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Older Workers

Volume 713: debated on Thursday 22 October 2009

Question for Short Debate

Asked By

To ask Her Majesty’s Government how they propose to enable older workers who are able and willing to continue working to do so.

My Lords, I welcome the opportunity to open this short debate. There has been much media concentration on the problems of young people, school leavers and those recently graduated, and I support what the Government are trying to do in that situation, but older workers in the 50-plus category face particular problems when they become unemployed. Many find that age discrimination magnifies other barriers that they face. Eventually the hurdles become insurmountable. They begin to fear that they may never work again. With a fall in income from pensions and savings, many who lose their jobs face the prospect of a bleak old age. As one unemployed 50 year-old put it, “Age is the new disability”.

Hopefully, recessions do not last for ever and this debate is concerned with the future as well as the immediate prospects. The background is well known. We are all living longer. Average life expectancy rose by 30 years in the 20th century and is still rising. Presently, there are more people aged 65-plus than people aged under 16. This is causing the Government and pension providers to endeavour to make changes in pension provision and is in part responsible for the decline, which I regret, in defined benefit pension schemes. But far too little is being done to ensure that those who are living longer have the opportunity to play a part in the labour market.

There are quite a few myths about older workers. These include ideas such as that all older workers are happy to retire; many are not. It is said that older workers cost more, but the evidence does not bear this out. Older workers are said to be less productive, but this also is not supported by the facts. There are health benefits attached to being at work. A recent review found that good work has a beneficial effect because work with others is a social activity. After a lifetime during which social contacts and lifestyle have been built around work roles and the workplace, it is often not easy to adjust to inactivity and a slower pace of life. A recent survey of older workers in former G7 countries revealed that while 82 per cent of the British respondents said that in general they worked for the money, only 45 per cent listed money as the main reason. Some 49 per cent wanted to work to stay mentally active, and 31 per cent said that it helped them to remain physically active.

A great deal of discussion recently has been about the lack of social care for the elderly. Indeed, the Prime Minister has promised that more would be done to provide adequate social care for older people. Of course that is important and very necessary. We must do a great deal more to ensure that care is available for elderly people when they need it, but it would seem from research undertaken that much less social care would be needed if older people were encouraged to maintain an active life through an appropriate form of work, and this could include the opportunity to move to less physically demanding work. Since 2006, new permissive legal regulations have allowed a company pension to be combined with a salary from the same employer, thus allowing a job to be downsized. Very few employers, however, have taken advantage of this.

While the age regulations we now have provide protection against discrimination by age, employers still have the right to compel the retirement of employees reaching the age of 65. Employees may ask to remain in employment, but many employers simply refuse such requests. The employee has a right of appeal, but this is rarely successful, and the employer does not have to give a reason for his decision. Indeed, employers’ rights in this respect have recently been confirmed in a High Court decision, but the judge made it clear that he believed that the law should be changed. We have the national default retirement age of 65. I understand that this is to be reviewed next year, but in the light of the judge’s comment in the recent court case, it surely should be dealt with immediately.

A survey conducted by the Chartered Institute of Personnel and Development of 50 to 64 year-old workers indicated that, if they could, 38 per cent planned to carry on working beyond age 65, and a further 31 per cent said they would be willing to do so if their employer were willing to grant flexible working. A further 20 per cent said that they would like to stay on if they could be granted an improved deferred state pension. It seems reasonable to conclude that if employers go the extra mile and make adaptations to working arrangements to accommodate older workers, many more would want to remain in employment. Of course there are trades and occupations where it is quite unsuitable for older people to continue working. The construction industry is obviously such a case, and incidentally seems to have a very poor safety record. But there are many occupations where suitable adjustments could be made and where older workers’ knowledge and experience could continue to be useful.

Recently I attended a reception at the invitation of the Age and Employment Network, the organisation to which I am indebted for much of the briefing I have received, at which presentations were made to the representatives of three UK companies which had won awards for the innovative way in which they employed older workers. The key areas for consideration in making the awards were what the companies had done in regard to their recruitment practices, the provision of training and education, alternative work options, flexible working, job sharing and phased retirement. I had the opportunity to talk to some of the company representatives present. I was struck by their enthusiasm. They spoke highly of the experience, knowledge and commitment of their older staff, so this shows what can be done, and I believe that much could be learnt from the experience of other countries, notably Denmark and Finland.

I know that these issues have been receiving some attention from the Government. The revised ageing strategy has been set out in the paper entitled Building a Society for All Ages. But there is some concern among organisations working with older people that insufficient attention is paid to the problems facing older workers seeking employment. Targeted support is provided to unemployed people after six months of unemployment, but this might not be appropriate in the case of older people. Rejection can follow rejection. Disillusion sets in and confidence evaporates. Older people must get help earlier. Jobcentre advisers need to be aware of the needs of older workers in order to direct them to possible employers. Many older workers feel that too little attention is given to the experience and knowledge that they may be able to bring to a job, as distinct from formal qualifications that they may not have had the opportunity of acquiring when they were younger.

Recently I read a pamphlet produced by the Institute of Directors about pension provision: 70 is the new 65, it declares, urging that the age of retirement should be immediately defined at this later age, believing that money would thus be saved in regard to pension provision. But it had little to say about employment. If the older worker simply moves from receiving the state pension to collecting jobseeker’s allowance, that is hardly likely to be very popular; indeed it has already been substantially criticised. The provision of appropriate work is absolutely crucial. I believe that the Government can give a lead here, and I await with interest the response of my noble friend.

My Lords, I thank the noble Baroness, Lady Turner of Camden, for securing the debate and for her excellent presentation.

We have an ageing population in the country and this puts a huge pressure on state services as well as on the state pension. We need, therefore, to look at ways of relieving this pressure, and enabling older people to work is crucial to achieving this aim. The current model, if left unreformed, will be unsustainable. It is therefore important to encourage people over 65 to remain as an active part of the productive economy. The Work and Pensions Select Committee has estimated that deferring retirement by just two years can ease the situation in regard to the basic state pension by up to 20 per cent.

Work also has an important intrinsic social and cultural value, providing structure to many lives and providing informal support mechanisms. A number of older persons need to keep themselves occupied: this gives them a purpose in life and they attain a great deal of satisfaction and pride by working. The aims of the Government to get us all to work longer are indeed laudable for a variety of socio-economic reasons but, if we look at the reality, there are often disincentives to this.

A cultural shift is required, focusing on three core areas: support and training for middle-aged and older people; removing economic barriers to carrying on working after 65; and ensuring that the workforce is not largely diminished through ill health. Employers should recognise that older workers are experienced and loyal assets to organisations; they provide excellent customer service.

The default retirement age, anti-age discrimination legislation and the retirement age need to be reviewed for the future, but we need a period of radical thinking about what we can do today. The Pensions Commission’s call for lower employer national insurance contributions for those over pensionable age is one such suggestion. Extending flexible working is also key in enabling older people to carry on working while balancing family and other duties.

The level of skills and training in older workers is often below average. A Conservative “all ages careers service” will make apprenticeships available to all and not only the young. It is also scandalous that people of state pension age are not entitled to attend Jobcentre Plus. We need to review this matter.

The economic incentives to work for the poorest pensioners who are receiving pension credit top-ups are minimal. The Work and Pensions Select Committee stated:

“A single pensioner on Guarantee Credit is entitled to £5 per week disregard on their earnings with couples entitled to a £10 disregard”

For many pensioners, it is probably not worth considering taking up work. As the disregard has stayed the same since 1988, I call on the Government to undertake a full-scale review of the earnings disregard.

Finally, I urge employers to take a proactive role towards the health of their workers who are over 50 as some fall ill in middle age and never return to the workplace. I would appreciate an update from the Minister on the progress of the trial of early intervention provision, Fit for Work schemes and the current ongoing work of the National Centre for Working Age Health and Well-being. Barriers to work for older people are a combination of cultural factors, economic disincentives and health concerns. I commend the Government’s efforts thus far but we need a more fundamental review if this plank of policy is going to be realised.

My Lords, for the first time in the history of this country we have now reached a position where there are more people of retirement age than there are younger people of working age. With our country facing the prospect of a rising life expectancy, an ageing population is something that we should consider much more than we have in the past. The fact that someone born today can expect to live well into their eighties should be seen as real progress—it is a triumph—and we should see it as an opportunity to harness the talents of older people. However, despite the fact that these are revolutionary changes, when we talk about an ageing population it is usually in pessimistic—and sometimes apocalyptic—terms; older people are seen as a problem or a burden because of the rising cost to the NHS and the cost of pensions. This is a great pity.

Sometimes public bodies send out messages that are really unfortunate in this regard. Last year, Moira Stuart was sacked from her job as a newsreader; apparently because she was considered too old. Just recently, Arlene Phillips has been taken off “Strictly Come Dancing” to be replaced by a younger model. What kind of message does this send out? That above talent, skill and experience, we value youthfulness.

This recession, like others, has seen a sharp increase in unemployment across all age groups, but people made redundant in their fifties face the real prospect of never working again. This was certainly the experience during the previous recession, where studies have shown that employment rates for the over-fifties took a decade to get back to their pre-recession levels. There is a great deal of evidence—some of it anecdotal but some of it more than that—that Jobcentre Plus simply does not understand the needs of older job applicants. People are sent for jobs for which they are not suitable or to employers who have no intention of employing older people. Quite often, frankly, they are patronised by people who are many years younger than they are.

It seems to us on these Benches—and has done for some time—that there is no option now but to remove the mandatory retirement age. We need a flexible decade of retirement where older people are given the option of working longer and generally contributing to their own and the country’s economic success. It would then become much more viable to retrain people who lose their jobs in their fifties. The recent High Court judgment on the national default retirement age has again highlighted the need for an urgent review of the current policy, which is unquestionably ageist, in spirit if not in law.

Earlier this week the Institute of Directors announced its proposals for retirement, suggesting, as we heard from the noble Baroness, that the retirement age be raised to 70—and, with increased longevity, it may have a good point—but that simply cannot happen in practice unless all kinds of other changes are taken into account. In any event, most older workers do not want to be made to work until they drop; they want choice. Many will want to work part time or to job share, and for the individual this would remove the cliff face of sudden retirement. It would also provide a more diverse and flexible workforce.

The Government need to allow older people to draw part of their private or occupational pension while still working, if they are working part time, and there should be much more flexibility in the way that annuities are used; they could be divided between current income and capital—whatever works for the individual concerned. We have a choice: an ageing population could become a massive burden or we can get used to the idea of flexible retirement, with people working longer where they wish to and are well enough to do so, so that pensions are deferred and the resources that are freed up can be concentrated on the very old and the very vulnerable.

I shall be interested to hear from the Minister what the Government think they can do. They are a major employer and could set a very good example in this regard. It will be interesting to know what they are doing. We need now serious action which can effectively deal with the ageing population, harness the potential and ensure that older workers are given the recognition and the rights that they thoroughly deserve.

My Lords, the noble Baroness, Lady Turner, has given us most eloquently an idea of the consequences of the huge demographic revolution that we are living through. Other noble Lords have also pointed to this—that we have to get used to and adapt to the ageing of society, benefit from it and welcome it. Older workers are a huge resource to society. Economists have demonstrated over many years conclusively that there is no fixed pool of labour; older workers, if properly guided and managed, do not block younger workers and take away their jobs. Older workers have different skills from younger workers; older workers often mentor the young and know the history of the organisation in which they are working. Part of a firm’s policy of diversity is to welcome the resource of older workers. Many in the retail sector have understood that customers welcome dealing with older workers; they like them and want to be served by them. So it is not a negative proposition at all, but we need to help employers in all sectors—especially SMEs—to manage effectively, through proper appraisal systems throughout the working life, which can guide people into appropriate work and give retraining throughout their career, as necessary. That will enable younger managers to have enough confidence to appraise workers as they get older, guide them into new forms of work and give appropriate training throughout their career. That is very important.

The Government have spoken of a review of the default retirement age. That has to be speeded up. The Equality Bill is another opportunity—but somehow we have to get rid of the default retirement age. It is a cliff edge that is totally disproportionate, and it is discriminatory, as it uses an arbitrary age to define the capacity of someone to do a job. We know that people vary tremendously and that age is not a reliable indicator. People have to be judged on their capacity to do a job. Older workers, research has shown, because they want or need to work, tend to be punctual, reliable and loyal and have a good sickness record. The effect on the health and well-being of those who work is positive, which has cost-effective economic, social and health results, of benefit to any company or employer. To replace a middle manager, for example, with someone new, costs approximately £8,000 to £10,000, when you take into consideration the retraining costs of new workers. So the cost-benefit analysis has to be realistic about the results of getting rid of older workers.

We have to change the situation of throwing people out of work at an arbitrary age. The Government have led the way with senior civil servants; now is the time to broaden this to all workers in all sectors. Fairness demands that the Government do that and do it now.

My Lords, I think that I am replacing the noble Baroness, Lady Lockwood. Like her, I got caught out, because on the electronic system it said that this debate was in the dinner break. I then thought that perhaps I was mixing up luncheon and dinner, which is some strange form of social division.

I am a follower of the noble Baroness, Lady Turner, and I have spoken on this subject before. I regard myself as one of her disciples—although I do not know if there is any word for a female disciple, I am a disciple in this cause.

I approach this matter purely on economic grounds. The economy of any nation is directly related to the work of its people and their contribution—and that means all the people. One of our problems now is that we have forgotten that. As headhunters used to divide everything into quartiles, I propose to take a knife and divide us into quartiles. The first quartile is under 20, of which there are around 15 million people and the male side has a slight lead in numbers, because more boys are born than girls. People in that age group should really be trained for the future, even if they start work at 16. In that sector, we need the creation of added value through training and experience, and even apprenticeships. But they are not the main contributors to the economy; it is not their labour that pays an enormous amount towards the costs of others, particularly those who may not work.

In the second quartile, aged between 20 and 50, suddenly the women begin to take over. That group amounts to 25 million people, or thereabouts, with just a slight female majority. They are the powerhouse of the United Kingdom, who earn more each year and have the training and experience. There should be no unemployed in that sector. They are the ones who are paying for the pensions, not only of themselves but of those who go before them and will come after them.

Fifty was the age at which many employers, in the previous recession—and there have been many recessions—tended to cut the workforce, offering old Joe premature retirement, whereby he got two-thirds of his pension if he left immediately. A lot of those people thought, “That is wonderful, I might be able to do something part time”—but the part-time jobs were not open to them. They often disappeared and faded away. Some of my friends would ring me up on a Monday and ask what was new. I thought I might set up an organisation and call it GA—Geriatrics Anonymous. Anyone who was retired and wanted something to do could ring me up, and we could talk and find out what we could do. That is a sad group, because it has reached the next level.

The next level consists of those aged 50 to 79. I do not just use your Lordships' House as an example, with 69 the average age, increasing by six months every year. I know people in many parts of the world who can make a contribution at any time. At that level, and in the middle level, women start to be dominant. In the last quartile of those over 80, the ratio of women to men is two to one. Of course, life expectancy for women from birth was 82 and, for men, it was 77—but that life expectancy is rising. How do we look at what those people can contribute? The noble Baroness has already suggested part-time work. To me, it is a simple matter and almost a fiscal one. When people reach retirement age—and it is probably fair that women and men retire at the same age of 65 and get their full pensions—thereafter they should be entitled to work without any contribution made by their employer to insurance or things like that and without paying tax. Perhaps they should be able to produce two hours a week, or four or eight hours a week, or two days. The population that is not working is an economic asset, and it is the duty of every Government to recognise that.

My Lords, I add my thanks to the noble Baroness, Lady Turner of Camden, for raising this important issue. I support all the points made in her speech and those of other noble Lords. I also thank TAEN, Age Concern and Help the Aged for their invaluable briefings. Clearly, we are faced with a growing UK population within which those over 50 will form an increasing percentage. Therefore, it must be in everyone's interest to think through those measures that can help those facing the reality of a life expectancy well into their 80s and 90s to be able to continue working for as long as they are willing and able to do so, not least to give older workers adequate income for those increased years of life.

Two issues are top of the list. First and most vital, there is the need to abolish the national default retirement age, which, while still in existence, gives employers the excuse to get rid of workers once they have reached 65. The second priority is the expansion to everyone of the right to request flexible working. I cannot help thinking how relevant this situation is to the 30-year plus battle, albeit a battle still under way, for employment equal opportunities for women. Today it is recognised, if not yet fully implemented, that an increasingly competitive global economy, in which we need to use everybody’s talents and experience, has to be arranged on a flexible basis if women are to work and fulfil their family responsibilities.

The battle for men, and for all employers, to realise that they too would gain from working flexibly is also at least under way and is essential if men are to share family responsibilities with their partners. As we are all beginning to see, that makes sense. Ironically, however, flexible working has become more sharply in focus, positively because of the problems caused by our disastrous recession. Today, many employers who would not have thought of voluntarily offering such an option now see it as the only alternative to closure—that is, to shutting down their and their workforce’s whole business and livelihood.

What, then, is the most sensible route and priority for Government to be supporting the over-50s? We have heard some very good ideas already. Surely, however, it is to legislate at an early opportunity for all employees, regardless of sex and age, to have at the very least the right to ask for, and to expect, to be allowed to work flexibly. Flexible working for the over-50s would allow a more gradual route to retirement—earning less, certainly, but still contributing to adequate incomes when retirement arrived. Yet there are other reasons why we should encourage more over-50s to stay in work.

Evidence from TAEN has shown that the stereotypes that older workers cost more, are less productive, work less flexibly and take more sick leave are all statistically incorrect. In every case, exactly the opposite is actually true in relation to the younger group. Against that background, it is not indeed shameful that, as a survey revealed, only 9 per cent of the over-50s said that they had never experienced age discrimination? Indeed, a rise in employment among the over-50s makes far more sense. That would lessen the pension burden, lessen costs to the NHS—given the mental and physical benefits of employment—assist in the improvement of inter-generational cohesion, and allow many to realise their desire to continue to work. Opening up new training and retraining to older workers, disseminating good practice, encouraging flexible working and rewarding those employers who hire and employ older workers are other possible routes that the Government could well and truly go down.

My last point is that, sadly, the unemployment of the over-50s is currently rising at a higher rate than for the rest of those in employment. The alarming rise of 71 per cent in those claiming jobseeker’s allowance in that age group over the past year surely needs more research and action from the Government. I hope very much that we shall hear some positive signs of what the Government intend to do—and as soon as possible, please.

First, I wish to thank my noble friend for introducing this debate—and it is the right place to have it, if we look around here. It shows that older people have a use after all, and can contribute to society. We might, perhaps, not get everyone to agree but when it is repeatedly said that the debates in here are far superior to those elsewhere, that is something to take credit for. I was pleased with the statistic used, that the average age here is about 69 and rising—of course it is, but does that not prove that it works?

We are not alone in this. It has to be faced that more than a third of the population are now 50 and over, and that that will rise to 40 per cent. We cannot allow those people not to contribute. We are not saying that everybody is the same; they are not. Everybody is different, and while some want to retire, a lot of people—perhaps most—do not want to do so. They want to be able to contribute not least because, as my noble friend said when she opened the debate, one difficulty facing a lot of people now is that the pension is not quite what they imagined it would be when they set off. Many of them are still paying off a mortgage and with many, it is the case that one or other of them has been the only wage or salary earner in that household, so there is a need to look at it and give them that opportunity to work.

We are talking at a time of recession—not just about the recession now, but about coming out of it—but there is no doubt that, as has been said repeatedly in this House, many people who are just over 50 have lost their jobs in that recession, and many fear that they will never work again. That is completely wrong; not only is it degrading, but we are losing an awful lot of talent, skill and expertise. One of the problems that have been mentioned is that, unfortunately, we live in a world where it is all about qualifications and not so much about expertise and skill. I am sorry to say that that colours the thinking of many employers who are looking at it.

Another thing is that, if we look at the surveys, many of those people said that, in being refused, they were either too well-qualified or too experienced for the job. Others said that they were just told, “You’re too old”, and that was the end of it. We have to do a lot of education with employers to get over that kind of difficulty. Another problem is that we should be appealing to employers to provide, throughout an employee’s career with them, the necessary training so that they can qualify to do one job or another. As my noble friend said, they do that a lot better in other countries than we do here, and it should be provided, but that does not mean to say that we cannot use the people who are here now. We certainly can, and we ought to do it more.

I shall be very interested to hear my noble friend’s reply, for, as he knows, I have always listened to him throughout his career, in many other different phases and spheres—different orbs, if I might say so, than this—but I want to know what he will do in the public sector. When you talk to people, they say it is not just the private sector refusing; equally, the public sector is refusing that. It is all right to talk about senior civil servants, but what about the vast majority underneath them? I cannot believe that we cannot use a lot of the expertise and skill lying there, and I look forward to a positive reply from him.

If people want to work longer, as has been said, they ought to be able to do it, and a lot of attention must be paid to employers who are saying, “The employee has the right to ask whether he can continue”, when far too many are just saying “no”. That is a blanket “no”, where they are not even looking at it. There is a lot to be done, and I am looking forward to my noble friend joining us in offering positive ideas about how we can use the skill and expertise of the growing number of our population who are over 50.

My Lords, I, too, am extremely grateful to the noble Baroness, Lady Turner of Camden, for initiating this debate on a subject close to my heart. We have heard how the national default retirement age is to be reviewed next year—and, if it were not to be, how a High Court judge, Mr Justice Blake, would recently have required it to be reconsidered. I agree with the noble Baroness, Lady Greengross, and with others all around this Chamber that it is time that the Government got on with it. It would be wonderful if we could hear from the Minister that the review will take place late in this year as well as, perhaps, early into next year. It is time; we have had enough.

I am also extremely grateful to the Age and Employment Network, and Age Concern/Help the Aged for their excellent briefings, particularly for the point that they made about CIPD evidence suggesting that one employer in five is intending to enforce compulsory retirement ages more rigorously than before. That is even more reason to get the default retirement age reviewed pretty quickly.

We have got it completely wrong in this country. There is no doubt that older people wish to feel that they are useful members of society and that they are no burden on others. We know that productivity means different things to different people. While I was working on a book on part of this subject, many of my discussions with older people made it clear that they longed to be back at work. For some, it was because they needed more money—doubly true in a recession, or where people have lost pensions—but, clearly, it is about more than money. As the noble Baroness, Lady Turner, said, for many people, it seems to be about a sense of being of value. The more our society judges people by what they do, rather than by who they are, the more older people are going to want to go back to work. My noble friend Lady Scott has already highlighted cases of people being thrown out because of their age, particularly Moira Stuart and Arlene Phillips, but we could think of hundreds and thousands more. There are some who are lucky and carry on working. They tend often to be self-employed. There is Phyllis who is 101 and still does the accounts at the garden centre she founded. There is Jackie Lawson, the online greetings card queen who started her business at 62 and has become a millionaire. There is also the plumber I encountered who did not take the day off on his 100th birthday because he did not want to let his customers down. That is really great.

However, there are huge challenges in finding and keeping a job at a later age, and that is particularly true in areas of high unemployment. Furthermore, as many Members of your Lordships’ House have said, there remains a prevailing view, which is completely incorrect, that older workers are too costly and too resistant to change. Nine out of 10 older people believe that employers discriminate against them and a quarter speak from experience, as the noble Lord, Lord Hoyle, said. Some 10 per cent of companies refuse to employ anyone over 50.

There are signs of measures to help. The EU has taken a bit of a lead but has not done as much as Japan where, with the Japan Organisation for Employment of the Elderly and Persons with Disabilities, they are working to police a new law which forces employers to keep people in work until at least 65. We could do with something like that here, so there needs to be a cultural shift. Our present culture that says we retire at 65 must go. The noble Lord, Lord Sheikh, made that point most clearly, and the noble Lord, Lord Selsdon, made the important point that if all the older people who wanted to work found jobs, they would generate an economic output as high as £30 billion. We ought to be able to do something more sensible.

However, I would argue that the real reason the Government have been so slow to encourage change and legislate for it is probably the same reason the employers have been so slow: they discount the skills and experiences of older people and cling to an increasing faith in those of the young. The editor of the Times, James Harding, when he was its Business Editor back in 2007 and only in his 30s, wrote about this most movingly:

“If the offices of the FTSE 100s chief executives had a theme tune, it would be the refrain of Bob Dylan’s ‘My Back Pages’—‘Ah, but I was so much older then. I’m younger than that now’”.

The average age of FTSE 100 chief executives had fallen by nine months to 52 during the preceding five years. This is what James Harding wrote:

“Corporate Britain is squandering experience, driving out good people … when they are in their prime. There is too much age concern in the executive suite”.

The default retirement age is one thing, but a real attempt to give older people a chance at apprenticeships and learning skills for new jobs and a chance to show that they bring real experience is sadly lacking. Can the Minister now assure this House that the Government will review the default retirement age immediately, starting now not next year; encourage apprenticeships and other adult learning for new skills for older people in a way that they do not at present; and, as employers, view favourably any request from any government employee to continue working beyond 65?

My Lords, we on these Benches strongly agree that older people should be able, indeed encouraged, to continue to work where they are willing and able to do so. Some people prefer to continue to work as a lifestyle decision—indeed, as my noble friend Lord Selsdon and the noble Lord, Lord Hoyle, said, your Lordships’ House is such a good example of how good continuing to work can be for one’s health. For others, their pensions may have been destroyed by the abolishment of the ACT credit and falling stock markets, so that they have to continue to work. The noble Baroness, Lady Turner, mentioned that and we are grateful to her for bringing this debate forward. As my noble friend Lord Sheikh and the noble Baroness, Lady Greengross, said, older, experienced workers have so much to offer employers.

The national default retirement age, which is after all at the core of this debate, is currently 65, with a right to request to continue beyond that age. The review of the Government’s decision to have a national default retirement age at all has, as the noble Baroness, Lady Neuberger, said, been brought forward to 2010. That is welcome.

Many employers have completely given up trying to comply with the colossal burden of employment legislation brought in over the past few years, which has had such a profoundly negative impact on UK competitiveness. So we can understand if the Government do not want to exacerbate the problem by reducing flexibility in the labour market even further at such a difficult time for business. Even John Hutton has said that there was a,

“need to challenge the automatic assumption that the only way to deal with exploitation in the workplace is by passing new laws”.

However, we on these Benches believe that we should be moving towards an environment where retirement is flexible, as my noble friend Lord Sheikh said, and viewed as a process rather than a single event. People with physical jobs should, for example, be able to retrain to take on less physically demanding jobs which can utilise their valuable experience—again, mentioned by the noble Baronesses, Lady Turner and Lady Howe. Others may opt to move into part-time work for a few years before final retirement. The noble Baronesses, Lady Scott of Needham Market and Lady Howe, referred to an ageing population, and it is a fact that once growth returns there will be a natural progression to businesses employing older people because they will have no option.

It is important that whatever action is taken in relation to the default retirement age is co-ordinated with that on the state pension age. My honourable friend the shadow Chancellor recently proposed an updated review of the state pension age and that, given the state of the public finances and changing demographic projections, the Government should consider whether the rise from 65 to 66 should be brought forward from their currently planned date of 2026, but starting no earlier than 2016 for men and 2020 for women. The noble Lord, Lord Turner, is quoted in the Daily Telegraph on 3 July this year as having said that if he were to redo his 2005 report he,

“would be more radical, arguing for an even faster increase in the state pension age”.

The Conservative position is that there should be a renewed commitment to relink the state pension to earnings growth in the next Parliament to ensure a decent standard of living for all in retirement, halt the spread of means-testing and restore incentives to save. If there is to be a default retirement age, it would clearly be inappropriate for it to be lower than the age at which an individual can draw the state pension. That is something that will presumably be recommended by the government default retirement review as a matter of course.

We support the review and are pleased that it has been brought forward to next year. In addition to pension age, it should address, first, whether there should be a default retirement age and if so, secondly, what that age should be. Perhaps the Minister will confirm that the review will indeed address those questions. In addition, I understand that several countries have no default retirement age. Can the Minister also tell us what those countries are and what their experiences are?

My Lords, I congratulate my noble friend Lady Turner on initiating this wide-ranging and stimulating debate. I genuinely mean that and it is proof positive of the liveliness of the cerebral cortex of those of us who passed the age of 60 a few years ago. I have probably an impossible task in answering every single point that has been made, but I will do my best in the limited time available. If I cannot do so, I will communicate with noble Lords in writing.

There is no doubt that older workers make a critical contribution to our economy. With the demographic changes that are upon us, the proportion of over-50s in the workforce is set to rise from about 24 per cent now to just under one-third by 2020. We are committed to ensuring that older people have choice and opportunity to work up to the age of 65 and beyond. That means that older workers will play an important part in the economic recovery—indeed, in our economy—now and in the future. They will need to be as skilled and productive as younger workers, and keep up with technological advances and changes in working methods. That is why we are committed to ensuring that people of all ages and backgrounds, both within the workforce and outside, can enjoy and benefit from the wide range of learning opportunities on offer.

Our age discrimination legislation has helped to protect older workers’ employment rate by making age-targeted redundancy generally unlawful and by making compulsory retirement ages below 65 generally unlawful, but we need to continue our efforts. Extending working life and raising the state pension age over the longer term are essential for pensions sustainability in our ageing society. The noble Lord, Lord Sheikh, talked about relieving the pressure. The proportion of people of working age to people over state pension age was expected to fall from 5:1 in 1950 to just 2:1 by 2050, but by raising state pension age to 68 by 2048, we can hold the dependency ratio at 3:1. I note what the noble Lord, Lord De Mauley, said about the noble Lord, Lord Turner, and his recent comments that in hindsight he would have been more radical. We have already committed ourselves to restoring the earnings link, and I welcome the conversion to that policy by the opposition Benches.

A number of noble Lords addressed redundancy in recession. Workers of all ages have been affected by the recession. The employment rate of people aged 50 to state pension age has gone down only slightly, down by less than 1 percentage point over the past year, compared to the rate for 25 to 49s, which has gone down by 1.8 percentage points, and for 16 to 24s, which is down by 4.4 percentage points. That shows that attitudes to older people in employment are changing, maybe not as fast as we would like, but those figures are interesting.

In response to the current economic downturn, the Government have committed half a billion pounds of additional support to help prevent people who are out of work from becoming long-term unemployed. The noble Lord, Lord Sheikh, asked about early intervention. We have doubled the resources available to the Rapid Response Service. The service offers support across the country for those facing redundancy with immediate help and advice, including skills assessments and retraining, to ensure that people get back to work as soon as possible. The noble Lord also talked about apprenticeships, and we have taken away the age barrier on apprenticeships. He will be pleased to know that there were some 27,000 adult apprenticeships last year. We have done away with the concept that apprenticeships are just about vocational careers for young people. They are a valuable contribution to people retraining and reskilling.

My noble friend Lady Turner talked about helping people of all ages through the recession. We have provided our Jobcentre Plus advisers with extensive training to ensure that they are able to help all jobseekers. We will continue to develop our advisers and our range of support so that individual jobseekers—older and younger—receive effective help. In addition, the Flexible New Deal is being rolled out from this year and will offer individually tailored help to meet the needs of both younger and older jobseekers.

My noble friend Lady Turner talked about the fact that many requests to defer retirement are turned down and fewer employers are using flexible pension rules. The survey of employers’ policies, practices and preferences will explore these issues. Business organisations such as the CBI and EEF say that most requests are accepted, but we need to examine that evidence, which is critical. My noble friend Lady Turner commented on the judge’s comments on the Age Concern judicial review and said that the Government’s review of default retirement age should take place immediately. That request was also made by the noble Baroness, Lady Neuberger. We announced earlier this year that the review of the default retirement age will be brought forward from 2011 to 2010, so the direction of travel is right. The judge endorsed that approach—

I declare an interest, since I was counsel in that case on behalf of the Equality and Human Rights Commission. Speaking personally, not professionally, I am very glad to hear what has been said. Can the Minister give an assurance that the review will take place in sufficient time, if necessary, to change the law before the next election?

Let me finish the point that I was making and then I will come on to that point.

We have said that the review will be brought forward. The judge endorsed that approach. There is no suggestion in the judgment that it should take place any sooner or that the default retirement age should be abolished. It is important that the review be evidence-based. At this stage, I cannot confirm when the review will conclude. We want the review to take place as soon as possible. We want it to be evidence-based and wide-ranging. I assure the House that there is no intention to delay the review. We understand the importance of the timeliness of the review.

The noble Lord, Lord Sheikh, said that people over state pension age cannot access Jobcentre Plus support. I think I have covered that. On the earnings disregard, those claiming benefits can access the same services regardless of age. Those not on benefits can access services through the self-service channels. There are currently no plans to change the earnings disregard. However, people over state pension age do not have to pay national insurance, and those over 65 generally have a higher tax allowance, so they keep more of what they earn. That is not to say that everything is perfect. Some of those issues will need to be raised during the review.

The UK Commission for Employment and Skills assesses that we need to fill 14 million jobs in the next 10 years. The National Institute of Adult Continuing Education says that only 7 million young people are coming through the education system in that time. Therefore, extending working life will be critical to meeting that challenge. I was fascinated by the careful, analytic approach to the different quartiles of life given by the noble Lord, Lord Selsdon, and it had much to commend it. One thing that was not mentioned during the debate—although we focused mainly on work and the default retirement age—is that a lot of people as they enter into the third and last quarters of their life take pleasure in voluntary activities. That is important and we should not forget it. That is not attempting to divert us from dealing with the default retirement age.

As a number of noble Lords said, extending working life will also play an important part in reducing pensioner poverty and ensuring that individuals are able to fulfil their expectations of retirement. A man on average earnings who delays retirement for two years can increase his net income in retirement by 14 per cent.

Many employers are recognising the importance of retaining the valuable skills and experience of older workers to help them through and out of the recession. The noble Baroness, Lady Greengross, made a valid point about their reliability, their sick records, the value of their experience and the cost-benefit analysis of their contribution. Attitudes are changing, but unfortunately age discrimination persists. That is why, through our Age Positive initiative, we are working with business sector leaders and business-led organisations, such as the Chartered Institute for Professional Development, which has been mentioned, the Employers Forum on Age and the Institute of Directors to encourage employers to adopt flexible approaches to work and retirement. We are providing guidance for them on the benefits that many employers have found by employing and retaining older workers, without the need for a fixed retirement age. I make no apology for mentioning companies such as Asda, South Wales Forgemasters, Marks & Spencer, B&Q and the Co-operative Group, which are part of the Age Positive initiative. They display enlightened attitudes and understand the benefit of employing older workers. We are working alongside business-led organisations to develop and launch guidance on sector-based models for flexible approaches to work and retirement.

We have also simplified tax rules to support flexible retirement so that, where pension schemes allow it, people can draw down all or part of an occupational pension while working for the sponsoring employer. It may not be the complete answer, but it is a move in the right direction. A number of noble Lords raised the default retirement age, and I think I have covered that in relation to the European Court of Justice and the High Court.

The Government provided for the default retirement age on the basis of the evidence available at the time but, recognising that circumstances can change, we made a public commitment to review it. As I have said, we are now bringing it forward. We announced that in Building a Society for All Ages. On 15 October, my right honourable friend in the other place, the Secretary of State for Work and Pensions, announced that we are calling for stakeholders to submit evidence that will inform the review by 1 February.

Further to this, I am pleased to announce that a statement setting out the sort of evidence that we are seeking will be posted on the websites of both the Department for Business, Innovation and Skills and the Department for Work and Pensions next week. I will of course ensure that the points made here today are fed into the evidence-gathering process. Obviously, I also encourage noble Lords to submit any further evidence that they may have. We have also commissioned a major research project, the Survey of Employers’ Policies, Practices and Preferences Relating to Age, which I have referred to, and which will provide a key insight into employers’ age-based practices, particularly the use of the default retirement age.

There was a comment about putting our own house in order. Increasingly, employers have been removing fixed retirement ages. By April 2010 the Civil Service will have removed retirement ages for all staff, not just the Senior Civil Service. I do not have any more information on the public sector, but that is a good thing. The noble Baroness, Lady Howe, talked about the importance to everyone of flexible working. I share her view. There was some scepticism from the noble Lord, Lord De Mauley, about some of the things that we have done being a burden on employers. However, such things as the national minimum wage, extending flexible working to parents and so on have been of benefit to society.

I apologise that I could not cover every point raised. I thank my noble friend Lady Turner of Camden for instigating the debate and I commend it to the House. I will try to answer in writing any questions that I have not covered.