Are older workers any better off following the back-to-work budget?
The recent budget has been billed both a back to work budget for the over 50s and a budget for the rich.
In his assessment, Luke Price, our Senior Research and Policy Manager for Work, says that while it was mostly a missed opportunity, it has opened up the possibility of some meaningful change for older workers.
The Spring Budget was billed as a back-to-work budget for the over 50s, but that's not quite what we got. There were some changes that could make a difference to over 50s who want to stay in or return to the workplace – particularly if they have a disability or health condition. However, this was overshadowed by accusations that it was, in the words of some critics of the government, “a budget for the rich”.
These accusations focus on changes to the pensions lifetime and annual allowances that will mostly benefit the already well-off. Responding to this criticism the Chancellor said “well, of course we want to help older people who want to stay in work. By definition they will generally be on higher salaries…”.
However, not everyone in later life earns a higher salary. Far from challenging inequalities between those who are financially secure and those who are not, the Chancellor’ risks entrenching inequalities with this policy. The employment measures in this budget must be implemented in a manner that delivers for the older workers who need support most.
Why are we even talking about older workers in the first place?
Pre-pandemic, a growing number of over 50s were active in the labour market, but since 2020 this trend has reversed with the main driver of this exodus being retirement. Many of those retiring have done so because they do not want to work any longer and have the financial means not to. According to Phoenix Insights research, those leaving to retire have a median wealth 20 times greater than those leaving due to long-term sickness or disability. Some older people are out of the labour market due to health reasons, but this trend is less about people leaving the labour market due to poor health (although some people do), and more about the deteriorating health of those who have been economically inactive (not searching or available for work) for a long time.
Given these huge inequalities in older people’s experience of labour market participation the lack of significant policies in the budget to help all older workers was disappointing - not least because the changes to pensions not only risk worsening inequalities, but also reinforce the unhelpful narrative that conflates “rich” with “old”. Indeed, raising the state pension age has meant that one in four 65-year-olds are now in absolute poverty – double the rate that we would have seen had the state pension age remained at 65.
While it was disappointing that a back to work budget for the over 50s did not deliver this, we are hopeful that the budget introduced more measures have the potential to help people in the 50s and 60s to return to work if they fall out.
What did the budget do that was targeted specifically at older workers?
There were some measures included in the budget that that might have some impact on labour participation amongst older adults.
The £70m additional funding for Mid-life MOTs will expand access to in-person sessions via Jobcentre Plus (JCP). This marks a significant expansion, by enabling up to 40,000 people per year to have a Mid-life MOT instead of the originally suggested 8,000. However, only older adults on Universal Credit will be able to access this in-person support - anyone not engaged with the JCP will only get to access support online. This rings alarm bells for two reasons. First, one of the fundamental issues with current employment support models is that they don’t reach beyond the JCP to other older adults that need them. And second, some older adults will struggle to engage with a digital-only system without additional support.
The budget also billed ‘Returnerships’ as a “new offer targeted at over-50s”. In reality this is just £63m for existing skills programmes with some additional promotion to older people. This policy has the potential to address one of the biggest problems with current employment support and skills provision: a lack of targeting of and marketing to over 50s. However, more questions than answers remain. What will it change about programmes to make them more appealing and effective for older workers? Who will lead on better targeting and what will it look like?
Risky opportunities
Another real opportunity for meaningful change comes with the publication of a White Paper on the scrapping of the Work Capability Assessment (WCA) which could lead to more older people getting employment support. However, it remains unclear how decisions will be made about additional financial support for those with long-term health conditions or disabilities, and whether it will lead to tougher sanctions on individuals. The last thing we need in the social security system is more stick over carrot.
The biggest opportunity for positive change may lie with Universal Support – a £4000 per head employment support programme aimed at people with disabilities and/or long-term health conditions in England and Wales. A lot of detail is still missing, but the programme will likely help individuals to find, and remain in, appropriate jobs, mirroring the Individual Placement Support model and reaching about 50,000 people per year. It is also set to follow the “place and train” model – getting people into work and training them on the job - that our research suggests could be more effective for older workers. Ultimately, bringing health and employment support together could make for a less fragmented, more holistic support structure.
However, older workers are often left behind on all-age employment support – the Work and Health programme only managed to get 15% of over 60s into work within two years. We also don’t yet know how Universal Support will engage with people who are not engaged with the social security system.
What’s next?
Before the budget, we were calling for a national programme of employment support specifically targeted at 50+, providing holistic support outside the job centre. Our research suggests a targeted programme has the best chance of addressing the systematic disadvantage that older workers face within the current system.
While it was disappointing that a back to work budget for the over 50s did not deliver this , we are hopeful that the budget introduced more measures have the potential to help people in the 50s and 60s to return to work if they fall out.
Now we need to make sure we’re learning from these efforts. That’s why we’re calling for a 50+ strand within new employment programmes, or at the very least service standards designed with older workers in mind.