Tag Archives: Self Employment

How Lord Fraud’s Benefit Rules For Self-Employed Workers Will Mean The End Of Enterprise

lord-fraud-freud1Fuck entrepreneurs.  Seriously.  Fuck them.  Most of them are are chinless jumped up idiots squandering their trust funds and boring everyone shitless with their latest wacky idea for raspberry fucking flavoured baked beans.  Or online spivs like Grant Shapps ripping off the public with fake websites and get rich quick schemes.

If you’re poor then the local entrepreneur is likely to be the person people buy their smack from, or your landlord, or someone you borrow fifty quid off knowing some bastard with a baseball bat will probably turn up if you can’t afford to pay it back on time.

Having said that, millions of people are now scraping an income as self-employed workers.  Whether being shafted by online micro jobs that pay 50p for an hour’s work, or working on building sites and forced to register as self-employed to save their employer money, a casualised, insecure and poverty paid working life is the reality of modern capitalism for many.

In his Autumn statement Geroge Osborne announced that from April this year self-employed people claiming Working Tax Credits will have to prove that their self-employment is genuine and likely to pay them the equivalent of 24 hours a week at the minimum wage.  This is called the Minimum Income Floor and when Universal Credit is introduced (stop laughing) it will increase to 35 hours for those without young children or a significant health condition.  A sinister bunch of ghouls called Concentrix have already been hired by the DWP to hound self-employed people claiming Working Tax Credits.  Thousands of people have received letters demanding they prove their self-employment is genuine or accusing them of fraud and expecting them to prove their innocence.

There is no easily found information on Government websites explaining when and how changes to Working Tax Credits for the self-employed will be introduced.  Not for the first time when it comes to Iain Duncan Smith’s shambolic welfare reforms, nobody, including claimants themselves, has a clue what is going on.

What we do know however is that the changes that are planned under Universal Credit will prove devastating for many self-employed people.

Claimants who want to register as self-employed will first have to pass a DWP Dragon’s Den style test with Jobcentre busy-bodies and persuade them that their self-employment is ‘gainful activity’ and expected to make a profit.  Just think about that for a second.  Imagine trying to explain a business concept like facebook or instagram to a DWP Work Coach who can barely work a smart phone.  The Mark Zuckerberg’s of the future will probably end cleaning the bogs in Poundland on workfare schemes rather than creating innovative online products.  Good.  Fuck entrepreneurs.

But think about people working in the creative sector, freelance journalists, actors or musicians.  Or those in the sex industry, or other fringe sectors which are not easily understood by Jobcentre Work Coaches.  Can we really trust that these groups are likely to be considered gainfully self-employed and granted the 12 month start up period during which claimants are exempt from the Minimum Income Floor?  And this is only the start of the bodged process set to be inflicted on the self-employed.

Once the initial 12 month start up period is over then the DWP wil assume earnings of 35 hours a week at the minimum wage when calculating benefits, including Housing Benefit.  That’s 35 hours every week.  No holidays, or periods of sickness will be considered in calculations.  If you have a bad month then the DWP will make it even worse by not paying you enough Housing Benefit meaning your home will be at risk.  It won’t take much.  An illness, personal crisis, a downturn, some shyster not paying on time, and people could be driven onto the streets.  How many people are likely to take that risk, when they could get more benefit by abandoning self-employment altogether and signing on the dole?

On top of this the amount of red tape is breath-taking.  Self-employed people, desperately trying to meet their Minimum Income Floor, will have to waste time sending the Jobcentre details of their income and expenses every single month.  This is in addition to their tax return.  Expenses or income cannot be carried over, so whilst if someone has a good month their benefits will be reduced, if they have a bad one then they will not be increased.  A single claimant who earns nothing in a month will have to find up to £950 to be able to pay their rent and survive for that period.  Or go on the dole.  That’s assuming the DWP will let them and don’t disallow them from benefits completely for giving up ‘gainful self-employment’.

It is genuinely astonishing that such a vicious attack on self-employed people is being launched by the party which once claimed to represent entrepreneurs and small businesses – and fuck small businesses as well, bunch of UKIP gobshites who pay their workers less than Tesco.*  These policies can only really be understood once you discover they were largely drafted by comedy toff and Minister for Welfare Reform, Lord Fraud.  Out of touch ex-bankers like Fraud don’t really believe working class people can run their own businesses.  They’d far rather we were all working for people like them.  They have no concept of what life is like for low earning self-employed people scrabbling around trying to gain an income wherever they can.  And they don’t care if their welfare changes could leave someone with no money at all, even to pay their rent.  Serves them right for not working hard enough that month they will chuckle to themselves.

Nobody knows how much of the so-called fall is unemployment is down to people registering as self-employed and claiming Working Tax Credits.  What we do know is that some of them will have been bullied into this option by grasping Work Programme companies who can claim a huge job outcome fee everytime someone becomes self-employed.  Hundreds of thousands of people could be hit by these changes and many could be left with barely any money at all to survive on.  They haven’t done anything wrong.  They are both working and claiming a much lower rate of benefit than Jobseeker’s Allowance.  They just aren’t earning enough so the government is intent on making them even poorer.  The less you have the less you get, which just about sums up the last five years of Tory Government.

There’s still more to come on this.  Meanwhile see what will happen to part time workers on Universal Credit: It Had To Happen. Soon You Could Face An In-Work Benefit Sanction … For Going To Work

*Fuck Tescos as well.

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Deconstructing The So Called Jobs Miracle And Why It Has Nothing To Do With Iain Duncan Smith

Iain Duncan SmithRepeatedly over the last few months the Tories have cheered that there are more people working than ever before as if this was some kind of fucking miracle.  In truth it is exactly what you would expect in a growing population.  Unless the economy is in the grip of recession there are almost always more jobs than ever before.  More people means more jobs.  They all have to shop.

According to the Office for National Statistics the total size of the UK’s workforce – which means all of those working, unemployed, or economically inactive, such as long term sickhas grown by 2.6 million since 2010.  In that period the number of people in work has grown by 2 million.  The disparity is partly down to the rise in women’s pension age, a bodge in how the figure are recorded means that all women under 65 are now included in the workforce, even if they are retired.  Previously only women under 60 were included.

The Employment Rate, the percentage of people in work, has only shifted upwards by about a percentage point, from 72.1% to 73.3%.  That’s around half a million people, which is just under the growth in the number of people who have become self-employed since 2010.  How many of them are making any money is anyone’s guess, but we do know that average earnings from self-employment are plummeting.

One of the reasons for the growth in both population and new jobs is migration.  In an astonishing fact, curiously ignored by the Tory press, there are one million more people in employment who were not born in the UK than in 2010.  That’s over half the growth in jobs during the current administration.*

What those million new workers tell us – and some will be UK citizens who happened to have been born overseas – is that most of the growth in jobs has fuck all to do with Iain Duncan Smith’s bungled welfare reforms.

To look at the impact of social security policies means delving into the unemployment figures, and crucially long term claimants.  Figures quietly released last week showed that the number of people who had been on benefits for three out of the last four years has fallen by just 91,000 since 2010.  This is despite economic growth, the Work Programme, mass benefit sanctions and the country recovering from a deep recession.  And even this figure is likely to be revised down as more data comes in.

There were just over 600,000 fewer unemployed people recorded in the latest figures than there were in the last period of the previous Government, and there are still almost 2 million of them.  Most of the jobs the Tory’s are claiming have been created have not gone to people who were unemployed.  And the quality of these jobs is also relevant.  People can be included as offically in employment if they are on workfare for example – although there are currently less people on unpaid work schemes than during the Labour administration.

As well as the growth in self-employment, nearly half a million of the new jobs are part time.  You only have to be working a few hours a month to be classed as employed.  The growth of zero hours contracts is well documented.  The quality of most of these new jobs is shit.

The Labour Market Statistics, on which all this information is based, are messy, not least because they are based on a survey.  What they suggest however is that unemployment has fallen, but not by that much, and that many of the new jobs are part time or low earning self-employment.  This is hardly a great fucking success story for a country emerging from a recession.

Perhaps a better guide to what is really going on are the Housing Benefit statistics.  This is an exact figure and reveals the number of people who need help to pay their rent.  The only two criteria for claiming Housing Benefits are a low income and low or no assets.  By the very nature of the benefit, everyone who is claiming it is poor.

There were 4.751 million people claiming Housing Benefit in May 2010.  In November 2014, the latest month for which figures are available, there were 4.883 million claims.  More people are poor now than before the Tories weren’t elected, despite the so-called jobs miracle   And that is the figure on which Iain Duncan Smith’s welfare reforms should be judged.

*Before anyone starts feeling all UKIP remember this is not a one way street.  A study released last year found that up to 70% of graduates are planning to fuck off soon in the search of somewhere less shit.  For every Polish builder who turns up we might soon lose a marketing graduate from Surbiton.  On balance we’ve probably got the better end of that deal.  Whatever your views on immigration policy, the very worst thing that could happen is for working class people of different nationalities to be be tricked into fighting each other over the scraps they hand down.  The capitalist class of Europe – the bankers, property developers, business owners and landlords – are united.  We need to be as well.

Join the Week of Action Against Workfare and Benefit Sanctions beginning on April 26th.

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The Unemployment Timebomb At The Heart Of Universal Credit

self-employed-earnings-graphIain Duncan Smith’s response this week to soaring low paid self-employment shows he remains as clueless as ever about what is really going on in the jobs market.

According to IDS, figures showing that the number of self-employed workers has jumped by 600,000 is a sign of “entrepreneurial spirit” and proves that his bungled and reckless policies are working. What is really going on is very different and lays the foundation for an unemployment time bomb at the heart of Universal Credit.

Some of the rise in self-employment is almost certainly down to falling living standards.  People who have taken early retirement are  setting up small businesses in an effort to pay soaring bills, along with so-called mumpreneurs – parents forced out of the workplace due to huge childcare costs and shit wages. The rise of the internet has also allowed some of those who are unemployed to generate a small income from self-employment, such as an ebay shop, or by carrying out small amounts of paid work online through micro-job sites.  Many companies use flaky self-employment contracts for sporadic or casual work to help them dodge minimum wage laws, or providing other benefits such as holiday pay.  These are some of the reasons self-employment is soaring, but of these precarious workers are really making much money.

Alongside this Jobcentre staff and Welfare-to-work companies are known to have encouraged unemployed people to claim Working Tax Credits and set up as self-employed, even if there is little chance of them earning a livable income. This gets them off the unemployment figures and onto a lower rate of benefits, although it may be a risky move for the claimant.  A claim for Working Tax Credits demands that those without children spend  30 hours a week working as part of their self-employment.  If they are unable to prove this then at some point the Tax Office may decide to take back the money that the DWP advised them to claim.

According to a report released late last year, the average annual income for self-employed workers (who earn less than £100,000) was just under £10,400 in 2011, a fall from from £15,000 in 2000.  There are currently four and a half million people who are self-employed.

£10,400 a year works out at £200 a week –  less than somebody working 35 hours a week on the current minimum wage would earn. That means that many, if not most, of these workers will be unable to claim the upcoming (stop laughing) Universal Credit as self-employed earners.

When Universal Credit is fully introduced, only those earning the equivalent of a full time minimum wage salary will be eligible for self-employment part of the new benefit which replaces Working Tax Credits, Child Tax Credits and Housing Benefit.

Claimants will be given a year to achieve these earnings – although first they will have to pass the planned Jobcentre Dragon’s Den assessment to prove their self-employment is financially viable. If after 12 months they are not hitting the required earnings they will see benefits slashed as they will be assumed to be earning the full-time minimum wage when their claim is calculated.  Many will be forced to forsake self-employment at this point, and some will be told to do so by the Jobcentre.  Instead they will become ‘unemployed’ and expected to spend 35 hours a week carrying out ‘work related activity’ such as attending endless courses on how to write a CV or even full time workfare. They may even have to give up the work they are doing which makes them a small income because – astonishingly –  Jobcentre busy-bodies will have the power to sentence claimants to unpaid work instead of allowing them to carry out paid work on a self-employed basis.

Iain Duncan Smith may have convinced himself he has created a new spirit of entrepreneurship, but seems to have forgotten that even if this were true – and it isn’t – he plans to kill it stone dead.  And then all those self-employed workers will suddenly be back on the dole, and we will see the true extent of unemployment in the UK.

Above graph from the Tax Research report on plummeting earnings for the self-employed.

For the latest red tape ridden rules planned for self-employed Universal Credit claimants visit: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/254254/uc-and-self-employment-quick-guide.pdf

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Universal Credit, Self Employment and the Minimum Wage

The new rules for self-employed people on Universal Credit are to set to be some of most complex ever designed and will prove devastating for the lowest earning workers.  Self-employed people could find business ideas rejected by panels of government busy-bodies or face having to cancel organised work to attend workfare, all whilst attempting to battle unprecedented levels of red tape.

Under current rules, low paid self-employed people who work 30 hours a week can claim Working Tax Credit.  This is a lower amount of benefit than Jobseekers Allowance and is removed at a lower rate when wages increase.  Housing Benefit can also still be claimed, at a reduced rate dependent on earnings.  This has meant that self employed workers can take work, or develop a business, without being forced to sign on and off unemployment benefits everytime they earn anything.  Much like Working and Child Tax Credits, which are payable to those with children working a certain number of hours a week, this ended the situation for parents and the self-employed which left some people better off on benefits than on taking up low paid work.

A removal of the 30 hour limit would have been a cheap and swift way to ensure that everyone could benefit from Tax Credits.  The payments could have functioned as a lower rate of benefits for those who are able to obtain some form of work, the stated aim of Universal Credit.  This Government have done the opposite and in April removed the right to working tax credits for parents working part time, plunging tens of thousands of families into immediate poverty.

Some have claimed that the Tax Credits system has been abused, with people working 30 hours a week on businesses or self-employment which earn very little.  This misses the point.  By and large these are people who would be paid the higher rate of Jobseekers Allowance were their Tax Credits removed.  As well as costing more, this would have meant it would be practically impossible for people to declare small amounts of income from self-employment without having benefits slashed or removed completely.

There are reports that Welfare to Work companies have been bullying people on the Work Programme to leave Jobseekers Allowance and claim Tax Credits instead.  This may account for the recent fall in unemployment, which saw a huge rise in the number of people registering as self-employed during the same period.  Welfare to Work companies can pick up large payments from the DWP for those they claim to have supported into self-employment.  Should that self-employment turn out not to be genuine, then those claimants could face not just being stripped of Tax Credits, but also forced to repay any money they have previously received under the system.

Despite this potential abuse by private sector poverty pimps, Working Tax Credits have been a cheaper and less complex way to support those in self-employment than previous schemes.  Those who have benefited are not just grasping entrepreneurs, – tradespeople, casual labourers, child minders and even artists, actors and writers are some of the sectors that depend on Tax Credits for survival.

This is all set to be brought to an end by Universal Credit, which will introduce a staggering amount of complexity into the system and will stifle the chances of both the self-employed and the entrepreneurial alike.

According to the recently published draft regulations: “claimants who declare that they have income from self-employment, or who are self-employed with no income, will be invited to a “Gateway” interview.”

This appears to be some form of Stalinist Dragon’s Den, whereby people will be forced to prove to the DWP that their business, or their trade is: “done with the intention of increasing the income received to the level we could expect the claimant to make if working full time”

Claimants will be expected to provide reams of evidence at these interviews which will no doubt be carried out by people with so much entrepreneurial know-how that they’ve ended up working in the Jobcentre.

Should the claimant pass this government test, then they will be granted a year’s start up period, during which they will be largely left alone.  After that they will be subject to the ‘Minimum Income Floor’.  This means that self-employed people will be expected to earn a certain amount a week, or lose eligibility for benefits or self-employed status.  The Government are not telling us exactly what that Minimum Income Floor will be in the consultation  documents, however it has previously been suggested that people will be expected to earn at least the minimum wage for any self-employed activity.

Under the new proposals self-employed people will be expected to work at least 18 hours a week.  It is unclear whether those in self-employment working at this level will be expected to abandon self-employment to take up full time work, or workfare, should the DWP deem it appropriate.  Those working part time are now to be forced to continually look for full time work, attend interviews at the drop of a hat and hand in their notice immediately should they be offered even a temporary full time job.

If these requirements are not inflicted on self employed workers, then for many people simply under reporting their hours will mean they are able to qualify for the full Universal Credit award.  If this all sounds confusing that’s because it is.  Once again a key piece of legislation, set to go before Parliament in Autumn, has not been thought through or adequately explained.

It is likely that the Minimum Income Floor will mean that self-employed people are expected to earn the equivalent of the minimum wage for 35 hours a week or face a cut in benefits.  As Housing Benefits are now to be lumped in with Universal Credit, this may mean homelessness for some.

Another aspect of the new regime will punish people who invest in tools, stock or other business expenses in order to increase earnings.  Self employed people will now be required to report all income and business expenditure on a monthly basis as opposed to annually as under the present system.  Expenses will not be carried over to the next month.  This will mean if someone spends a couple of grand on stock this will only be reflected in their earnings for that month.  The new system will make it impossible for self-employed people to invest on any significant level to improve their earnings.

It will not just be businesses that have large outlays, such as small shops or tradespeople, that will be affected by the monthly reporting.  A freelance journalist who spends a month writing a piece in anticipation of it being sold will be penalised for not earning minimum wage during that period.  Self employed people will be punished for injecting both time and cash into their business.  The harder you work, the less you get.

And these are the lucky ones who have passed their DWP Dragon’s Den.

People who fail to impress the Government with their self-employment plans will still be permitted to earn money from self-employment, and will face the same monthly requirement to report any earnings.  They will also however be given a Claimant Commitment, meaning they will not be treated as self-employed.  This will mean that there will be a requirement to attend Mandatory Work Activity or attend pointless courses and workshops with Welfare to Work companies like fraud ridden A4e any time the DWP sees fit.

This will destroy people’s ability to take on small amounts of work on a casual basis.  Should someone be offered a few days work on a self-employed basis they will not be in a position to guarantee they can turn up.  They could be sent to work in a charity shop with no pay that week instead.  Far from the stated aim of making all work pay, short periods of self-employed work will be a commitment that claimants can no longer make under the new regime. The DWP will decide how you spend your time and if you fail to comply you could face sanctions for up to three years.

It is the subtle shift in the meaning of the minimum wage though which is perhaps the most revealing indicator of the direction of this toff Government.  For too long greedy employers have forced people to work on a self-employed basis to avoid having to pay employees the minimum wage.  Many cleaners, au pairs and child minders are paid less than minimum wage and registered as self-employed, as are people on building sites around the country along with people working in shady commission only sales jobs.  Whilst in some cases this is illegal, it is common practice in many sectors.

Iain Duncan Smith is attempting to usurp the minimum wage by making it not an employers responsibility to pay it, but a workers responsibility to earn it.  If someone is working on a self-employed basis on a building site for less than minimum wage, it will be the worker who is punished by the benefits system for not earning enough.

The sets the groundwork for the abolishment of the minimum wage, whilst retaining a requirement on those in receipt of vital benefits to earn it.  It is obviously wild scare-mongering to suggest that the Tories want to do away with the requirement on employers to pay the minimum wage, however there is nothing in these new regulations that would prevent that.

The proposed regulations state: “In order to meet a given work availability requirement claimants must be available to immediately take up, (or attend an interview for) work/more work/better paid work.

Were Tories to bow to pressure in their own party to scrap the minimum wage for certain groups, such as disabled people, there would be no need to amend Universal Credit legislation.  If you don’t earn minimum wage it will be your own fault, not the fault of those paying you.  For those in self-employment this is already to become a reality under the new regime.  Whether this punitive arrangement is laying the groundwork for the minimum wage to be scrapped for everybody –  whilst attempting to minimise the resulting cost of in work benefits – remains to be seen.

The draft regulation for Universal Credit have just been published and are open to consultation at: http://ssac.independent.gov.uk/consult.shtml

Universal Credit’s Attack on Householders (and who really benefits)

How Universal Credit Will Destroy Part Time Work

Universal Credit’s Attack On Volunteers

How Universal Credit Will Split Up Families

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