Supported Employment for Illness-Related Joblessness Returns £5.71 Per Pound Spent, Model Finds

Long-term sickness has become one of the defining economic challenges of the modern labour market. Across OECD countries, employment rates for people living with chronic health conditions typically sit 20 to 30 percent below those of healthy peers, and in the United Kingdom the cost of health-related worklessness approaches £200 billion every year through lost productivity, NHS treatment spending, benefit payments and forgone tax revenue. A new cost-benefit modelling study published in Public Health in Practice suggests that one well-established intervention, Individual Placement and Support (IPS), could meaningfully reverse that picture, returning roughly £5.71 to society for every £1 invested over five years when offered to people out of work with musculoskeletal conditions, with comparable returns for common mental health conditions.

IPS is not a conventional job-search scheme. Developed originally for people with severe mental illness, it follows a place-then-train philosophy: rather than screening and pre-training candidates before any contact with employers, employment specialists embedded within clinical teams move clients rapidly into competitive jobs matched to their preferences, then provide ongoing practical and health-related support to keep them there. Decades of randomised trial evidence show IPS consistently outperforms alternative supported employment approaches, and England has been at the forefront of extending the model beyond severe mental illness. Recent large-scale trials, most notably the Department for Work and Pensions’ Health-Led Employment Trial (HLET), tested IPS in people with low-to-moderate mental health (MH), musculoskeletal (MSK), or combined MH and MSK conditions, populations that had previously been largely excluded from the evidence base.

Despite that clinical evidence, policymakers have lacked a rigorous way to judge whether the economics stack up. A recent systematic review found that 79 percent of 56 economic studies reported a positive case for IPS, but few used long-term modelling, disaggregated results by population subgroup, or tested how sensitive returns were to service costs and performance. The new study addresses these gaps with IPS-MOD, an open-source Excel-based cost-benefit and outcomes model built to HM Treasury Green Book standards. It simulates a cohort of non-employed adults with MH, MSK or combined conditions over five years in quarterly steps, comparing a scenario in which they receive IPS against standard UK employment support such as Jobcentre Plus provision.

The model’s architecture is deliberately grounded in real-world data at every node. Labour market transition probabilities between employment and non-employment were estimated from 27 five-wave longitudinal datasets of the UK Labour Force Survey covering 2012 to 2018, then calibrated so the model reproduces the year-one employment outcomes actually observed in the HLET for both intervention and control arms. Population sizes draw on Office for National Statistics mid-year estimates combined with local authority prevalence data and the 2019 Health Survey for England. Health gains are captured in quality-adjusted life years (QALYs), combining length and quality of life, estimated from EQ-5D survey data and adjusted for the utility gain associated with moving into work using Understanding Society regression analyses. Each QALY is valued at £79,468 in 2024 prices, in line with Green Book guidance, while earnings, taxes and benefits are computed with the UKMOD tax-benefit microsimulation model applied to the Family Resources Survey.

In the base case, set in a typical local authority of 180,000 working-age adults, the model assumes 30 percent of the non-employed population with each condition voluntarily joins IPS. For the MSK group that yields 3,749 participants at a service cost of £2,326 per person. Trial-calibrated effectiveness figures show 28 percent of IPS participants in work at some point in the first 12 months compared with 24 percent receiving usual support; for the MH group the figures are 57 percent versus 53 percent, and 28 versus 23 percent for those with both conditions. The gap looks modest, but across thousands of people and compounded over five years it produces substantial economic and health dividends.

Those dividends accumulate quickly. By the end of year one, employment among MSK participants on IPS stood at 21.55 percent against 16.73 percent without the service, an absolute gain of 4.82 percentage points, equivalent to a 28.83 percent relative improvement. By year five the gap narrows in proportional terms but remains a 3.01 percentage point advantage, alongside an extra 8.65 weeks of paid work per person. Health utility improved by an average of 0.028 QALYs per participant in year one and 0.137 QALYs by year five, worth £2,201 and £10,881 per person respectively, or £8.25 million and £40.80 million across the population. Participants themselves accumulated average gains of £2,352 in year one and £11,718 over five years, while the exchequer collected £6.63 million in total benefits by year five through higher tax and national insurance receipts, £3.79 million in reduced social security payments and £467,105 in avoided NHS spending.

The headline result is the benefit-cost ratio. For the MSK population, every £1 spent on IPS returned £1.13 by the end of year one, rising steadily to £5.71 by the end of year five as wages, health gains and avoided benefit payments compounded. The MH group returned a similar £5.67 over five years, and the combined MH and MSK group £4.13, reflecting that group’s lower baseline rates of movement into work. Notably, the model’s returns are driven primarily by monetised health gains rather than fiscal effects alone, a departure from many economic evaluations that count only government savings. Sensitivity analysis indicates the five-year positive return would survive even if a QALY were valued at roughly £10,000, well below the official £79,468 figure.

The team stress-tested the model extensively. Two-way sensitivity analyses varied IPS effectiveness between 18 and 45 percent employment entry and service costs between £1,500 and £3,300 per participant. Most scenarios produced a positive return on investment within the first year, and by year five every modelled combination was cost-beneficial, even though the lowest-effectiveness, highest-cost corners delivered short-term negative returns. Because published trial evidence only calibrates the model for 12 months, the default scenario conservatively assumes treatment effects fade to 25 percent of their year-one value by year five, reflecting IPS’s continued in-work support, while direct effects on health utility are assumed permanent. Alternative persistence assumptions are built in as user-selectable options.

The limitations are acknowledged candidly. The model cannot run full probabilistic sensitivity analysis because the HLET published no distributions for key parameters. It assumes trial results from South Yorkshire and the West Midlands generalise nationally, and that the relative effect of IPS applies equally across health conditions and disability statuses. As a two-state Markov model it also cannot distinguish good jobs from insecure ones, even though the health benefits of work likely depend on job quality. Nevertheless, the timing of the analysis is significant: as the £1 billion Connect to Work programme scales IPS across England and Wales for jobseekers with low-to-moderate MH and MSK conditions, IPS-MOD gives commissioners a transparent, adaptable tool to forecast returns before committing budgets, and its framework could be exported to any country with a national health survey and longitudinal labour data.

What emerges is a rare case in public policy where the clinical evidence, the health economics and the fiscal arithmetic all point in the same direction. Unemployment is both cause and consequence of poor health, with people out of work two to three times more likely to experience mental health problems than those employed, while good work is linked to reduced suicide risk, relapse and better physical health. By quantifying those feedbacks in monetary terms and showing that returns grow rather than shrink over time, the study makes the case that helping people with common health conditions back into work is not merely a welfare expense to be managed but an investment with measurable, multi-stakeholder payoffs, from the individual’s payslip and quality of life to the Treasury’s balance sheet.

Subject of Research: Cost-benefit modelling of Individual Placement and Support supported employment for people with mental health and musculoskeletal conditions in England

Article Title: Estimating the health and economic impacts of Individual Placement and Support (IPS) for people with mental and physical health conditions: A cost-benefit modelling study

Article References: Clarke, H., Morris, D., James, M., Brennan, A., & Whitworth, A. (2026). Estimating the health and economic impacts of Individual Placement and Support (IPS) for people with mental and physical health conditions: A cost-benefit modelling study. Public Health in Practice, 12, Article 100867. https://doi.org/10.1016/j.puhip.2026.100867

Image Credits: AI Generated

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Keywords: Individual Placement and Support, IPS-MOD, supported employment, mental health, musculoskeletal conditions, cost-benefit analysis, QALYs, economic inactivity, Health-Led Employment Trial, health economics, UK labour market, Connect to Work