Even if we’re truly desperate to get the over 50s back to work, we shouldn’t be given them bespoke tax carve-outs which will create more intergenerational inequality, writes Emily Fielder
It was with a certain sense of irony that I read a piece recommending that we hand the over 50s a tax bonus as my colleagues were Whatsapping me from the latest intergenerational inequality themed event.
Considering that this suggestion that we give a tax-break to the elder cohorts was made in the same week that the Chancellor suggested that our salaries should be kept low, and taxes high, to deal with inflation, this will feel particularly galling. To put this in greater context, the real terms value of our wage packets have suffered at an almost unprecedented level whilst it would take the average 30-year old first-time buyer 20 years to save for a deposit. In the 90s, it would have taken three.
It’s frustrating to have to sound the “highest tax burden in the country and sky-high house price” klaxon again, but the reminder is clearly needed.
Blatant unfairness aside, let’s look at the reasons why the over-50s aren’t returning to the workforce. One of them, if this was not implied heavily enough above, is that they are simply more financially secure and have no desire to come back. Recent research by Public First showed that home ownership, and housing wealth, fuelled by increasing house prices, is a key driver. No amount of money is going to prise them from the golf course.
Those who do not have the luxury of a decent savings-pot, or wealth-creating assets, and who therefore want to return to work, tend to cite the availability of flexible working – whether that be the choice to work from home or to work part-time – as the predominant factor when deciding to return to work. Companies are likely to find that making concessions on this will encourage greater workforce participation from these early retirees.
But any suggestion that there is not enough recognition that there is a cultural problem is, to my mind, rather unfair. Older workers certainly require support- but the Department for Work and Pensions has, to their credit, recognised this and has rolled out a whole host of support packages, including job-centre led mid-life MOTS, the returnship campaign for better access to re-training and the network of 50 plus champions.
What is a truism is that work simply doesn’t pay in this country- and this is a real economic problem. Frankly, why would anyone want to return to work when you get to keep so little of your own money? If you’re on Universal Credit, there’s an even greater disincentive. The current taper rate, the rate at which your benefit allowance is withdrawn as your earnings exceed the approved amount, is at 55 per cent. This means that for every pound someone earns over £16,000, their Universal Credit is reduced by 55 pence.
Fundamentally, more financial bungs for the older cohorts is both inherently unfair, and would fail to tackle the dominant underlying reasons for our work-force problem. This is to say nothing of the fact that shortage occupation lists are simply government meddling schemes into something that should be left to the free market.
Look, I’m all for tax cuts, in fact, I’d actively encourage the Chancellor to cut income taxes. But work should pay for every worker, not just the over 50s.