Rishi Sunak’s government is said to considering proposals to give over-50s tax breaks for getting back into work after a career break.
The Treasury is discussing plans to encourage people to return to Britain’s workforce by offering them tax incentives, according to The Times.
Ministers are also understood to be discussing a shake-up of disability benefits – including reform of “perverse” fit-for-work tests believed to encourage people to prove they are unable to work.
Sickness and disability payments could be removed more gradually once people find a jobs and start earning, like other out of work payments in Universal Credit, under the proposals.
Around nine million people in the UK are now “economically inactive” according to government figures, and around 2.2 million are on out of work benefits.
A report by senior peers recently warned that a wave of early retirement during the Covid crisis was largely to blame for the number of economic inactive Britons increasing by 565,000 people since the start of the pandemic.
Using the tax system could reportedly see and greater used of tax-free allowances, with ministers reportedly keen to see over-50s returning to work made entirely exempt from income tax for up to year.
Mr Sunak’s official spokesman did not deny the idea the tax system could be used to get people back into work, but said reporting on the idea was “speculative” and changes would have to be made by chancellor Jeremy Hunt at a Budget.
The No 10 spokesman said on Thursday that the PM had made clear that “there were a range of things we are looking at, but obviously it is for the Budget to talk about these kinds of things”.
The spokesman said a health and disability white paper would set out more of the government’s plans in the coming months – saying the paper would “help shape our approach” to getting people back into work.
Vicki Nash, head of policy at the charity Mind, said the proposals seemed “utterly unworkable”, saying they appeared to be aimed at “forcing people to show how they can return to the workforce”.
She said: “Unless the DWP removes the threat of sanctions, they will continue to struggle getting people who might be able to return to employment to take up support.”
Labour’s shadow work and pensions secretary Jonathan Ashworth accused the Tories of “stealing” his ideas on reforming the benefit system to incentivize returning to work.
“It’s great for workless people and the economy that [work and pensions secretary] Mel Stride is stealing my ideas I outlined this week,” he tweeted on Thursday. “But the truth is only Labour has a plan to get Britain back to work.”
Earlier this week, Mr Ashworth said Labour would make “better use” of existing resources, as the party pledged to end repeat work capability assessments for those who are disabled or ill.
The frontbencher set out measures aimed at making the system more “flexible” and easier for people on out of work on sickness benefits to return to the workplace would arduous tests.
But Mr Ashworth denied any suggestion that his proposal would simply allow those who dislike a certain job to easily move back on to benefits, as he said it was about “de-risking” the return to work for those who are ill or disabled.
