Tag Archives: working tax credits

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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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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