When Universal Credit is fully introduced (stop laughing) then anybody who is self-employed will be subject to the ‘Minimum Income Floor’. What this means is that when calculating in-work benefits, such as Tax Credits and Housing Benefit, the DWP will assume a level of income regardless of how much the self-employed worker is actually earning. For most people this means that the rate of benefits they receive will be based on them earning the equivalent of the minimum wage for 35 hours a week. This will apply even if they earnt nothing at all that month, potentially plunging people hundreds of pounds into rent arrears just because they’ve had a bit of a slow period.
So, as George Osborne is well aware, any rise in the Minimum Wage will prove devastating for the self-employed if they are not able to constantly improve their earnings to keep up. Instead of it being an employer’s duty to pay the Minimum Wage, for the self-employed at least, it will be the worker’s duty to earn it. Failure to do so will mean an effective cut to vital housing benefits as well as the replacement for Tax Cedits.
For five years the Tories have been happily encouraging low paid, precarious self-employment, not least because it helps bring the unemployment figures down. Companies running the Work Programme have been handed pay-outs worth thousands of pounds in some cases everytime they encourage someone on the dole to become self-employed. And now, having used a bogus fall in unemployment to help them win an election, the Tory Party are setting out to destroy this socially engineered entrepreneurship.
The median self-employed income in 2012/13 was £207 a week. When the Minimum Wage rises to £7.20 these people will be assumed to be earning £252 a week for benefit purposes, leaving a huge shortfall unless they can increase those earnings. Every time the Minimum Wage goes up again, they will be forced to try and keep up or face being unable to pay their rent. For most, going onto unemployment benefits will be preferable to this kind of imsecurity.
Only the Tory Party could have produced a draconian system that means a rise in the Minimum Wage will prove devastating for the lowest earning workers. They may talk the language of aspiration, but what they do shows a very different intention. Rules are planned which will force social housing tenants to pay eye-watering rents if their earning rise above a certain amount. Further Benefit Caps are on the way to force the poor out of big cities where the best jobs are. Huge student fees and the abolishing of the Educational Maintenance Allowance have devastated the opportunities of the poorest youth. And now they are coming for the self-employed, who are struggling to stay afloat, let alone prosper in an ever-more insecure jobs market.
George Osborne wants to put the working class back in their place, just like his idol Margaret Thatcher. Unless you come from the gilded elite then don’t think about ever owning a house, getting an education, or setting up a small business. Don’t get on your bike and look for work alongside the newly graduated rich kids in cities like London or Edinburgh. Stay in your box. Don’t complain. Doff your fucking cap. Stay poor. That is the real goal of Tory Party policy.
This blog has no sources of funding so here’s a quick reminder that you can help ensure it continues by making a donation.