Friday, September 17, 2021

New style unemployment benefit would guarantee 80% of previous earnings

Think tank calls for furlough to be replaced with a new earnings-based unemployment benefit.

Following the ending of the Covid-19 furlough plan at the end of this month, a new Fabian Society study today urges for a reform of unemployment benefits.

The furlough plan has been successful in assisting those unable to work during the epidemic, and the Fabian study indicates that it has altered public perceptions of unemployment protection.

The research, which was sponsored by the Standard Life Foundation, recommends creating a new programme that combines aspects of the present Jobseeker’s Allowance (JSA) and furlough.

As with furlough, the new benefit would pay up to 80% of an unemployed person’s prior wages up to a maximum of £30,000. As with JSA, the benefit would last six months and eligibility would be determined by National Insurance contributions.

Although the concept is novel in the UK, it is comparable to unemployment benefit programmes in continental Europe.

According to the report’s modelling, the average weekly payout would be £250 and the highest would be £460 (now, JSA is worth £75 per week for over-25s). This would alleviate poverty for 430,000 individuals, including 110,000 children.

The policy’s objective is to increase the number of individuals who get assistance. The modelling anticipates a caseload of 390,000 claimants at any given moment. On this premise, the policy’s cost is anticipated to be £4.8 billion, paid for through a 1% National Insurance increase.

The idea was a central recommendation of a Fabian Society-convened citizens’ jury of 22 persons. Despite the fact that the proposal’s cost and possibility of resulting in increased taxes were known, it was by far the most popular alternative for assisting the unemployed that the jury evaluated.

Following the citizens jury, a YouGov survey found that 49% of those who gave an opinion supported the furlough-replacement plan after being informed that it may result in an increase in national insurance.

51% supported the current system of JSA with no tax increase (excludes those who responded ‘don’t know’ or ‘neither’).

Report author and senior researcher Josh Abey said: “Now is the time for the government to grasp the nettle and provide a fair safety-net for those who find themselves out of work.

“This scheme is practical and pragmatic and will prevent families falling into poverty where a breadwinner loses their job.

“At a time when the temporary uncertainty of Covid-19 is being replaced by enduring labour market insecurity, we must continue to provide generous support to those who lose their livelihoods.”

General Secretary of the Fabian Society, Andrew Harrop said: “The furlough scheme was invented in a moment of crisis and proved how the state can step in to help individuals in need. It established the principle that we should match the support people get if they stop working to the earnings they have lost. For hundreds of thousands of people still out of work, we can’t allow that protection to end.

“The Fabian Society convened a citizens’ jury of randomly selected members of the public. They overwhelmingly recommended replacing today’s flat-rate jobseeker’s allowance of £75 per week with a generous new benefit where the amount people receive in the early months of unemployment is based on how much they used to earn.”

Mubin Haq, chief executive of Standard Life Foundation said: “The pandemic laid bare the holes in our safety net. The introduction of furlough saved many from serious financial difficulties and protected livelihoods.

“If we are going to build back better, increasing the support available to the newly unemployed is an essential element of a fairer society. The benefits far outweigh the costs and public attitudes have shifted towards more generous support.”

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