Labour promises extra £120 for workers who lose long-term jobs

Extra £20 a week in benefit for six weeks would apply if they had been in work for four or five years

People who lose their jobs could be paid an extra £20 a week in benefit for six weeks under a Labour Government if they had been in work for four or five years.

Rachael Reeves, the shadow Work and Pensions Secretary, said today that she was determined to "reinforce and renew" the "contributory principle" in the benefits system. Her plan could increase the £71.70 a week adult rate of Jobseeker's Allowance (JSA) to more than £90 a week to cushion the impact of people becoming unemployed.

In her first major policy speech in her post, she told the IPPR think tank: "We need to look at how we can better reflect records of contribution in the benefits people are entitled to…In recent years we've seen more people rely on the system who've not claimed in years."

The IPPR is to study the cost of options to increase the initial rate of JSA for people who have built up a record of national insurance contributions.

Ms Reeves said: "If this can be done in a cost neutral way by extending the period people need to be working and paying national insurance to qualify for contributory JSA it would be a very valuable step forward.

"A higher rate of JSA  paid for the first six weeks of unemployment to those who have lost their jobs after perhaps four or five years in work could be a big help in cushioning the immediate financial impact of redundancy and give them a better chance of getting back into work and back on their feet sooner.

"And it would be a powerful way of restoring that understanding of collective insurance against unemployment that was such an important impulse behind Beveridge's original plan but which today has been all but lost from sight."

Ms Reeves confirmed plans, revealed in an interview with The Independent, for all newly-unemployed people to take a "basic skills test" in English, maths and computers within six weeks of claiming benefit.  If they failed the test and refused training, they would lose their JSA.

Answering questions after her speech, Ms Reeves denied that the jobless would be punished if they failed to pass the test after a few weeks of training.  She said: "We are not going to penalise somebody if they struggle with English and maths."

The shadow Work and Pensions Secretary told BBC Radio 4's Today programme: "These are tough policies. We are requiring people to do something for their benefits. But they are also fair, because they are giving the support to people to get back to work. We have got record levels of long-term youth unemployment. We need to help people get the skills they need to get into work, and then stay in those jobs."