Monday, 25 March 2013

Self Employed and Universal Credit: Demonisation Begins

...And so it has come to pass. The DWP have published "Guidelines" - information on how the Self Employed who currently claim Working Tax Credits will be treated under Universal Credit - the shiny new 6 Benefits-In-One flagship policy of Iain Duncan-Smith.

You can find the new guidelines here:

The first thing I noted was how under the previous Labour government and even initially under the Coalition Government the Low Paid Self Employed or Employed worker was seen as "striving" "doing the right thing" and trying to work their way in a low paid job. However the emphasis and language has shifted dramatically! No longer is it enough to work in a low paid Self Employed capacity, a new stringent set of regulations in order to claim Universal Credit, is about to come into force in 2013, with emphasis on "sanctions" if you do not comply on time.

The Self Employed have always sent in tax returns with income made on a once yearly basis. Not under Universal Credit. Those who need to claim the Working or Child Tax Elements perhaps, or/and the Housing Benefit element or more of the 6 benefits encompassed under Universal Credit must report monthly with paperwork so income can be scrutinised closely. Appointments will be made at Job Centres/HMRC offices much the same as the unemployed currently: a Gateway Interview will be made to discuss your Self Employment and appointments made on a recurring monthly basis. For those in rural/coastal areas it is a trek to the nearest Job Centre, and your time could be better used in finding more work quite frankly,or chasing up paperwork. Failure to report on time and sanctions will be made. Failure to report within a month and Universal Credit will be terminated!

There is also a presumption that you must work a 35 hour week and make minimum wage to be "gainfully self employed" as the DWP put it. Carers who claim Carers Allowance are exempt, but others are not. Time limits will be set to bump up your hours/pay until you are "gainfully self employed" or your Self Employment will be terminated and the DWP will force you to seek paid employment - a subtle term to transfer you onto JobSeekers Allowance/Income Support until you have a paid job.

So what are the likely outcomes/consequences? I can see many women in particular being disproportionately hit. I for example, am an Avon rep. I get commission on my sales once every 3 weeks. To get £500 of sales I receive £80-£100 of commission earnt- nowhere near minimum wage. There are many women in Betterware and Kleeneze reps jobs who fit their work around caring for young children etc but who desparately want  to retain a small degree of independence, and feel valued in the work they do. There are those who are writers, sculptors or seasonal workers like Gardeners who have erratic low pay also. The outcome will be these people will be forced to close down as Self Employed and seek paid employment. Those who have "done the right thing" and registered with HMRC as a Self Employed Rep for example will be tempted not to register as Self Employed and try to get away with earning a small pittance "on the side" - in fact HMRC has recently offered an amnesty to Avon Reps as this situation of Non Registering was rife!

The Unemployment stats are bound to rise, if the low paid Self Employed are then transferred to JSA until they get paid employment. I have been told from a source that the main targets of the DWP are immigrants who have become Self Employed selling the BIg Issue or betting a reps job like Avon, and have then be able to be eligible  for the more generous tax credits than if they were on JSA/Income Support. However, even looking at it from the DWP viewpoint when they transfer those not "gainfully self employed" their net will close long standing small sole traders down too, especially those in the creative arts type trades.

There are devils advocates out there who have said "Well you are claiming benefit- shouldn't the taxpayer ensure you are looking for more hours/increased pay?" Fair comment I say if we were not in the middle of a toxic storm of austerity. But many of us Low Paid Self Employed are contributing to society in many ways. Shouldn't we be rewarded for our efforts instead of facing the "stick of sanctions"?

The Conservative Party: always been the Party of the Small Business, the Sole Trader, the Party as Mr Cameron tells us daily "of those who want to get on and work hard" . Under Thatcher the Self Employed Low Paid were the very sector of the electorate she targeted to enable those to buy their council home! Seems the Self Employed Low Paid Workers are now to be demonised alongside the Unemployed, Disabled, Sick, and Young, Mums, Dads.. The list is longer every day!

Mark Hoban - Minister of DWP said on 21st January 2013

..."new demands could also be placed on the self-employed, pointing out that the tax credit system as it stands allowed people to pursue hobbies, earn nothing and subsidise their income through state support "without any expectation that they will increase their earnings and move towards self-sufficiency. This flies in the face of a principled welfare system".

So onto the Labour Party: no news yet on how they will tackle/oppose these swingeing attacks on Self Employed Low Paid Workers. Mr Miliband has spoken out about the loss of Working Tax Credit Cuts this April and the loss of those tax credits against the tax cuts for Millionaires and rightly so! Now the Labour Party need to act to defend us.