Budget sees new measures for older workers

The Chancellor today announced a package of measures, including returnerships, an increase in midlife MOTs for those on Universal Credit and changes to pension taxes which he said would help over 50s back to work or stop them from dropping out.

In his Spring Budget, the Chancellor announced a new ‘Returnerships’ apprenticeship targeted at the over 50s which will refine existing skills programmes to make them more accessible to older workers by making them more flexible and shorter to take account of their previous experience. Policy experts have said this is more about rebranding existing programmes and some additional investment.

The Chancellor also said that the digital midlife MOT tool would be enhanced and that there would be an expansion of the Government’s in-person midlife MOTs for Universal Credit claimants who are over 50. Currently the in-person MOTs delivered through Job Centres reach 8,000 people. The aim is to increase the reach of the midlife MOT to 40,000 Universal Credit claimants in the next 12 months. The digital midlife MOT will be available to everyone from this summer. Midlife MOTs offer a financial and health check for over 50s.

But it is his announcement on pensions that has attracted most comment.  The Chancellor said the Lifetime Allowance charge – the total amount you can build up in all your pension savings without incurring a tax charge – will be removed before being abolished altogether, which he said would simplify the tax system by taking thousands out of the complexity of pension tax. The Annual Allowance – the amount workers can contribute to their pensions each year before they have to pay tax – will be increased from £40,000 to £60,000, which he said would incentivise highly-skilled workers such as NHS doctors to remain in the labour market. But critics say the move is unlikely to attract back or retain more than 15,000 people at a significant cost to the Treasury. The Resolution Foundation estimates the policy will cost around £1.2bn – around £80,000 per extra worker if the 15,000 figure is correct. The Foundation said the 15K figure could even be an overstatement “given that giving very large wealth boosts will actually encourage some people to retire earlier than they otherwise would have done”.

Labour leader Keir Starmer said the pension changes would help those “with the broadest shoulders” and represented “a huge giveaway” to the wealthiest. He said the only tax cut announced in the Budget affected the richest 1%.

At the other end of the earnings spectrum, there was an announcement affecting low paid part-time workers. Currently those working less than 16 hours a week on minimum wage come under a more intensive jobseeking regime which means if they don’t seek more hours they could face benefits sanctions. This will be increased to encompass those working less than 19 hours a week. The Chancellor also announced that the application and enforcement of the Universal Credit sanctions regime will be strengthened “by providing additional training for Work Coaches to apply sanctions effectively, including for claimants who do not look for or take up employment, and automating administrative elements of the sanctions process to reduce error rates and free up Work Coach time”.

When it comes to long-term health issues, the major reason people have dropped out of the workplace since the pandemic and an ongoing issue, the Chancellor announced a new voluntary employment scheme for disabled people and those with health conditions called Universal Support for England and Wales, with those eligible able to opt in to receive up to 12 months of provision. The government will spend up to £4,000 per person to find them a suitable role and cater to their needs, supporting 50,000 places per year once fully rolled out. And there was over £400 million to be spent on services for mental health, musculoskeletal conditions and cardiovascular disease, the major health-related causes of people leaving the workforce, through ‘WorkWell Partnerships’ .

Other measures announced included:

• A DWP White Paper on disability benefits reform. This includes removing the Work Capability Assessment. The Government says the reforms will also support claimants to try work without fear of losing their financial support.
• More funding for an occupational health pilot scheme for SMEs.

Tony Wilson, Director at the Institute for Employment Studies, welcomed the focus on health through the ‘WorkWell Partnerships’ and ‘Universal Support programme’ for those with health needs and other support for older people, saying they and reforms to childcare support are “welcome reforms that could help to raise participation in work and reduce inequalities”.  The challenge is to implement this at pace and in partnership, he stated.

However, he added: “We also called for a more coherent and joined up approach to how we work with employers and what we expect from them in return, and sadly the participation review has been all but silent on this. We need a much better approach to how we help employers to fill their jobs and make work better, but also to take forward the protections promised in the all-but-abandoned Employment Bill – in particular for insecure workers, pregnant women and those seeking more flexible work. So today feels like a missed opportunity to make work better, more secure and more rewarding.”

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