to think that if you need state support because your self employed income is low, then you haven't got a viable business

[trillianandrandom]

Linked to a Guardian article. Self employed people can get universal credit if their incomes are low.

Which I can see is needed if you are do 'gigs' and your earnings fluctuate.

But in this example, I don't think this person has a viable business.

www.theguardian.com/society/2018/mar/25/universal-credit-self-employed-benefit-slash

"a self-employed children’s entertainer in Norfolk, said she would be affected by the new system. “Most of my money I earned in June, July, August and then December,” she said. “I have a small amount of money coming in this month, but not paid bookings this time of the year. If I earn under the minimum income floor, I don’t get any extra help. It’s not just me. It’s gardeners, childminders. This is thousands of people. If I had to go to an employer, I would probably end up becoming very anxious and depressed and eventually become physically sick with it. I could see a situation in which I would be signed off, on long-term sickness benefits, living on the bare minimum; I would lose my private rented house.”"

And I can see that - however, what is to stop anyone just doing some self employed business a few times a year and then getting Universal Credit to top it up?

I do think it's a mess with all the self employed people there, all the gig economy workers and people just earning a bit of money on the side.

But how do you balance it out?

and I can see that - however, what is to stop anyone just doing some self employed business a few times a year and then getting Universal Credit to top it up?

If someone did this how much would they be receiving a year in total?

And how many people do you think are likely to jump onto that?

Im not sure the overall wage from UC top ups is what most people would be desperate to be on

I thought the rules were changing for self employed under universal credit. You have to be earning the equivalent of minimum wage at full time hours and have to continue to seek work if that's not the case. Although I believe it's dependant on circumstances and the rules are slightly different if you have young children or are a LP. That's just from memory reading the rules a while back though, I could be mistaken. I do actually agree with these rules, if you can't pay yourself minimum wage then it's not really viable plus it will mean more maintenance for many as lots of self employed NRP's claim to be earning ridiculously low wages meaning they get away with not supporting their children.

The problem is at the moment is that there is no benefits provision whatsoever for the self-employed. So if someone who has their own business they are building up while DCs are small, and whose partner was an employee of a company, is suddenly abandoned by that partner and can't pay the rent, they are told the only way they can get any financial assistance is if they take a job as an employee, or do no work at all. So while I do agree that one should not start an ill-advised business expecting UC to make up the shortfall for one's lifestyle, I do think it a good thing that the self-employed can get a little help when they need it and don't have to abandon all they have achieved.

Before the minimum wage, some businesses used to offer ridiculously low wages in the knowledge that "the social" would top it up to an amount that that you could live on. I think this was for families with children. I remember talking to someone who'd been interviewed by a security firm and the firm was brazen about it. These firms were using the benefits system to subsidise their wage bill, which distorted the market. The minimum wage was supposed to put a stop to that. I guess it's a long and difficult road to sort out other ways in which similar things may be happening in self-employment. The MIF which @jengnr explained above is part of that I guess.

So while I do agree that one should not start an ill-advised business expecting UC to make up the shortfall for one's lifestyle, I do think it a good thing that the self-employed can get a little help when they need it and don't have to abandon all they have achieved

It's a fine balancing act - and not made easier by the fact that are many more self employed people.

But those self employed people cover a wide range of self employment - people trying to start a business, people who do 'gigs' like Deliveroo and people just earning a bit of cash on the side.

Is not just that they are submitting monthly rather than yearly? So taken over a year they would be entitled to UC, but the system cant account for fluctuating income. So they get less all round - in high earning months, they appear to earn too much but in low earning months they don’t earn enough to get UC, but if spread over 12 months they’d get a consistent payment.

I fail to see the difference of someone earning the same amount per year self-employed as in paid employment - both should get the same benefit.

My DH runs his own business, and there have many times when he's barely had a wage and we've lived off very little. Thankfully now he's doing extremely well but all businesses take time to establish and get off the ground. I'd say it took a good 7/8 years to start making a decent profit. In the early years you can be investing in stock, premises, staff and set up costs can be overwhelming so most money made goes straight back into invest. We've never claimed state help as we were lucky enough to have family help in bad times (ie buying groceries) and we've made sure we've repaid all of those favours a dozen times over as we were so grateful. But I don't have any issues with the state helping people out who are at least trying and not sat on their arses doing nothing.

I fail to see the difference of someone earning the same amount per year self-employed as in paid employment - both should get the same benefit

The quote was from an entertainer who said she would lose out because some months she has low income and some months she has high income.

Should she get support? Or should she charge more for her work to cover the low income over the quiet months?

I think benefits propping self-employed people up is fine, I don't have a problem with it. It could also be a boon to people who are trying to make it as artists, actors and musicians who may have low-paid self-employment in other fields on the side to keep them going. The withdrawal of benefits (as well as the rise is living costs and clampdown on squatting) is one of the reasons the arts is increasingly becoming the preserve of the wealthy.

however, what is to stop anyone just doing some self employed business a few times a year and then getting Universal Credit to top it up?

A family member of mine was advised on how to 'beat the system' by the jobcentre

She didn't want to go back to work so signed up to do Avon. She makes about £50 a month doing an hour or two a week...and gets the full HB/UC topping her up as she's 'self employed'.

Personally I think it's wrong and that your SE income should need to reach a minimum amount, proving it's a genuine business/industry before top ups are given.

I don’t have an issue with it either.

Chances are they would be unemployed if they weren’t running the business.

Unemployment tends to cost the state more than just the cost of the benefit, there are poorer mental and physical health outcomes, which cost the NHS. I far rather someone was out there entertaining kids, feeling good about life than stuck arguing with the benefit office about how many jobs they have applied for this week. It’s going to cost me as a taxpayer less, and we have happy kids and a happy entertainer. Win win.

Plus the small buisness person is gaining skills, and might do well enough to be self supporting in the future, maybe not as an entertainer but using those skills to run a more viable business.

A family member of mine was advised on how to 'beat the system' by the jobcentre

And no doubt it makes the figures look good for unemployment figures.

I think the benefits system can end up subsidising unscrupulous employers. Also you get people being self employed selling The Big Issue which then allows them to claim benefits - all the Big Issue sellers round our way are Eastern European, and my nearest one has been doing it for at least ten years, she's been here ever since I moved here. I thought the Big Issue sellers were supposed to be homeless but she certainly isn't, I know where she lives.

So while I agree to support during start up, I really don't agree to support throughout what is in fact a lifestyle choice.

However, the stupid cost of housing ensures that the lowly paid can't afford to live even when working full time which is a ridiculous state of affairs

So while I agree to support during start up, I really don't agree to support throughout what is in fact a lifestyle choice

Against

Chances are they would be unemployed if they weren’t running the business

And all the effect of unemployment.

It's a complex debate with good reasons on all sides.

Of course, the Government subsidises businesses, the Arts etc all the time - and many of those would be unviable without state support

I also know someone who has a viable business but is doing very well only earning a small amount a week and getting full benefits on top. They employ a group of people as self employed too. It’s an interesting problem.

I think anybody whose business earns them less than minimum wage shouldn't be entitled to state support. But if they earn minimum wage then I think they should get it. And I also think people should be working a minimum number of hours per week. A business that only pays three or four months a year isn't viable and that person should get a job the rest of the time. If they don't then they shouldn't qualify for state support.

It's not zero loss though. If you're self employed you may have sat down and worked out you have to make x amount per week to support yourself which means charging a certain amount. If the person down the road doing the same thing can charge 20% less because their self-employment allows them to access benefits to top up their income then all of a sudden you're not competing in a fair market.

I was going to say what Hengine has. Also if a business cannot pay a living wage, not minimum wage, then it shouldn't be allowed to expand in the way the Tesco etc has.

Many hairdressers/beauticians wouldn't be in business if they wasn't topped up via benefits. My Gardener/decorator wouldn't be able to survive. I can't afford to pay any more than i do for services (i'm disabled) so my house (and hair) would look a state. Likewise small rubbish removal firms.

Watch "rich house/poor house" the Rich people have all these opinions and solutions before they do the swap and then realise that they knew nothing and they were very wrong.

If these in-work benefits wasn't happening we would see an even wider divide in income groups.

you dont get 'extra' money though, if you earn under the minimum wage - so its not 'topped up' You just get the same amount you would if you were earning those hours working elsewhere. So if you can manage on less than that, why is it a problem.

Many people choose self employment for a variety of reasons which isnt just 'sitting on their arse doing hobbying' - perhaps they also have caring responsibilities and fit their work late at night, or would not be able to hold down FT employment due to medical needs or hospital appointments. My daughter for example has been in hospital miles from home for 6 weeks recently and needed me to stay with her- same last year, and with approx 20 appointments in London inbetween. I have had a reduced income this year, but I have managed to keep on by working remotely around this. But no, I didnt make minimum wage this year as a result. But I didnt get any more WTC than I would have if I had. We just got by. I cant see any min wage job allowing me the time off I need to care for her - her illness is unpredictable - or any job centre letting me stay in London for 6 weeks at her bedside without being sanctioned and losing everything. But I can still manage the business from there so, if I am not getting any 'more' than if I was forced into a min wage job, what is the issue?

Also we are in danger of once again, as in the case of disability benefits, of spending more on preventing people from getting them.

This country cannot provide full employment. We cannot all earn enough not to claim benefits, unless businesses are given a kick up the arse. People will only put up with so much.

You have to give evidence that you're advertising, insured, sending invoices and all that. It's not a case of pretending to work and not actually trying. I don't know how anyone could beat the system.

Taking the idea that UC is a good thing and should be there and fair and equally applied as a given, say, for instance, I’m a gardener.

During peak season (5 months) I work 6 days a week, 6 hrs a day (paid - the other two are travel time). I charge £25/hr and am full booked up. I take home around £14 per hour (to account for equipment costs, insurance, van, travel costs etc.). During those months I earn just over £1900 per month. I meet the min income level with some to spare so get less UC.

During off-peak, (4 months) I still work but it averages only 6 hrs per week,, with no work happening in the winter months. I take home near £750/month and don’t get entitled to UC. I get nothing for winter months.

Over the year though, I earn £13.5k enough to get UC. Why is it that this person shouldn’t get UC but a person working 35hrs/week in a shop at MW should? Overall self-employed people like this still pay into the economy, pay the same taxes, earn the same as the next overall according to the taxman, why on earth should they be penalised for seasonal work? We need that seasonal work, we need well-skilled tradespeople and there is no magic bank of wonderful jobs that leave people happy with life. There is no intrinsic benefit to someone paying via PAYE and I’d far rather apply benefits fairly across the board and have people actually enjoy their life rather than take a job just because a crappy online computer cant work payments based on yearly income rather than monthly.

If these in-work benefits wasn't happening we would see an even wider divide in income groups.

Another way of looking at it would be that if in work benefits such as Tax credits were not introduced in the first place, the onus would have been on companies to increase wages, part of the reason for the part magical 16 hours and crap wages, is precisely because tax credits were introduced.

If a shop can’t pay someone a wage that is enough to live on then they aren’t running a viable business either

Ridiculous statement. A student or an adult living at home would easily live on the wage but the same wage supporting a family simply wouldn't. Employers are not responsible for their workers lifestyle choices.

I don't think UC should top up self employment, either it's a viable business or a token gesture to net benefits without jumping through the rules for JSA.

We shouldn't need other tax payers to pay top ups for others but so many are irresponsible and make choices they can't afford.

If a shop can’t pay someone a wage that is enough to live on then they aren’t running a viable business either.

This is the silliest idea we have been sold.

A business is viable if it can make money in the long run. Businesses aren't and shouldn't be mandated to pay "living wages", and the trouble with us (society in general) is that we believe the government's propaganda that the problem is business not paying high enough wages.