EMPLOYEES who lose their jobs will get higher benefit payouts than those who have never done a day’s work in Labour’s welfare overhaul.
Work and Pensions Secretary Pat McFadden is drawing up a Bill to give bigger, short-term payments to people who paid National Insurance before becoming unemployed.
Officials hope the new system will help people back into jobs faster while cutting the welfare bill.
The plan will replace the current policy with a simpler “Unemployment Insurance” scheme, paying about £140 a week up to a year.
Those who did not contribute will stay on lower support from Universal Credit, which is means-tested.
Higher payments will be time-limited, lasting six to 12 months, before people drop on to standard benefits.
A Department for Work and Pensions spokesman said: “We consulted on reforming the contributory benefit system to better support those who have made National Insurance contributions.
“Our plan is to create a single new Unemployment Insurance to replace both New Style Jobseeker’s Allowance and Employment & Support Allowance.
“The new Unemployment Insurance would make the contributory system simpler and more pro-work by providing a stronger, time-limited level of financial support for people who lose their job.
“We’re now considering responses to the consultation as we develop our proposals, and we will set out more details in due course.”
Experts say the overhaul could save up to £3billion a year once the limits kick in.
Currently about £9 in £10 spent on contributory benefits goes to people claiming for over a year.
It comes as PM Sir Keir Starmer faces spiralling welfare costs.
Labour had to shelve plans to cut welfare spending after a backbench revolt over tightening disability benefits this year.
