People could get tax breaks for going back to work, under plans being mulled to cut the number of inactive Britons.
Those returning to jobs might also be able to keep disability benefits in order to avoid ‘inventivising’ them to stay off.
The ideas are being floated as part of a major overhaul of the system, amid concerns that millions of people have simply opted out of the labour market since Covid.
According to The Times, the Treasury is looking at increased tax allowances for those who go back to work.
Senior ministers are even understood to be pushing for returning over-50s to be exempted from income tax entirely for up to a year.
Rishi Sunak is said to be anxious that economic growth will be held back this year if the government cannot solve the inactivity puzzle, which has been contributing to shortages of workers across industries.
Rishi Sunak is said to be anxious that economic growth will be held back this year if the government cannot solve the inactivity puzzle
Mr Sunak and Mr Stride are working on an overhaul of the benefits system to get more people into work
Last week the PM admitted ‘we need to look at how our welfare system is operating’, to ensure it is ‘incentivising people who can be to be in work’.
Work and Pensions Secretary Mel Stride has been assembling plans to ‘rewrite’ the benefits system.
He wants to remove ‘perverse’ incentives for claimants to prove they are too sick to work – instead focusing on what people are able to do.
Disability claims are up 70 per cent since the pandemic, with estimates that the annual cost will rise to £8.2billion by 2027.
A White paper due in the coming months will include reforms to the ‘work capability assessment’.
Separately the Treasury has been examining what incentives can be offered for middle-aged workers who stepped back from the labour market during Covid to go back.