The Institute for Public Policy Research has called for the introduction of national salary insurance.
The thinktank has come up with the idea to address concerns that the welfare system does not reflect the amount that people have paid into National Insurance.
Jobseeker’s allowance for people who have paid a minimum level of NI is £67.50 a week, regardless of whether a person has been employed for several years before losing their job or has been out of work for some time.
National salary insurance would offer people who lose their job up to 70 per cent of their previous earnings, capped at £200 a week, for up to six months. This would include the JSA amount of £67.50 a week. Any money received above the JSA amount would be repaid interest-free once people are back in work. The maximum support available for six months would be £3,445.
The IPPR suggests the money could be recouped either through additional NI contributions or by levying a flat rate amount per week. It estimates the net costs to the Government could be between £180m and £520m a year.
Plan Money director Peter Chadborn says: “I like the idea in theory but, like student loans, this idea saddles people with debt in what is already a debt-ridden society.”