Benefits For Young People Should Be Repayable Loans, Say Tory MPs

Jobcentre Plus sign.

An influential group of Tory MPs have called for young person’s unemployment benefits to be turned into repayable loans, it has been reported today.

It’s claimed that the move would provide young people with “an additional incentive to find work rather than allow the debt to build up”.

The suggestion is included in a book by the right-wing Conservative MP, Kwasi Kwarteng.

Mr Kwarteng and junior Tory MPs call for the shrinking of the welfare state and a return to a contributory benefits system – the more you pay in the more you get out.

The book – ‘A Time For Choosing: Free Enterprise in Twenty-First Century Britain’ – says: “Young individuals who have not yet paid national insurance contributions for a certain period, five years say, could receive their unemployment benefit in the form of a repayable loan.

“Turning an entitlement into a loan would mean that people would still be supported while out of work, but would have an additional incentive to find work rather than allow the debt to build up.”

It argues that “welfare is too expensive” because “too many people are eligible”. Adding that Jobseeker’s Allowance (JSA) “is fairly stingy for those who have contributed to the tax system for years and find themselves out of work for the first time”.

Turning JSA into a repayable loan would see a young person who has been out of work for seven years, and who has not yet made any National Insurance Contributions, paying back around £20,475.

JSA is one of the smallest areas of welfare expenditure, costing taxpayers £4.91bn in 2011-12. This compares to the state pension, which accounts for 47% of the entire welfare budget at £74.22bn a year and rising.

Turning unemployment benefits into a repayable loan would represent no more than a drop in the ocean in the government’s commitment to cut welfare by £12bn. Particularly considering the fact that it would only cover younger jobseekers.

The book also calls for the scrapping of maternity and paternity pay to ease the pressure on businesses. Instead, it would be replaced by a “baby bonus” included in a persons salary and paid by government.