This non-means-tested support would be available to those who have contributed to the system. As it stands, this support would be time-limited and would replace the new-style Jobseeker’s Allowance and New Style Employment and Support Allowance with a single rate paid at the current ESA rate of £138 per week, as reported by the Daily Record.
Currently, ESA offers support for people with a disability or health condition that affects their ability to work, while JSA provides assistance to those seeking employment.
Unemployment Insurance aims to provide better support for individuals who have lost their jobs and will require recipients to be actively seeking work, with some flexibility for those with health conditions that limit their ability to work, according to guidance on Gov.uk.
These proposals were brought to light in response to Conservative MP Wendy Morton, who queried about the DWP‘s strategies to “help improve work incentives within the benefits system and reduce long-term economic inactivity”.
Sir Stephen Timms, the Minister for Social Security and Disability, highlighted several welfare reforms and proposals: “In the Pathways to Work Green Paper, we consulted on introducing a new contributory benefit in Great Britain, provisionally called ‘Unemployment Insurance’ (UI).
“The introduction of UI would simplify the contributory system by removing the distinction between jobseekers and those considered unable to work”.
“Introducing UI would also improve the income protection available to people who lose their job to give people the time and space to find the right job, while time-limiting that entitlement to create a strong incentive to return to the labour market.”
He further added: “At the heart of our reforms is the principle that those who can work should work, but if you need help into work the government should support you, and those who can’t work should be supported to live with dignity.
“We’ve recently published draft regulations on our Right to Try guarantee, which will give disabled people the confidence to try work and, in July, the Universal Credit Act provided for the first ever, sustained rise in the standard allowance of Universal Credit, benefitting millions of those on the lowest incomes.
“We have also introduced reforms through the Universal Credit Act 2025, to rebalance support within UC, to address perverse incentives and better encourage those who can work to enter or return to employment. We have also put in place the equivalent of over 1000 full-time Pathways to Work advisers, offering tailored support to support people into work across Britain and we have begun testing our new support conversation.”
The DWP is presently consulting on the creation of a new, straightforward and clear “Unemployment Insurance” benefit through the reform of contributory benefits.