Margaret Hodge
Retirement Age
The Minister for Employment and Welfare Reform (Margaret Hodge) : I congratulate my hon. Friend the Member for
My hon. Friend is right to draw attention to the changing nature of the population. Many of our policies look at employment rates beyond the age of 50; at that age, men and women have life expectancies of more than 33 years and more than 36 years respectively. One can pull out very stark statistics on this issue. The one I have chosen to mention is that by the late 2020s, almost half the adult population in the
If we compare the employment rate of those over 50 to that of the general population of working age, we see a gap. Some 70.7 per cent. of people below state pension age but over 50 work, whereas just under 75 per cent. of the population as a whole work, so the gap is about 4 per cent. The other interesting thing is that most of those over 50 who are no longer in work did not volunteer to leave their jobs, yet once out of the labour market very few of them—only 8 per cent.—try to get a job again. There is genuinely an issue here, and my hon. Friend is right to draw attention to it.
Many of the issues that we are dealing with today come from the legacy that we inherited, and the most rapid decline in the employment of older men in particular came after 1979. That was due partly to the structural change and the decline of heavy industries, but also to the fact that company policies, to which the hon. Member for South-West Bedfordshire (Andrew Selous) drew our attention, were pretty rigorous in using the pretext of age to reduce work forces. The stewardship of the economy meant that there were not as many job opportunities as we enjoy today.
Progress has been made since 1997, when the Labour party came to power. In 1979, the employment rate among those aged 50-plus was 72.4 per cent., but by 1994 it had gone down to 62.6 per cent. We have returned the figure to just over 70 per cent. Not surprisingly, the employment rate for women has also increased. It was at its lowest in 1984—54.7 per cent.—but at 68.4 per cent., it is now almost equal to that for men.
Our record of using the instruments of public policy to encourage the employment of older people is good and has been recognised as such by the Organisation for Economic Co-operation and Development—we are about 10th out of the 30 OECD countries—and by the European Union. In relation to our European partners, we are second in respect of the employment rate for the over-50s. The unemployment rate for older people is now lower than that for other groups. If older people choose to stay active in the labour market, they are more likely to be in work than the rest of the working-age population. That is another interesting fact to consider.
Since we have been in government, we have brought more than 1 million extra people aged 50 or over into work. Of course, we want to go further and tackle many issues to which my hon. Friend the Member for
There are problems that we need to tackle and there are structural questions. We need to think about whether we have the structure of the tax and benefits system right and whether we have the right rules on pension schemes. We have done a lot, but we need to do more. There are personal issues for people that we need to confront. Older people tend to be the ones who have issues relating to health and disability. Many of our welfare reform Green Paper proposals focus on that.
My hon. Friend drew attention to the lack of flexible working. The Green Paper also contains proposals on that. We are attempting to tackle lower qualification levels among older people through many of the employment and training programmes that we have introduced. There are also cultural issues, as individuals might have unrealistic aspirations on early retirement and employers might have outdated prejudices on the capabilities of older people and their capability to work.
I shall go through some of our plans and then briefly tackle the issues to which my hon. Friend alluded. We published our health, work and well-being strategy document about six months ago and it is very important. In it, we consider the links between the work undertaken by the Department of Health, the Department for Work and Pensions and the Health and Safety Executive, so that we ensure that people can get the benefits of work. I am talking about healthy workplaces and ensuring that efforts to secure early rehabilitation to keep people in their jobs or to bring them back into their jobs are co-ordinated across Government and all agencies that respond to individual needs.
I have talked about the welfare reform agenda, whereby we are trying to ensure that proper support structures are in place so that we can provide opportunities for older workers to stay in or return to work. Once those support structures are in place, there will be a responsibility on individuals to take up the opportunities.
I note that my hon. Friend does not think that the changes to the state pension go far enough, but there are now better financial incentives to defer taking the pension. I am referring to the rate of increment and the ability to access a lump sum, which is pretty generously calculated. It is set at 2 per cent. above the Bank of England interest rate and compound interest is built into the calculation.
We have made an important alteration to private pension schemes so that people can take their pension and carry on working. We have introduced improvements to personal allowances for those over 65. The personal allowance for someone over 65 who is working is £7,280 as compared with the general allowance of just over £5,000.
The welfare reform Green Paper contains a series of propositions, which we are taking forward. They involve giving older workers access to the new deals, piloting better one-to-one support for older workers and seeing whether we can take the introduction of flexible working further.
We are also considering how we implement the age discrimination legislation. My hon. Friend talked about that for some time. The legislation has just passed through the processes of the House and will come into force in October. He is right to say that, under the legislation, there is a default retirement age of 65, although we have promised that we will review that, as the measure beds in, over five years. I tend to agree with him that if we can get rid of that default age, we will improve the ability of older people to participate in the labour market. However, I hope he accepts that as we try to transform cultural attitudes in our society towards the employment of older people, we should bring all the stakeholders with us. As we set the default retirement age, we were conscious of the concerns of business. There were fears among those in the business community that if there was no retirement age, they would find it difficult to manage their work force and ensure that younger people had the opportunity to develop in the workplace.
My hon. Friend talked about the lack of knowledge of and information about the changes that the Government are introducing. I have been engaged in a number of changes, particularly involving individual rights in respect of equality, and I know that it takes time for such changes to become known to employers. I am thinking particularly of the work that I have done on disability. Despite pretty extensive publicity, there was still some reluctance among employers to understand and take on board their responsibilities under disability discrimination legislation.
We probably face a similar situation with the issue that we are debating today, but 37 per cent. is not a bad knowledge base, given that we have some months to go before implementing the legislation. I hope that our "Age Positive" campaign and the "Be Ready" campaign, which we are running with our partners, will help to build understanding of the new legislation so that there is compliance when it comes into force in October.
I agree with what my hon. Friend said about the advantages of older people staying in work. That is better for the individual in terms of their prosperity and status in society. There is also a growing body of evidence that work can benefit individuals' health and well-being and can prolong life rather than reduce life chances. He was also right to draw attention to the benefits to society—not only the gains from additional income, but those from less expenditure on benefits, health services, social services and social infrastructure to support individuals. There is also a loss of productivity to society if we do not take full advantage of the capabilities of older people.
My hon. Friend talked about whether we should waive employer national insurance for those over 65. He will know that that recommendation emerged from the Turner commission. We are considering it and we will report on the way forward that we want to pursue, having considered the Turner review.
My hon. Friend talked about whether we could go further on greater advantages to individuals through the tax and national insurance system. Again, we constantly review our position on that to see whether we can do more. He talked about greater help for those who defer taking the state pension. We have made huge progress in that regard, but I will take his views on board as we consider how we can better benefit from the undoubted huge strength that we have in older workers, whom we want to keep in work and contributing to the well-being of our society. We also want to ensure that they, too, feel that they make an individual contribution.
