The United Kingdom has had a good record of job creation over the past two decades with the aggregate unemployment rate and related expenditures falling, and employment rates at close to record levels. Although most disadvantaged groups including older workers, lone parents and ethnic minorities have enjoyed significant improvements over the past decade, unqualified workers and younger people continue to fare less well. Moreover, while it has reduced significantly in recent years, there is still a considerable flow of people, including prime working age males, into disability benefits. The government has taken a number of positive steps to address these issues including tightening eligibility criteria, offering income supplements and providing personalised counselling. However more could be done, particularly in the area of skills training both prior to employment and while in employment, and in tackling distortions in work incentives that arise from the high cost of child care and through the interface of the tax and social security systems.