Warning over lifting of support for the lowest earners

The freelance organisation IPSE warned over the weekend that at least 200,000 self-employed people could be affected by the reinstatement of the Minimum Income Floor for Universal Credit from 1st August.

The Government suspended the MIF during the pandemic and IPSE said that its research shows that led to a 341 per cent rise in self-employed UC claims – up from 46,800 to 206,200 in 2020.

Given that many self-employed people have suffered hugely during the pandemic with substantial numbers falling outside government support schemes, IPSE is calling for the MIF to be scrapped altogether or for it to only kick in after three years, rather than one year to give self-employed people enough time to build their business.

Andy Chamberlain, Director of Policy at IPSE, says: “The Minimum Income Floor unfairly stopped self-employed people accessing Universal Credit before the pandemic because it did not account for freelancers’ naturally volatile incomes. Rather than looking at the actual earnings of self-employed claimants, it assumed they were making a base level of profit, which in many cases was false.”

IPSE thinks that it may take freelancers longer to recover from the pandemic.

Many women have turned to self employment in the last decade, with working mums making up a fast-growing number before the pandemic. Part of the reason is the lack of flexible options that fit around their family life and because high childcare costs mean inflexible employed work  is not worthwhile. Many are on very low earnings.

While workingmums.co.uk’s latest survey shows a move away from self-employment due to the pandemic amid concerns about financial insecurity amid growing jobs vacancies and optimism that employed jobs may become more flexible, there are still a number of working mums who are considering self employment. Sixty four per cent said they were less likely to want to be self employed after Covid, while 29% said they were more likely to go self employed as a result of the pandemic. For many of the latter it is due to a lack of flexible jobs in their area. Despite optimism, surveys show the situation with regard to the availability of flexible new jobs is still patchy.

While the Government is looking to cut the financial support it has granted during the pandemic, it is surely wrong that the poorest should be among the first to suffer, particularly when the pandemic’s tail is likely to be long.  This is also the case when it comes to the 20 pound a week increase in UC which comes to an end after September, amid rising inflation and concerns for those who will remain on furlough until October as a British Chamber of Commerce survey shows 18% of businesses saying they are now likelier to make staff redundant and 25% saying they will reduce their working hours or move staff to part-time patterns. The Government may argue that the furlough numbers have fallen significantly in the last three months and that there are plenty of jobs available, but this ignores the fact that many of those on UC are working families.

Covid has increased all the inequalities present in our society. Any Government truly committed to ‘levelling up’, should be starting with addressing the issues that lead to so many being stuck in low paid, insecure jobs or being forced into self-employment.

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