Over half of all small businesses launched under the DWP’s flagship New Enterprise Allowance (NEA) scheme will be ruthlessly closed down when draconian new benefit conditions for self-employed people are introduced as part of Universal Credit.
New Enterprise Allowance (NEA) is the Jobcentre scheme under which claimants receive a small allowance for starting a small business for the first six months as long as they agree to occassional harassment from some dickhead advisor from the local welfare-to-work company. It has been a huge success according to a gushing press release published by Minister of Death Priti Patel today, who claims that 80% of those who started out as self-employed on the NEA are still trading, with nine in ten of them having been in business for over 12 months.
Patel was responding to a survey carried out amongst NEA participants examining the success of the scheme. A total of 1,500 of those who had taken part were questioned and the vast majority had been sucessfully self-employed for over one year. The so-called support offered by NEAs was not so popular however. Of those still trading at the time of the survey 70% had not accessed any help from their provider after the initial launch of their business. They appreciated the money though, despite it being the miserly amount of £65 a week for the first three months on the scheme and then falling to just £33 for the remaining period. This is because skint people need money, not lectures from some DWP busy-body whose entrepreneurial flare is so astounding that they ended up working in the fucking Jobcentre.
According to the survey the majority of these businesses were sole traders, with some of the most common sectors including cleaning, health and beauty, IT repairs or gardening. In other words these are largely precariously self-employed workers, struggling to get by from week to week. And this is reflected in the amount of money they are making. Over half of small businesses (58%) questioned at the time of the survey had a monthly turnover of less than £1000, and for 37% it was under £500. Almost of all these businesses will be forced to close when Universal Credit is fully introduced.
Savage new rules for in-work benefits are soon to mean that after one year self-employed people will be expected to be earning the equivalent of the national minimum wage for 35 hours a week if they have no young children or health condition. That means profit, not turnover, of at least £985 per calender month at the current minimum wage rate – and as that rises this will become ever more difficult for self-employed people to achieve. Those who do not meet this threshold will not be classed as ‘gainfully self-employed’ by the Jobcentre and so will be forced to claim mainstream unemployment benefits*. They will then be expected to carry out ‘work related activity’, which means looking for a job, for up to 35 hours a week. Self-employed activity may not be counted towards this and they could be stopped from doing it at all and forced to attend full-time unpaid workfare instead. From budding entrepreneurs starting out as their own boss to benefit scroungers at the stroke of DWP Minister’s pen.
For those with monthly profit at or close to the threshold and passing the test for ‘gainful self-employment’ then the situation will be little better. These claimants will then be assumed to be earning the minimum wage rate for full time work when their in-work benefits are calculated. This will include benefits intended to cover housing costs as well as the replacements for both Child and Working Tax Credits. So should someone self-employed go through a lean patch for a couple of months they will not only suffer through lack of earnings but their Universal Credit will not reflect that loss of income. The only solution will be to go back on the dole in an effort to restore housing benefits, and that’s assuming the Jobcentre lets them and doesn’t suspend their claim for giving up gainful self-employment. This is what Minister of Death Priti Patel secretly has in store for all those small businesses she is cheering on today. Financial destitution and bureacratic chaos. And once they on their knees, sanction their benefits for not trying hard enough. Build’ em up and knock ’em right back down. She hasn’t had so much fun since she was working in PR for the tobacco industry encouraging poor people to take up smoking.
*Such is the shambles in the delayed roll out of Universal Credit that there is a crass attempt being made to bolt this kind of conditionality onto the current Tax Credit system. As reported in the trade journal Nursery World (h/t @stukisu) many child miners are being inundated with demands from HMRC to prove that their small businesses are genuine and that they are striving their hardest to make a profit. Perhaps most appallingly, as this is being done before Universal Credit has been implemented, they are threatened not just with loss of their current in-work benefits but a demand for a repayment of all benefits to date – potentially plunging some into thousands of pounds worth of debt. That’s child minders, working all the hours God sends for shit money, being persecuted and driven into unescapable debt for not making quite enough profit or being able to produce detailed business plans and advertising strategies on demand to government bureacrats.
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