Jeremy Hunt's blistering Budget acknowledged the need to boost Britain's older workforce but failed to deliver on three key wins, a veteran protection specialist has claimed.
Ron Wheatcroft, technical manager at Swiss Re, said he had been advocating for the UK government to push through changes in three key areas.
These were: fewer tax charges on life assurance policies; occupational health initiatives to help people stay in the workplace; and P11D charges on employee assistance programmes.
According to Wheatcroft, these would have helped reduce the burden of complexity for taxpayers and helped the chancellor achieve his ambition of keeping more people in the workplace.
Chancellor Hunt said: "Today, we deliver the next part of our plan: a Budget for growth ... but long-term, sustainable, healthy growth that pays for our NHS and schools, finds good jobs for young people and provides a safety net for older people."
The Budget acknowledged that more needed to be done to lure the over-50s back into the workforce and keep them there, by uplifting the caps on the money purchase annual allowance from £4,000 to £10,000, for example. "Older people are the most skilled and experienced people we have in Britain", he told the deputy speaker.
There were also measures to help those with disabilities to stay in the workforce, with £400mn for occupational health to keep sick people in work, and increasing the mid-life MOT availability.
But Wheatcroft said much more could have been done to help older workers. “While it’s important that the Government is taking steps to improve occupational health initiatives which help to mitigate economic inactivity, we are disappointed that the proposed measures didn't go further.”
Instead, he called it a "missed opportunity", comments echoed by senior parliamentarians, such as Baroness Ros Altmann.
Wheatcroft outlined the rationale for the three changes he had hoped to see in the Budget on March 15. These were:
Fewer charges for life insurance policies held in trust
Currently, a discretionary trust that holds one or more pure protection life assurance policies faces possible tax charges – at entry, periodically through its life, and on closure.
In his view, these charges need to go.
Wheatcroft said: "They were designed with investments in mind and should have no place when pure protection policies are put into trust. The main reason for doing so is to ensure the policy proceeds are paid promptly at a time when loved ones need them most, not with any investment motives in mind.
Occupational health services should be expanded to support those in poor health to stay in the labour force.Baroness Ros Altmann"Removing the charges would make for a far simpler system, easing the burden of complexity around potential tax charges currently placed on trustees. We calculate that the annual cost of compliance with the Relevant Property Trust regime is approximately £3.1mn.
"In contrast, the maximum amount of tax revenue generated is less than £1million and, in practice, may be no more than half of this figure."
He said a simpler system would encourage employers to offer more benefits to workers. This could be particularly helpful in encouraging smaller employers, who make up the bulk of the economy, and may otherwise be put off by the prospect of a potential tax liability affecting their business.
Mitigate economic inactivity through occupational health initiatives
Some 520,000 more working age adults were economically inactive at the end of last year compared to pre-pandemic according to the Resolution Foundation. It’s a national problem because other developed countries have seen a rise in labour force participation.
Wheatcroft said: "Many commentators talk of encouraging people who have chosen to retire early back to work – but sober analysis points to long-term sickness as a more likely root cause."
Moreover, as the table below shows, people's life expectancy and the years of good health they can expect depends a lot on their economic situation: those in the lowest decile (1) are expected to have the lowest number of years in good health, compared with those who are in the top decile (10) in terms of socio-economic conditions.
Decile | MenYears in good health | WomenYears in good health |
1 | 52.3 | 51.9 |
2. | 56.4 | 56.8 |
3 | 58.4 | 59.6 |
4. | 61.1 | 62.0 |
5. | 64.1 | 64.2 |
6. | 65.1 | 65.1 |
7. | 65.9 | 67.3 |
8 | 67.3 | 68.5 |
9. | 68.5 | 69.5 |
10. | 70.5 | 70.7 |
According to the Office for National Statistics' latest employment figures, there are 1.7mn people currently not looking for work, but who say they would like a job. The figures show there are increasing numbers with long-term health conditions. Many of these people are over age 50.
According to Baroness Ros Altmann, these people could still work with improved help, retraining or more flexible working conditions.
She said: "New thinking is needed to overcome ageism, improve retraining, provide apprenticeships for older people, extend occupational health services and encourage part-time work: Encouraging, forcing or helping older people to work requires a number of interventions, alongside pensions or benefits.
"There is still too much ageism in the labour market, with employers often overlooking older job applicants, or failing to offer training to the over-50s. Government training programmes and apprenticeships for older people will also be important to help older people acquire the skills needed by employers."
Altmann commented: "Occupational health services should be expanded to support those in poor health to stay in the labour force, with a focus on what work people can do, rather than what they can’t do. A period of part-time work and flexible working opportunities, including remote working, for those caring for loved ones would also help older people to keep working.
Wheatcroft said he was pleased to see some changes but asked for more: "If the Government is serious about improving economic activity, it needs to shift the focus onto keeping people in work and supporting them back into the workplace through vocational rehabilitation and occupational health initiatives, where it makes sense to do so.
"There are huge opportunities for the insurance industry and central authorities to collaborate on these initiatives. It's vital for society that we keep focused on this."
Remove potential P11D charges for EAPs
The third thing Wheatcroft wanted to see in the Budget is support for employee assistance programmes in the form of removing all potential P11D charges.
He said: "EAPs are cheap - starting at £2.25 per employee - and useful when it comes to supporting workers with their mental health and many other issues they face.
"We recommended the removal of all potential P11D charges for EAPs. This would involve no cost or loss to the Treasury - as EAPs currently operate in such a way that P11D charges are not incurred - but would enable employers to extend their support for mental health and productivity in the workplace via EAPs."
He said this issue is even more pertinent with the so-called great resignation still happening, and current cost-of-living issues having exacerbated mental health conditions and relationship difficulties for many.
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