Plans to increase working hours among the over 50s and benefits claimants are set to be unveiled in tomorrow’s mini-Budget.
Chancellor Kwasi Kwarteng is set to announce more employment support for people aged 50 and over, following a significant increase in economic inactivity following the Covid-19 pandemic.
The Department for Work and Pensions, which earlier this year introduced more one-to-one employment support for over 50s, recently reported a drop in the employment rate of people aged 50 to 64, with many leaving work because of injury, illness or disability. There has also been a reduction in part-time employment in this age group.
The Chancellor is also set to announce a tightening of the Universal Credit rules, which will require claimants working up to 15 hours per week to take steps to increase their earnings or face having their benefits cut.
Kwarteng said: “Our jobs market is remarkably resilient, but it is not perfect. While unemployment is at its lowest rate for nearly 50 years, the high number of vacancies that still exist and inactivity in the labour market is limiting economic growth.
“These gradual changes focus on getting people back into work and maximising the hours people take on to help grow the economy and raise living standards for all. It boosts incomes for families and helps businesses get the domestic workers they need, all while supporting economic growth.”
The current threshold at which benefits claimants need to take steps to increase their working hours is nine hours, but next week this will increase to 12 hours. Kwarteng’s new proposal is set to come into force in January 2023.
According to reports, only a small number of benefits claimants would be affected – around 120,000 people out of about 5.5 million who receive Universal Credit.
DWP work coaches will require the claimants to make commitments such as applying for jobs, attending interviews or increasing their hours.
The chancellor has faced calls to increase the national minimum wage in his mini-Budget tomorrow (23 September), as many workers struggle with the rising cost of living.
TUC general secretary Frances O’Grady said: “Friday’s mini budget is an acid test for this government. Are ministers on the side of working people, or more interested in handing out bungs to big business and City bankers?
“Tax cuts will do nothing to jumpstart the economy and will only line the pockets of the wealthy and companies like Amazon. When millions are struggling to make ends meet, the chancellor should focus on getting wages rising across the economy – not helping out corporations.
“That means a £15 minimum wage as soon as possible, boosting universal credit and fair pay deals for workers across the economy.”
Paul Farrer, founder of recruitment consultancy Aspire, said that encouraging employers to invest in jobs would be key to stimulating economic growth.
“Businesses are facing challenges on several fronts – with inflation and an ongoing skills shortage that’s hampering economic growth – and so it’s essential that the Prime Minister and her government do what they can to create more favourable conditions,” he said.
“The range of options include raising the tax threshold to remove more of the lowest paid from tax, increasing the national minimum and living wages – as long as shifting tax thresholds doesn’t negate any rise – and a cut to national insurance, or a combination of these.
“It’s no surprise people want a pay increase, with inflation rising fast. But businesses also need considerable help to avoid large-scale redundancies and a reversal of our high employment economy.”