Mel Stride: ‘Work is more than just growing the economy... it’s the source of self-worth’

Mel Stride - Geoff Pugh
Mel Stride - Geoff Pugh

It is often said that charity starts at home. But if you are over 50, the Work and Pensions Secretary thinks that charity starts with returning to work.

Mel Stride believes that early retirees who return to the workplace should be celebrated in much the same way as those who take up voluntary work.

“If you’re over 50 and you’ve retired early, I think we as a society should recognise that it’s fantastic when people, for example, go out and engage with the voluntary sector,” he tells me from his office in Westminster – a dark space he has previously likened to “a nightclub but without the music, the drinks or the atmosphere”.

“They’re putting something back – and I think in the same way, we should probably see engagement with work at that stage as in a similar kind of vein.”

It might not seem the most obvious argument to deploy when trying to tempt would-be retirees back to the office, but Mr Stride does his best to make the moral case.

“Apart from anything else they’re paying, presumably in most cases, more taxes, which is eligible to fund public services. And there’s a real community value to people doing that. And I think that’s worth shouting a bit louder than perhaps we typically do.”

Mr Stride is on a mission to get people back to work. He and his officials at the Department for Work and Pensions have spent the past few months poring over different models, schemes and initiatives aimed at trying to crack Britain’s staggeringly high levels of economic inactivity.

Overall, one in five Britons aged 16 to 64 describes themselves as neither in work nor looking for work. But the problem is particularly acute among the over-50s.

Middle-aged workers have quit the workplace in droves since the pandemic, with the number of jobless rising and many in the 50 to 64 year old age group now classed as "economically inactive” compared with the period before the pandemic – meaning that they are neither working nor seeking work. Two in five cite sickness or disability as their reason for leaving work.

The UK is almost unique among rich developed countries in having a workforce that is smaller than before Covid, attributed in part to older professionals taking early retirement. It is feared that this is holding back the country’s economic growth as labour shortages push up inflation.

Last week’s “Back to Work” Budget saw the Chancellor unveil a raft of measures – worked up by Mr Stride’s department – aimed at solving the problem. This includes rolling out “skills bootcamps” around the country to help the over-50s. Another measure is a major expansion of the “mid-life MOT” scheme, whereby those considering early retirement are encouraged to assess their finances and see whether they have enough money to live comfortably into their old age.

Mr Stride – who, to be fair, is setting a good example to the over-50s himself (he is 61) – is upfront about the scale of the problem. He admits there is “not a very clear cut answer” as to why the UK’s levels of economic activity have failed to recover following the pandemic.

“I think it’s fair to say that health problems have been a particular issue, which were actually on the rise before the pandemic. So it’s probably in that area which, of course, is affecting the over-50s as well as every other cohort. So there’s a huge prize if we can encourage greater engagement from those that retired, and other people that are over-50, as well as make inroads into other groups such as those caring responsibilities and those the long-term sick and disabled.”

And the benefits of work are not just economic, he says. “It’s really important to recognise that work is so much more than just growing the economy or providing labour for businesses. It’s also the source of self-worth and self pride. You have better outcomes if you’re at work, generally, than if you’re not at work.”

He could be the poster boy for his campaign. He grew up the son of parents who had both left school young – his father, who had grown up in orphanages and foster homes, at 14, and his mother at 15 to get a job and bring money back to the family home on a council estate. Although his family were not particularly political, they taught him that if you were prepared to put in the effort, you could make something of yourself.

Mr Stride won a place at a grammar school and went on to become the first in his family to go to university. He started with chemistry, but transferred after three weeks to Philosophy, Politics and Economics at Oxford University, where he was president of the Oxford Union.

He then set up and ran his own business in trade exhibitions, conferences and publishing, expanding into America, before selling the US company and getting elected as the MP for Central Devon in 2010, aged 48. His daughters (aged 26, 16 and 14) with wife Michelle are, he has said, “all self-starters”.

Mr Stride is keen to stress that he is not “moralising” when he talks about the virtues of over-50s returning to work and insists that it is entirely up to each individual to decide for themselves.

“It’s not for me to say that they’re right or wrong as to whether they do that,” he says. “There is no stick and there shouldn’t be because if you’ve been very successful in life, and you’re very comfortable taking early retirement, I don’t think the Government [should be] saying that you’re doing the wrong thing.”

But, he adds, there is nothing wrong with the state encouraging people to conduct a robust assessment of their finances before they retire. “What I think we are right to say is if you’ve taken an early retirement… just have a really good, cool look at your situation and think about how long you’re likely to live and have you got the resources and the wherewithal to get you through that period?”

Research published earlier this month found that almost two million over-50s who have left the workforce face a cash crunch in retirement. A report by Phoenix Insights found “notable” differences in the fortunes of over-50s who have fallen out of the workforce. The think tank, which is part of the FTSE 100 retirement savings group, said there were “significant concerns about the ability of many… to sustain a decent standard of living in retirement”.

Of the 3.6 million people aged between 50 and 64 currently classed as economically inactive, a million or so have opted for early retirement and people in this group have an average wealth of more than £1.2 million each.

However, those who say they are looking after their family or home have average assets of just £137,000. Median wealth for those who are economically inactive because of long-term sickness or disability is lower still at just £57,000, more than 20 times less than those who have chosen to retire.

Separate research by the Institute for Fiscal Studies found a notable increase in the number of economically inactive over-50s pledging to return to the jobs market as a result of rising pressure on incomes.

Mr Stride defended the rising number of foreign workers in the UK, arguing that “we have millions of people who could work who are not” and until we have more British people filling jobs, we will continue to need migrant workers to plug the gaps.

Official estimates released last week showed that net migration into Britain by foreign workers, students and families is set to average 245,000 a year and total 2.6 million under post-Brexit reforms. The Office for Budget Responsibility (OBR) was forced to upgrade the figure from the 205,000 it estimated just five months ago. It represents a marked contrast to pledges by previous Tory leaders to bring net migration below 100,000 a year, and has been fuelled by a more liberal approach to post-Brexit immigration by Boris Johnson that saw his points system open up half of all jobs in the UK to foreign workers.

Is the UK addicted to foreign workers? “No, I think what’s changed is that we now have control over immigration and we decide who we wish to allow into the country to work, settle and so on, whereas we couldn’t before we left the EU and that’s the big change,” Mr Stride says.

“I don’t think anybody ever said it would stop. There are certain areas in the economy where I think it’s very helpful to bring in skilled people to help.” But, he adds, “it’s far better in the Government’s view and in my view that we train people up and support them into taking up employment, and then we can rely less on migration”.

Speaking the day after the Budget, Mr Stride cannot quite bring himself to assert that the Tories have regained their reputation as the party of economic competence, saying there is still “a bit of a journey to go”.

“I think we’ve made huge progress,” he says. “I think it would be folly to suggest that last September wasn’t a very difficult moment because it was.” He is referring to the previous chancellor Kwasi Kwarteng’s mini-Budget which delivered on Liz Truss’s promise to oversee a low-tax, high-growth agenda. Following the event last September, the pound crashed and the Bank of England was forced to make an emergency intervention to calm market turmoil.

“I think we’ve had grounds to catch up on but I think we are making very significant progress now,” Mr Stride says. “We have now spent some months demonstrating that we have steadied the ship economically, that we are fiscally responsible, that we have a very clear plan for getting the inflation down, a very clear plan for getting growth going, a very clear plan in the labour market, and that we’re going to methodically and effectively see that through.

“That is the first step of making major gains in terms of economic competence in the eyes of the public. And what I think will follow if we keep down this path will be more opportunities for some more interesting things further down the line.”

He acknowledges that the Tories are “still a long way behind in the polls” but defends the Prime Minister’s approach. A close ally of Rishi Sunak – he ran his campaign in the leadership contest last summer – Mr Stride brushes aside criticism that Mr Sunak is too “managerial”, arguing that his “detailed, sensible and pragmatic” approach will “yield dividends” in the long run.

Despite calls from the Tory back benches for tax cuts, Mr Stride is not willing to make any promises, merely saying: “We are a party that believes firmly in low tax but we also believe in fiscal responsibility.”

Can he commit to lowering taxes in the next year, or perhaps by the next election? Again, he demures.

“You have to, number one, make sure you run the economy in a fiscally responsible way. And then you can turn to issues like tax.” Seeking to add credence to his argument, he points out that Margaret Thatcher didn’t just “slash taxes left, right and centre”, instead “she got on top of inflation and a lot of fundamental problems, and then the tax cuts came further down the line.”

While Mr Stride’s stance on tax clearly differs from that of the Truss administration, he does appear to show a degree of sympathy with her assessment that she was unfairly blamed for the chaos that followed in the wake of her mini-Budget. Ms Truss has said that during her time in Downing Street, no one at the Treasury highlighted any risks to pension funds – which would trigger unprecedented volatility in the gilt market – to either her or Mr Kwarteng.

She described how the lack of concern flagged to her about Liability-Driven Investment (LDI) and the risk it posed to bond markets was a significant omission because this issue ultimately brought “my premiership to an abrupt and premature end”.

Mr Stride said that while the Bank of England and banking regulators are “very nimble” when it comes to reacting to problems that suddenly appear, they are not always as adept at spotting issues that are further away on the horizon.

“As they look from 10,000 feet across the terrain that they survey, I think they have a very good view of it and the ability to reach in and undo the problems as they emerge,” he explains. “But sometimes it is difficult, actually, to spot where the real problem is going to suddenly emerge. And LDI is an example of that. Because if it had been spotted a long time before, presumably, measures would have been brought in and would have avoided it in the first place. But they were able to react and sort it out.”

He said that overall he is not concerned about LDI as an area, nor does he have any misgivings about the ability of regulators to weather the current storm in financial markets. British stocks had their worst week since Russia invaded Ukraine over concerns that the crisis that has engulfed the banking industry has not been contained. Following the turmoil in the markets triggered by Credit Suisse’s struggles and the failure of two American banks, the stock market value of the FTSE 100, home to London’s biggest companies, fell by almost £100 billion last week.

Credit Suisse was plunged into crisis this week as bets that the bank would default on its debts hit a record high, following the collapse of Silicon Valley Bank and two other smaller US lenders over the weekend. On Thursday, Switzerland’s central bank stepped in to make £44.5 billion available to the troubled lender in a bid to stabilise the situation. Shares in crisis-hit Credit Suisse fell and led to a broader decline in European markets, as analysts continued to warn of a “crisis of confidence” in a turnaround plan laid out by bosses.

Are the Bank of England and financial regulators in the UK sufficiently on the ball to deal with such crises? “I’m absolutely certain that the kinds of stress tests that they apply – and they have got even more exacting through time – to the banks and the financial system are very robust and that the banks are in a very good position to withstand all sorts of shocks that may come our way. So I don’t think we should read across anything from the current situation with the Swiss bank.”

As for whether we’re heading for a banking crisis, he simply says “no”. But then changes his mind ever so slightly. “Well, unless everybody says we are. Then we will have a banking crisis.” Let’s hope his words are as powerful.