House of Commons - Work and Pensions

Select Committee on Work and Pensions Third Report

7 People Over 50

188. The employment rate for people over 50 is 71%, and is on an upward trend. Evidence from Inclusion predicted that the employment rate for this group and the overall employment rate "will rapidly converge within the next ten years, on current trends."[214] This table shows the current position:[215]

Figure 3:

Employment rate of older workers, the overall rate
and the gap between the two - SR2004 target

189. However, The Age and Employment Network/Help the Aged argued that the improved employment rate should not be taken as an indication that older people required no help:

"There has been no reduction in the numbers of economically inactive people aged 50-SPA since 1997. The pool of under-utilised or wasted talent and skills remains as large as ever. The over-50s make up 40% of all the non-working people of working age. 30% of the 50-SPA age cohort, 2.6m are inactive. In some parts of the country it is well over 50%. This feeds a major barrier in the labour market, the conviction that there are no suitable jobs and if there were they should go to younger people."[216]

Age Concern agreed that "[t]here are large numbers of over-50s wanting work in every region and nation."[217] TAEN pointed out that improving the employment rate of people over 50 will be crucial if the DWP is to achieve the employment rate aspiration.

Current targets

190. The DWP has an aim of getting an extra million people over 50 into work.[218] We heard evidence that this aim needed to be clarified. Andrew Harrop of Age Concern told the Committee:

"By about 2016 to 2020, so looking a decade ahead, we would have an extra million just from the growth of the cohort, so we would support the one million target, but only if it is over and above gains just from demographic change so that it is a change in the employment rate for the 50-to-69 age group rather than just the size of that age group."[219]

191. When questioned on this point, the Minister, Mr Jim Murphy, told us that the figure of a million people was in addition to the increase which would result from demographic change. He said, "our aim is not a million more, it is a million on top of demographics."[220] However, no specific timeframe is attached to this aim, and it is not clear how the DWP will define "on top of demographics" in assessing whether the aim has been reached.

192. The DWP's PSA target for older workers aims to increase the employment rate of over 50s and decrease the gap between it and the overall rate "significantly". In both cases, "significantly" is defined as meaning "at least 1%".[221] Patrick Grattan of TAEN told the Committee that "we need to tighten up the PSA target which the DWP currently has which is an extremely modest and unmeasured one of simply decreasing the gap in the employment rate between the under- and over-50s."[222] Andrew Harrop of Age Concern agreed, saying "We think it is really important, as part of the process of refreshing the Department's PSAs at the Comprehensive Spending Review, that a real target in terms of the employment rate for this age group is agreed."[223]

193. We concur that raising the employment rate for people over 50 is essential and that a clearer target needs to be set. We recommend that the DWP's next set of PSA targets include a clearer target for increasing the employment rate of people over 50, as a stepping stone clearly linked to the achievement of the employment rate aspiration.

Employment and skills programmes

194. TAEN/Help the Aged told us, "[t]he impact of DWP national employment programmes on older workers is marginal compared to Government action on other under-employed groups. There is a danger in assuming that market forces will drive continued improvement in employment rates, despite the barriers to employment."[224]

195. We were told that current employment programmes were often not focused on the needs of older people. TAEN pointed out that whilst groups such as ethnic minorities and lone parents are targeted by specific employment programmes, this was not the case for older people.[225]

196. Witnesses argued that specific programmes were not necessarily the answer, but that there was a need for monitoring to ensure that the general programmes to which older people had access were suited to their needs. Patrick Grattan of TAEN/Help the Aged said:

"I would say we are not going to have special programmes based on age but what we have got to do is not let this become a marginal issue and we have got to put right up front: are all these various programmes working for all age groups. Is Pathways to Work working for all age groups? Is employer training working for all age groups? […] [T]he Government - Ministers and others - have got to demonstrate that these programmes on skills and on work really are working equally well for all age groups, because at the moment the messages are fudged or hidden."[226]

197. In particular, it was argued, area-based initiatives such as the Cities Strategy or Employment Zones risked leaving out older people, unless they were specifically located with the needs of over 50s in mind. This is because, as Age Concern told us, "[p]eople over 50 without work are more widely dispersed across local authority areas than people out of work aged 25 to 49," and there are also "more pockets of severe employment disadvantage for over-50s than for adults aged 25 to 49 […] these are not always the same disadvantaged areas."[227] Age Concern suggested that "[t]he government therefore needs to 'age proof' the selection of area based initiatives."[228]

198. To make sure that employment programmes are working equally well for older people, TAEN suggested that performance information needed to be placed regularly in the public domain: "At present it is hard to discover whether Government programmes are working equally well for all age groups and therefore are responsive to the ageing of the population. Such data as is available is not publicised, often because it shows that programmes are not working so well for the over-50s."[229]

199. TAEN also stated that data should be provided on whether a range of programmes, including New Deals and Cities Strategy, were working equally well for people under 50 and over 50. We agree that this would be a good way of monitoring these programmes and making sure they are "age-proof."

200. Witnesses identified skills training as an important requirement to help older people enter or progress within employment.[230] However, they told us that current skills training programmes were poorly suited to older people. Patrick Grattan of TAEN/Help the Aged said,

"Our view is that the skills strategy is not fit for purpose for this age group; it is all about formal full level 2s […] our common approach is saying: "Here is a qualification designed for an 18-year-old and you, over 55-year-old, should do it." If you want to go back into nursing, shall we say, or start as a nurse and you have had 30 years as an adult, is that the right kind of qualification?"[231]

Andrew Harrop, of Age Concern, agreed, saying that "[e]ven though most of the schemes on offer are available to people of all ages there is a culture that skills is about young adults, and that culture needs to be shaken up."[232]

201. To improve skills provision for older people, Andrew Harrop suggested that a more tailored approach should be developed: "If we focused on giving everyone who does not have formal qualifications an entitlement to a level-2 skills-set, plugging qualification gaps with specific, tailored opportunities that fit their needs, that would be much more suitable for many older workers."[233] This reflects the approach recommended by the Leitch review, considered in Chapter 5, which also calls for a move towards a Level 2 entitlement.

202. Andrew Harrop also called for "robust monitoring and targets of the age profile of training participants."[234] As with other employment programmes, this would be useful to ensure that the skills needs of older people are being met.

203. We recommend that the DWP publish data on whether those employment programmes available to over 50s and under 50s are working equally well for both age groups, and this should be done at least yearly. Area based initiatives, including the Cities Strategy pilots, should be included in this data. The DWP should more explicitly monitor the participation of people over 50 in skills training programmes.

New Deal 50+

204. We heard evidence that the New Deal 50+ was no longer as effective as it had been when first launched. Age Concern told us:

"New Deal 50 Plus was a successful programme until 2003 when a £60 weekly credit was absorbed into Working Tax Credit. Since then the number of job entries have halved. New Deal 25 Plus remains moderately successful and we support plans to extend the Intensive Activity Period to older claimants."[235]

205. In order to join New Deal 50+, a person must have been on a benefit for at least six months.[236] We heard evidence that this delay could cause particular problems for older people. Andrew Harrop of Age Concern said that over-50s should be treated differently from younger groups, as "they risk becoming detached from the world of work faster and accepting early retirement." The ideal situation would be one where "New Deal programmes and the equivalent were available as soon as was needed by that individual on a personalised basis, depending on their barriers from the labour market."[237] Richard Exell of the TUC agreed, saying that whilst in many ways older jobseekers had similar needs to younger ones, "[a]ll the evidence we have got is that economic status reinforces itself for this age group [the over 50s]."[238]

206. Age Concern told us that "Older people without work experience […] particularly high barriers to returning to work […] After initial optimism about finding work they have a tendency to become rapidly detached from the workplace."[239] TAEN stated that "personal barriers to opportunity are based on self-limiting beliefs that 'we have had our chance' and there are no more opportunities. These are as important as employer stereotypes and barriers based on age."[240]

207. We were also told that the term "early retirement" was not straightforward. Richard Exell of the TUC told us that "[f]or a majority of older non-employed people, even when they are describing themselves as early retired, actually it was not a voluntary decision; they have got very low levels of income, they are heavily reliant on state benefits and most of them say that it is not what they had planned for their future."[241] This supports the view that early intervention is vital for this group.

208. Organisations told us that the decline in the performance of New Deal 50+ was particularly problematic because of the delay in introducing BoND which was discussed in Chapter 3. Age Concern told us, "[t]he long-term future of the New Deal remains in doubt with no news of the proposals for a personalised, streamlined New Deal."[242] Patrick Grattan of TAEN/Help the Aged agreed, saying that "We accepted that we were moving away from a world where New Deal is defined by age, and that New Deal 50 Plus was gradually dying, on the basis that the whole thing would be rejuvenated for all ages. That has not happened because of resource constraints or for whatever other reasons."[243]

209. As recommended in Chapter 3, the DWP should move towards a flexible New Deal along the lines of the Building on the New Deal proposals, and pilots of this programme should include people over 50. Allowing older people to become distanced from the labour market, and come to think of themselves as "early retired", is a loss to the economy, limits the choices of older people and increases their risk of poverty. We recommend that the DWP move towards making New Deal support available for this age group as soon as benefit is claimed.

Age discrimination

210. The Committee was told that age discrimination on the part of employers was a significant problem for older workers. Richard Exell of the TUC told us that it was "very common for older people to report age discrimination," and that evidence for the problem was "indirect, but […] quite persuasive."[244] Andrew Harrop of Age Concern said that:

"The latest evidence is that a third of people in the course of a year say they have experienced age discrimination which is extraordinarily high. We have also just done some qualitative research with people over 50 looking for work and they mentioned age discrimination early and consistently throughout the research as the major barrier that they were facing. These were not people that you would in any way think of as difficult to employ. They were capable, they had done a wide range of jobs, they had the sort of life skills that employers cry out for and they just were not getting a chance. That was a consistent message from six different focus groups."[245]

He added that many employers admitted to this: "Even last year a survey had 1 in 10 [employers] saying that they discriminate in recruitment and I suspect a lot more who do not own up to it still have those sorts of attitudes in their recruitment practice."[246]

211. We were told that age discrimination was often based on misconceptions about the abilities of older people. A report by the TUC, Ready, Willing and Able, states that "employers often hold stereotypical views about older workers," and that "these influence recruitment, training and promotion practices. The stereotypes found to have the closest relationship with actual employment practices are: older workers are hard to train; do not want to train; lack creativity; are too cautious; cannot do heavy physical work; have fewer accidents and; dislike taking orders from younger workers."[247]

212. To counter this, the TUC report cited studies which show that older workers are no more resistant to new skills training than younger ones and that they have similar frequency and type of workplace injuries. They do not have more absence from work than younger workers, though they do have a different pattern of absence, tending to take fewer, longer spells off work. The TUC also argued that "experience can enable workers to compensate for declining powers".[248]

213. The CBI stated that it "shares the Government's objective of raising participation rates amongst older workers given strong concerns about the sustainability of pensions, economic growth and future labour supply."[249]

214. The DWP told us that it is working to encourage employers to recognise the benefits of a workforce that includes older workers:

"The Department will continue to build on the success of the 'Age Positive' campaign to encourage employers to realise the business benefits of adopting more flexible approaches to retirement, giving individuals more choice and more opportunities to stay in work for longer."[250]

215. Age discrimination was described as promoting under-employment as well as preventing entry to employment. Andrew Harrop of Age Concern told us that "[a]ge discrimination is as significant in influencing under-employment, people being employed beneath their capabilities and skills, as it is to just getting into the labour market at all."[251] The issue of under-employment was looked at in Chapter 4.

216. Recent regulations have made it illegal for employers to discriminate on the basis of age, with certain exceptions.[252] Witnesses told the Committee that they welcomed the regulations, but were concerned that they needed clarification. Andrew Harrop told the Committee that "[t]here is an awful lot that is not yet clear in the legislation particularly about how easy it will be to justify direct discrimination […] the early test cases on what that means in practice will be crucial."[253] He also said that promoting awareness among employers and employees was important. Patrick Grattan of TAEN/Help the Aged agreed that the new regulation "is not the whole answer, but without a doubt it is part of the answer." [254]

217. Age Concern suggested in evidence that the new Commission on Equality and Human Rights should take the lead in monitoring the success of the new law. "The CEHR should monitor the development of age discrimination case-law and intervene in litigation to ensure that age-based practices are only lawful in exceptional circumstances. However if tribunals permit widespread discrimination the CEHR should request that the Government […] tighten the legislation."[255] We recommend that the Government monitor, through the new CEHR or directly, the effectiveness of age discrimination legislation.

Forced retirement

218. The issue of forced retirement at a certain age was mentioned by Age Concern, which, together with its new membership organisation, Heyday, is applying for a judicial review of the regulations, which currently include an exception to allow employers to compel people to retire at 65.[256] The DWP has said that "in 2011 we will review whether the time is right to sweep away retirement ages altogether […]."[257]

219. Andrew Harrop of Age Concern told us that

"[I]t [the exception] is being interpreted by employers to mean, "We had better get rid of people over 65 because we might face risks if we don't", so rather than being a rarely used exception, the early evidence seems to be that it is becoming a default that employers do it unless they have a very good reason not to. That is really important for people's opportunities over the age of 65, but it also sets the tone for employment for at least five years before that, possibly longer, because you have a countdown to a fixed arbitrary age rather than it being about the individual employment relationship, how good any one employee is and how long they wish to carry on for."[258]

220. On 6 December 2006 the High Court ruled that Heyday's legal action should be referred to the European Court of Justice. The Government did not contest this view in the High Court. The Director of Heyday, Ailsa Ogilvie, welcomed this, saying that she hoped the ECJ would "declare that the UK's new law does not fully implement the European Directive outlawing age discrimination," and that "the Government would be forced to amend the legislation to give workers over-65 the same protection from discrimination that younger workers have."[259] We will follow with interest the outcome of this challenge.

221. We welcome the Government's initiative on outlawing age discrimination, but we remain concerned that it still leaves people over 65 without adequate protection. Given that the State Pension age is due to rise steadily in future, and that there is a consensus in favour of making retirement a process rather than a cliff-edge event, we recommend that the Government reconsider its decision not to address this issue until 2011.

214 Ev 312 Back

215 Department for Work and Pensions, Autumn Performance Report 2006, 2006, p 30 Back

216 Ev 141 Back

217 Ev 191 Back

218 "More older people in work, fewer people on incapacity & lone parent benefits," Department for Work and Pensions press release, 15 November 2006 Back

219 Q 102 Back

220 Q 518 Back

221 Department for Work and Pensions, Public Service Agreement and technical note for 2005-2008, p 5, www.dwp.gov.uk. Back

222 Q 103 Back

223 Q 103 Back

224 Ev 139 Back

225 Ev 144 Back