, and the removal of barriers that prevent people from finding or sustaining employment.
Approximately 2.8 million people are out of work because of ill health, while the annual economic cost of inactivity has been estimated at £212bn. That figure encompasses lost output, lower tax receipts, benefit expenditure, and the wider consequences of prolonged exclusion from work.
Work and Pensions Secretary Pat McFadden said: “We inherited a welfare system which has locked too many disabled people and those with health conditions out of work.
“We’re determined to ensure no talent is left behind, and that people are given the support they need. Through our £3.5 billion Pathways to Work employment support offer, we’ve seen that personalised support can be life-changing.
“Now we’re calling on business, disabled people and charities to work with us, and bring forward their ideas to transform employment support.”
An expert panel, including Paralympian and crossbench peer Baroness Tanni Grey-Thompson, will assess ideas and advise on the fund. The programme is intended to draw on experience from employers, disabled people, local organisations, and specialist providers rather than imposing a single national model.
Artificial intelligence and machine learning are also being examined for possible use in employment support. Potential applications include matching candidates to suitable roles or helping advisers identify interventions, although any deployment will need strong controls around consent, data quality, accessibility, explainability, and bias.
Health related inactivity has become a persistent constraint on the labour market. Employers continue to report shortages in technical, professional, care, construction, and operational roles, while many potential workers encounter recruitment processes built around fixed hours, standard locations, and uninterrupted career histories.
Support provided before somebody leaves work can be as important as help offered afterwards. Timely adjustments, access to occupational health, flexible scheduling, phased returns, job redesign, and trained managers can determine whether an employee remains economically active after developing a condition.
Research linking shorter working weeks with improved disability inclusion has already shown how working patterns can affect access and retention. Flexibility is most effective when it is designed into roles rather than offered only after an employee has reached the point of leaving.
The population covered by the fund is highly varied. A person managing a fluctuating condition, an employee returning after cancer treatment, somebody awaiting surgery, and a neurodivergent jobseeker may each require different forms of assistance. Local transport, healthcare access, housing, and labour demand introduce further differences between regions.
Evaluation will therefore need to look beyond the number of people referred to a programme or placed briefly into work. Sustained employment, earnings progression, retention, health outcomes, and employer adoption provide a stronger indication of whether an intervention has produced lasting change.
Short placements can overstate success when support ends quickly or a participant returns to inactivity within months. Longer follow-up periods and consistent comparison groups would help identify which approaches are effective and which merely shift people between programmes.
Employers taking part in trials will require clear guidance on legal duties, reasonable adjustments, health information, and the boundaries between management and clinical support. Smaller companies may need practical assistance because they rarely have dedicated occupational health teams or extensive human resources capacity.
Partnerships between employers, local authorities, health services, charities, and training providers may offer the most credible route to sustained results. Employment barriers often combine health, skills, confidence, transport, and workplace design, which no single organisation can address in isolation.
Innovation funding can produce promising local projects that disappear when the pilot ends. Proposals will therefore need a realistic cost per participant, a route to wider adoption, and evidence that the approach can be replicated without losing the personal support that made it effective.
Technology may improve access and administration, but digital systems cannot replace trusted relationships between participants, employers, clinicians, and advisers. Automated decisions may exclude people whose circumstances do not fit standard categories, particularly when records are incomplete or a condition changes over time.
The £60m allocation is small beside the stated annual cost of inactivity, yet well-designed trials could shape larger employment programmes if the evidence is transparent and the strongest approaches are adopted more widely. Participation by disabled people in the design and assessment of proposals will be essential.
Applications opening in September will give organisations a limited period in which to form partnerships and develop measurable plans. The fund will be judged by whether those projects alter recruitment, retention, job design, progression, and long-term participation rather than producing another collection of isolated pilots.
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