Government "pulling the rug away" on self-employment

17 July 2018

The Work and Pensions Committee publish Government Response to Universal Credit: supporting self employment report.

Commenting on the Government’s response to the Committee’s report on Universal Credit for self-employed people,  Rt Hon Frank Field MP, Chair of the Committee, said:

“The DWP encourages self-employment and then pulls the rug away. It withdraws vital support too early. Genuine self-employment is a cornerstone of our economy, and growing in significance. A policy that penalises entrepreneurship and stifles viable businesses this way is simply counter-productive, for individuals working hard to get a business up and running, for the Treasury and for the economy as a whole.”

The Committee has reported on the way the monthly calculation of Universal Credit can penalise self-employed people by up to £3,000 a year. In its response, on that point, Government said:  “As the Committee’s report acknowledges, volatile earnings and expenses are an entirely normal feature for many self-employed people. The Government’s view is therefore that fluctuating earnings are something self-employed UC claimants need to plan for, just as other self-employed earners do.”

On the evidence that it takes much longer than one year for ultimately highly successful businesses to get off the ground, the Government says:  “The intention of the Start-up Period has never been to match a notional average time taken to grow a business to profitability. Instead, it is intended to give claimants the breathing space they need to work out how to support themselves while growing their business - including identifying other sources of work, income or investment - while not subsidising claimants indefinitely to pursue unsustainable activities.”

Further information

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