The Department for Work and Pensions (DWP) is considering replacing Employment and Support Allowance (ESA) and Jobseeker's Allowance (JSA) with a new contributory benefit called 'unemployment insurance'. This follows a consultation held last year, which closed in June. The DWP has now issued an update, stating: "We are now carefully considering the responses to the consultation alongside other evidence, and we will share details of our proposals in due course."
Consultation and Timeline
The consultation on the proposed unemployment insurance was part of broader welfare reforms. The Child Poverty Action Group (CPAG) has indicated that any changes are not expected until 2028/29, based on the estimated date given for the reforms.
The DWP's proposal would replace the current ESA and JSA with a non-means tested, contributory benefit. This means it would be based on National Insurance (NI) contributions rather than income or savings.
Key Features of the Proposed Benefit
According to the DWP, the new benefit would be paid at a rate equivalent to the current higher rate of 'new style ESA'. It would be available for a limited time, with the government suggesting a period of 6 to 12 months. Unlike ESA, it would not involve a health assessment.
The benefit would have National Insurance contribution conditions, similar to current rules. These would require a claimant to have made sufficient contributions in the last two complete tax years prior to the benefit year of the claim. Self-employed individuals would also be eligible, provided they have paid the appropriate NI contributions.
Work Requirements and Support
Claimants would be expected to actively seek work, but there would be 'easements' for those with work-limiting health conditions. The government states that almost all disabled people and those with long-term health conditions receiving the new benefit would be required, at a minimum, to participate in conversations as part of a new offer of tailored employment support, with appropriate exemptions.
The DWP has not yet provided a detailed timeline for implementation, but the CPAG's estimate suggests 2028/29. The government is currently reviewing consultation responses and other evidence before finalising its proposals.
