Individuals and the economy would benefit from the government rethinking aspects of the support provided to people when they first fall out of work, based on a return to the language of ‘social security’ rather than ‘welfare’.

This report draws on evidence gathered from experts at two webinars held in Autumn 2020, while acknowledging the deeply impressive way that Universal Credit (UC) and the Department for Work and Pensions coped with the huge surge in UC claims as the pandemic took effect.

It says the government should strengthen existing contributory benefits – which provide time-limited support those who have paid into the National Insurance system – to help ensure that periods of unemployment do not permanently worsen individuals’ employment prospects and productivity. The government should ensure that – at the very least – the income available from contributory benefits does not remain below means-tested benefits.

The UK benefits system is both heavily means-tested and provides a level of income that will typically be much lower than an individual was previously earning from the first day that someone loses their job. There is evidence that this – unlike the earnings-related systems in place elsewhere, including in continental Europe – leads to longer term damage to individuals and families, and potentially to the wider economy.