By James Rodger

Copyright birminghammail

A Department for Work and Pensions (DWP) shake-up could deliver annual savings of up to £3 billion for the Treasury. The Institute for Fiscal Studies (IFS) has found, if the DWP combines Jobseeker’s Allowance and Employment Support Allowance as planned, into a unified unemployment insurance scheme, the economy could be turbocharged. Under existing rules, unemployed benefits claimants receive £92.05 weekly for a maximum of six months, whilst those with health conditions affecting their work capacity obtain £140.55 through ESA. The new unified benefit would adopt the higher payment rate of £140.55, up nearly 53 per cent. READ MORE Mortgage warning for UK households as they risk being ‘squeezed’ The Institute for Fiscal Studies (IFS) has concluded the proposed changes could save between £2 billion and £3 billion a year. The IFS has estimated that a 12-month UI benefit would cover the entire out-of-work spells of around 53% of those who lose their jobs and save around £2 billion a year in the long run. Anvar Sarygulov fthe research grants and programme manager at the Nuffield Foundation, said: “The Government needs to avoid pulling the rug out from under existing long-term claimants with health conditions by thinking carefully about the delivery and design of any transitional support.” Martin Miklos, the research economist at IFS and report co-author, said: “Most European countries pay unemployment insurance benefits for 12 months or more.” “Their design has been neglected for many years and it is high time they were modernised, not least so that they work better alongside the rest of the benefits system,” Mr Miklos said. Responding to the research, one claimant said: “So what will happen to those claiming the higher rate ESA for long term health conditions? And will this higher rate payment not backfire? “Won’t there be many more claimants? 140 quid a year for doing nothing? It will be like taking a paid years sabbatical. “Did they really think this through? It might save money at the current level of claimants….but they’ll be many more….mark my words….”