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Sir John Bourn, Head of the National Audit Office, reported to Parliament today that good progress has been made in recent years in increasing the overall employment rate for older people. The gap between the proportion of older people in work compared to the general working population has also narrowed by 1 per cent over the last year. Improving the position of older people in the labour market and tackling age discrimination in the workplace are key elements of the Governments employment strategy. However, substantial regional and local variations remain in employment rates for older people and in the number who are economically inactive, with areas like the North East and Wales having particularly high levels of inactivity.

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The Government is increasing employment opportunities in a number of ways including working with employers to raise awareness of the benefits of employing an age diverse workforce, increasing the opportunities and incentives for people to work longer if they wish to, and helping older people back into work by improving self-confidence, providing work experience, financial incentives, supporting self-employment and improving skills. Sir John said despite the progress, further efforts were needed to tackle the barriers to employment of the over 50s given the demographic changes facing the country. It is estimated that the relatively low levels of employment among older workers costs the economy 19-31 billion a year, mostly in lost output but also because of reduced taxes and increased welfare payments.

Against the background of an ageing population, a high overall employment rate and skills shortages in the labour market, around 2.7 million people between 50 and state pension age do not work. Currently, almost half are receiving incapacity benefits, many on a long-term basis. Between 700,000 and one million of those currently inactive say they would like to work, with some 200,000 seeking employment, although they are confronted by one or more barriers to finding a job.

Todays report examines the progress that has been made in helping older people overcome the barriers to employment. These barriers include relatively low levels of skills, age discrimination by some employers, health problems, low confidence and negative attitudes to employment.

The report underlines the importance of joint working between government, employers and the voluntary sector at a local level, as well as the need for better publicity to improve awareness of local services to help improve employment prospects.

The NAO found that the scheme specifically for older workers – New Deal 50 Plus – has helped more than 120,000 people into work at an estimated cost of 270 million, although an unknown number of these people would have found jobs anyway. Other employment and training programmes (in particular, the New Deal 25 Plus and Work Based Learning for Adults) have helped a further 70,000 older people into work over the last five years. Jobcentre Plus is increasing the flexibility within its programmes in order to better meet the individual needs of people facing acute or multiple barriers to work. This includes piloting new approaches to help people claiming incapacity benefits return to work.

Older people still have relatively low levels of participation in most forms of training and education, which they need to compete more effectively in the labour market. They are also under-represented in their use of Information, Advice and Guidance Partnerships, which are a valuable source of help for people who are out of work.

The report also identifies age discrimination on the part of some employers as an ongoing and significant problem. Legislation to outlaw such discrimination is expected in October 2006 but there has been a delay in issuing for consultation the draft regulations. However the Government has announced a national guidance campaign in advance of the legislation to further enable employers to adopt age positive employment practices and to encourage the recruitment, training and retention of older workers.

The NAO report makes a number of recommendations aimed at building on the success achieved so far. These include: DWP should undertake a full evaluation of New Deal 50 Plus to determine, as far as possible, its net economic effect and the impact on participation levels of introducing the Working Tax Credit in April 2003; Jobcentre Plus and Learning and Skills Council local offices should share objectives and priorities in respect of improving the employability of older people and collaborate on contracting for employment and training services, in line with the recommendations of the recent report by the National Employment Panel; DWP and Jobcentre Plus should develop performance measures that reflect improvements in the employability of people who have participated in programmes but not yet succeeded in obtaining employment, as an incentive for staff to help such people; Regional Development Agencies should set targets for the employment of disadvantaged groups within their regions; more local Learning and Skills Councils should address the education and training needs of older people and Information, Advice and Guidance Partnerships should target their services on those most likely to benefit from them; and the Department for Trade and Industry should consider whether its support for the PRIME Initiative Ltd which supports self-employment for older people should be expanded.

"Good progress has been made in increasing the employment rate for older people. As people are living longer it is important that they have better opportunities to continue working for longer, should they wish to do so, than has been the case in the past. There is scope for government agencies to focus their efforts on improving the employability of older people and for targeting disadvantaged groups. Success will bring benefits not only for the individual, but also for business, the taxpayer and the economy at large."

Sir John Bourn

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