Tag: ill health

Kendall launches blueprint for fundamental reform of employment support

Changing the DWP from a ‘Department of Welfare’ to a ‘Department for Work’

  • Hundreds of thousands more people out of work due to long-term sickness since the pandemic.
  • Experts on new board will help to shape government work ahead of groundbreaking White Paper this autumn.

Liz Kendall will today set out how Britain’s system of employment support must be fundamentally reformed to tackle the “most urgent challenge” of spiralling economic inactivity.

Experts advising the Westminster government on how to tackle the ‘greatest employment challenge for a generation’ met with the Work and Pensions Secretary for the first time yesterday (Monday 9 September).

The new Labour Market Advisory Board – appointed by Work and Pensions Secretary Liz Kendall MP – is made up of labour market experts from across business, industrial relations and academia.

At its first meeting, members offered new approaches to shape government work on economic inactivity, tackling the root causes for people remaining out of work such as poor physical and mental health, and how the group can help the government reach its ambition of an 80 per cent employment rate. 

The Board will develop new ideas and initiatives for the Work and Pensions Secretary to consider as she sets about bringing down the levels of economic inactivity, with the UK being the only G7 country whose employment and inactivity rates haven’t returned to pre-pandemic levels, part of the dire inheritance left by the previous government.

Work and Pensions Secretary, Liz Kendall MP, said: “Spiralling inactivity is the greatest employment challenge for a generation, with a near record 2.8 million people out of work due to long-term sickness.

“Addressing these challenges will take time, but we’re going to fix the foundations of the economy and tackle economic inactivity.

“The board’s knowledge, expertise and insight will help us to rebuild Britain as we deliver our growth mission, drive up opportunity and make every part of the country better off.”

As the Health Secretary Wes Streeting has previously set out, cutting NHS waiting lists will get Britain back to health and back to work. and the Board’s first meeting will examine the impact of ill-health on inactivity and how the Government can support more people into good work.

Paul Gregg, Chair of the Labour Market Advisory Board said: “Having studied the UK’s labour market across several decades, it is clear that the current labour market faces a deep-seated set of challenges.

“We have seen a sharp increase in economic inactivity and long-term sickness, most notably in our young people post-pandemic. Further, real wage growth has been heavily supressed for 15 years hitting living standards and government tax revenues. Reversing these trends will be key to ensuring the long-term prosperity of the UK’s labour market. 

“I look forward to working with members of the board and the Secretary of State to support her vision for growth and examining positive solutions to address inactivity and harness the true potential of the UK’s labour market.”

The Secretary of State is also expected to outline her plans to devolve power to local areas so they can tackle inactivity with bespoke work, health, and skills plans, which are expected in a White Paper in the autumn. 

It will also include plans for a new youth guarantee for 18-21-year-olds, and the overhauling of jobcentres by merging them with the National Careers service.

Inactivity levels and rates across the UK & regions as of 13/08/2024:

AreaLevel (000s)Rate
United Kingdom9,41022.0%
Great Britain9,09022.0%
England7,75621.6%
North East45427.4%
North West1,11223.6%
Yorkshire and The Humber86225.0%
East Midlands61620.1%
West Midlands87523.5%
East85121.7%
London1,26320.7%
South East1,08018.7%
Wales54128.3%
Scotland79323.1%
Northern Ireland31927.1%

Over 50s to be hardest hit by the cost-of-living crisis and the financial impact of the Covid pandemic

A report by leading UK data scientists has revealed that the over-50s are being hit hardest by the current financial crisis and could face a lifetime of financial insecurity.  

That’s according to new research from the University of Edinburgh’s Smart Data Foundry, supported and funded by abrdn Financial Fairness Trust. 

According to the report, economic inactivity rates have risen a third amongst the over 50s since 2019, and people aged 50-54 face double the financial vulnerability risk than those aged 70-74.  

Findings reveal that people in their 50s and 60s are facing the ‘perfect storm’ of circumstances including redundancy, ill health or caring commitments combined with a lack of savings and pension provisions.   

To offset this loss of income, many people are being forced to withdraw lump sums from their pension pots to deal with pre-retirement income shocks.  

And with the majority of pension pots worth under £30,000, this is causing knock-on issues with income tax and entitlement to benefits.  Worryingly, the research also identified that those people who do cash in their pension pots early are 1.75 times more at risk of financial vulnerability in the future.   

To tackle this, Smart Data Foundry is calling on the Department of Work and Pensions to act now to reduce the risk of pension assets being spent before retirement. It recommends an increase to the current capital limit of £16,000 for means tested benefits and, for those on Universal Credit, the reform of the Support for Mortgage Relief (SMI) loan facility by removing the zero earnings rule. 

Chair of Smart Data Foundry, Dame Julia Unwin, explains: “We are seeing a pattern of people in their early to mid-fifties going from being in positions of comfortable, middle-aged breadwinners eyeing their future retirement over the horizon, to a generation suddenly finding themselves facing long-term financial hardship.  

“A combination of being unable to secure viable work, confused messaging over pensions, little by way of state aid, and the savage cost-of-living rises resulting in many making decisions that could have long-term negative consequences.  

“With this report and our key recommendations, we are calling for UK Government to intervene to protect and support the most vulnerable before it is too late. If they don’t act now, we will undoubtedly see even bigger problems in the years ahead. Data doesn’t lie; the evidence is there – older workers are at very real risk of financial vulnerability, but it is not yet too late to act.” 

The research study also uncovered a widespread lack of understanding about the benefits system, confusion about claims processes, and hardship arising from payment frequency.  To improve the transition to retirement, the report calls for increased government investment in the Pension Wise guidance service and expansion to include the state pension. 

According to the findings, older workers are encountering barriers to returning to work, including lack of digital skills, unavailability of flexible working, lack of specific government initiatives, ageism, psychological barriers, and retraining needs.  

The longer the unemployed worker remains out of work, the harder it is for them to find a suitable position and the greater their risk of falling into forced retirement.

The report calls for a government-funded employment programme targeted at those who need support in changing careers, starting from the first day of unemployment for the over 55s. 

Lead researcher Dr Lynne Robertson-Rose from the University of Edinburgh added: “We set out to understand the financial vulnerability amongst those in their 50s and 60s and have been surprised by the bleak picture that the data paints.

“Any disruption in earning capability in the decade before the state pension is forcing older workers to draw down on savings earmarked for retirement with little ability to top up the pot, leading to the risk of financial vulnerability becoming lifelong. 

“We have access to rich data supplied to Smart Data Foundry by UK financial institutions and these insights have furnished us with the information that enabled us to make policy recommendations.  It also flags  opportunities for the financial services and fintech sector to innovate in order to help individuals better manage their finances.” 

Karen Barker, Head of Policy and Research at abrdn Financial Fairness Trust, added: “Making decisions about your pension is tricky to navigate, and for those on lower incomes, advice is too expensive.

“The Government needs to improve access to advice on pensions planning for those on lower incomes to avoid a living standards catastrophe.”  

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