Skip To The Main Content

Cross-party MPs slam Universal Credit treatment of self-employed

Responding to the launch of the Work and Pensions Committee’s ‘Universal Credit: supporting self-employment’ report, Federation of Small Businesses (FSB) National Chairman Mike Cherry, said:   
 
“This report delivers some much-needed home truths about the treatment of the self-employed under Universal Credit. It’s good to see the Work and Pensions Committee echoing our concerns about a system that encourages users to take a job rather than create one. 
 
“Self-employment is often the best route into industry for those furthest from the labour market. That includes those with caring responsibilities, mental health conditions and physical disabilities. By trying to force these people into employment, Universal Credit is bringing misery to those most in need of support. 

 
“The Minimum Income Floor is bad for entrepreneurialism, pure and simple. We know that it generally takes two to three years to get a viable firm off the ground. The Universal Credit system fails to recognise that fact and, in doing so, threatens the futures of successful firms. 
 
“The committee is right to say that the Minimum Income Floor is “a very real risk” to economic dynamism. The start-up period should be extended to two years at the very least. Universal Credit can’t be allowed to go on stinging the newly self-employed after just 12 months. The self-employed generally earn considerably less than employees, especially in the early days of setting up. 

 
“Unfortunately, Universal Credit tries to force “square pegs into round holes”. By having monthly reporting periods, the whole system favours the employed. Longer reporting periods would make Universal Credit fairer to the self-employed, who often have volatile incomes. The committee’s recommendation that these be made a reality needs to be taken forward without delay.
 
“On top of all of this, DWP won’t even be analysing the impacts of Universal Credit on the self-employed until at least Autumn next year. 
 
“Our hard-working self-employed community deserves better.”