Universal Credit Has To Work For The Self Employed

Universal Credit Has To Work For The Self Employed

Today marks the year anniversary of my first election as the Member of Parliament for Batley and Spen.

During the year, one of the most pressing and continuous issues has been confusion and mistakes around the benefits system. With the Universal Credit rollout now started, things will only get worse.

500,000 new claims are being added every month and in Batley and Spen 900 people are expected to be moved over to Universal Credit on November 1st.

With Citizens Advice Bureaus and Job Centres closing, my constituents are coming to my surgery for help in ever greater numbers. I have personally made more referrals for working families to our local food banks in the last few month than ever before.

Our poor, both in work and not, are getting poorer and in increasingly difficult situations. Using Peter to pay Paul families are ending up in serious difficulties and deeper in debt.

Numbers attending the homeless drop in centre in Batley has doubled and local food-banks are bracing themselves for an onslaught of misery before Christmas.

My constituents are being treated as guinea pigs in the system roll out.

For most of my working life before entering parliament, I was self-employed, either in acting or writing. And I feel for them now as freelancers and self-employed are being targeted by Universal Credit.

I'm well aware of the vagaries of the freelance life. One month you're paid, three months you struggle by on nothing. At a time when the UK creative industries is worth four times more to the British economy than the automotive industry, it's galling to know that the average income for a writer is £10,000 a year and not much more for actors.

This means, inevitably, a large majority of creatives and plenty of others will need to use the benefit system to get them through the difficult, lean times.

Now, most entertainers are self-employed. It's been established in case law and accepted by HMRC that entertainers should usually be classed as self-employed for tax purposes as the manner in which the work is characteristically freelance. For example, work is short term, offered at short notice, entertainers have to do unpaid preparatory work, they're sole traders and responsible for their own expenses.

Moving from traditional benefits on to Universal Credit means those 'gainfully self-employed' now will have their average earnings as a baseline, the 'Minimum Income Floor'. This is set at 35x the National Minimum Wage per week.

On average that means HMRC will assume you earn over the year £1,047.50 a month regardless if you earn it or not.

Looking at the figures this means someone who's self-employed and on Universal Credit will be far worse off than if they were on legacy benefits and even more impoverished than if they were a regular unemployed Universal Credit claimant.

As Universal Credit payments include housing costs, the self-employed and freelancers will be increasingly unable to pay rent, risking homelessness.

Unlike many other UC claimants, entertainers don't have a choice as to whether they pursue self-employment. They must be registered as self-employed in order to work professionally.

If an entertainer claiming UC is deemed gainfully self-employed then they're penalised by the Minimum Income Floor yet if they're not deemed to be self-employed they are mandated to be looking for work in a PAYE job.

This is a terrible Catch 22 position to be in and gives the entertainer no choice but to leave the career they trained for.

If you're self-employed or low paid, you'll receive less benefit and there was nothing in the original policy intent that said self-employment should be penalised.

The minimum income floor is the equivalent of a 35-hour working week on the minimum wage, we know not everybody can get that kind of level of employment from self-employment in today's world of insecure work.

I'd be surprised if legal minds weren't looking at the impact of Universal Credit on the self-employed.

In April 2017 the Work and Pensions Committee called for the solving of problems in the practical operation of UC to become an 'urgent priority'.

The Government later released the 'Self Employment and The Gig Economy' research document which included a recommendation that the Minimum Income Floor assumption is suspended while an independent review is carried out on UC and self-employment in order to 'improve its sensitivities to realities of self-employment. Until this is complete, the Minimum Income Floor should not apply to self-employed UC claimants'.

Sadly there seems to be no indication from DWP that they've listened to these recommendations or that they are investigating the unfair impact the roll out of UC on the self-employed will have.

Earlier this year I, along with Gloria De Piero MP, chaired an enquiry into the class ceiling in the cultural industries. The subsequent report - Acting Up - showed unequivocally that carving out a proper career in the arts is becoming increasingly difficult for working class creatives.

With Universal Credit unfairly discriminating against creatives, it is inevitable there will be a diminishing of the diversity in the industry and it will only be those with private means or wealthy parents who can aspire to a career as a creative freelancer.

Our country will be all the worse for it and Labour will be campaigning to keep working class voices at the heart of the cultural industries.


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