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The Government has rejected a call for to change its position on monthly calculations for Universal Credit payments which campaigners say will ‘punish’ self employed people on irregular earnings.
The Government today published its response to the Work and Pensions Committee’s report, Universal Credit: supporting self-employment.
The Committee reported on the way the monthly calculation of Universal Credit can penalise self-employed people by up to £3,000 a year. In its response, on that point, Government said: “As the Committee’s report acknowledges, volatile earnings and expenses are an entirely normal feature for many self-employed people. The Government’s view is therefore that fluctuating earnings are something self-employed UC claimants need to plan for, just as other self-employed earners do.”
Frank Field MP, Chair of the Committee, said: “The Department for Work and Pensions encourages self-employment and then pulls the rug away. It withdraws vital support too early. Genuine self-employment is a cornerstone of our economy, and growing in significance. A policy that penalises entrepreneurship and stifles viable businesses this way is simply counter-productive, for individuals working hard to get a business up and running, for the Treasury and for the economy as a whole.”
Jordan Marshall, Policy Development Manager for IPSE, a lobby group for the self employed, said:“It is disappointing that the Government hasn’t listened to the repeated warnings of industry, trade unions and the self-employed themselves about the damage monthly reporting does to self-employed people claiming Universal Credit.
“Just last month the National Audit Office said the self-employed ‘lose out due to monthly reporting’.
“By not considering the fluctuating nature of self-employed income, the Minimum Income Floor can leave the self-employed up to £3,000 worse off each year compared to an employee earning the same amount.”
However, he welcomed government plans to increase the number of specialist Work Coaches to give self-employed claimants more focused advice on growing their businesses.
The Government has also agreed to review the impact Universal Credit has on the self-employed, but not until the end of 2019.