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?

Under the tax credit system people set up silly hobby jobs on facebook selling glittery wine glasses and a few second hand clothes and made very little profit but claimed to work 16 hours a week to claim working tax credits. The government wanted to put an end to this abuse of the system and it looks like they are carrying it on with the UC minimum income floor. I think they should give longer than 12 months grace period though and check people have a viable business and decent business plan. I know people who have a bouncy castle business , they work just a few weekends a year in the summer months, the rest of the time 9 24 hours a week) apparently is spent promoting the business, they get more in wtc than they earn.

I hate to break it to you but there are other places outside London. Places with much lower costs of housing. Guess what, people on low wages still struggle. Im not saying fixing housing costs wouldn't alleviate some of the financial pressure but it is far more than just housing. And how far to the government go in 'fixing' the other areas such as food costs, utility costs, care costs, travel costs etc?

yes, I know there is life outside of London. But how are housing costs so high if local wages can't support them? The trouble is that we have high housing costs, so we need benefits, which push up housing costs.

I understand why people want benefits and tax credits, and certainly in the absence of other changes they make sense. But we really need to rethink the best way to help the poor.

The problem is that both labour and con do not really want to tackle this issue, and the electorate on both sides only want to tackle the issue as long as it doesn't affect their own personal circumstances.

agreed. Both have worsened the problem.

Well, "we" (I guess best expressed through the government) is that we simultaneously want the housing market to go up (or at worst flatten), and have affordable housing. well, you can't have both. Hence the brilliant idea of housing benefit, which tries to do that, but of course is one of the best ways to funnel public money to private hands.

I hate to break it to you but there are other places outside London. Places with much lower costs of housing. Guess what, people on low wages still struggle. Im not saying fixing housing costs wouldn't alleviate some of the financial pressure but it is far more than just housing. And how far to the government go in 'fixing' the other areas such as food costs, utility costs, care costs, travel costs etc?

I hate to break it to you, but for the past decade the places outside london was already outpricing the locals to afford a house, there were many a guardian article about snapping up a BTL in some small norther working town in the run up to the financial crisis, it is only recently the snake has decided to eat itself that the housing crisis has become a big issue.

shit like this doesnt help.

www.theguardian.com/society/2018/mar/24/london-social-housing-sell-off-protest-luxury-hotel?CMP=Share_iOSApp_Other

Benefits are there to support the most vulnerable in our society. Not to enable vanity business start ups. If you want to make money from knitting blankets or tie dying cloth nappies great - but generate your own income to support your whim.

Benefits are there to support the most vulnerable in our society. Not to enable vanity business start ups. If you want to make money from knitting blankets or tie dying cloth nappies great - but generate your own income to support your whim

Yes, agree with the non supporting of hobby businesses to avoid USA etc.

However it's been many years since benefits just helped the vulnerable. Nowadays many claimants are people who made choices they couldn't afford believing it was their right to do so. The SE aspect is just one tiny area in a host of things that needs reform.

However it's been many years since benefits just helped the vulnerable.

exactly. This idea that benefits are a "safety net" is outdated. Working people of all kinds get benefits. Around a third of Londoners get help with their rent. This is the slow creep of benefits. Since then the government has been pricing people out of work.

The government actively encouraged people to be self employed - in effect to fiddle the employment figures. A significant proportion of those people did not have any chance of ever building a proper business.

Tax credits allow businesses with employees to pay sub living wages and be topped up by the tax payer. They also subsidise the subset of people who were shunted off jobseekers onto self employment but should have remained on jobseekers.

Now the government brings in UC and I’d put money on them starting to unravel the tax credit system next.

Now that’s not necessarily a bad thing per se - tax credits should never have existed in the form they do (ie a public subsidy for private business / a way of fiddling the unemployment figures.)

The problem is that the structural issues of very low wages and underemployment are still there so if you remove the tax credit system without putting something else in place a LOT of people are going to get trapped - including many who were advised to go self employed.

In effect, the government are moving the goalposts, and removing the remedy for low wages without tackling the low wage etc issues. It’s going to lead to huge issues.

Social housing has always been an issue since even before right to buy, and do not believe that the likes of the Guardian or Labour fully support the idea of social housing either, there are many many caveats in their proposed solutions.

I'm alright Jack is by no means just an "evil tory" trait

In effect, the government are moving the goalposts, and removing the remedy for low wages without tackling the low wage etc issues. It’s going to lead to huge issues.

The thing is that the government can only do so much, both labour and con have agreed on the minimum wage amount, labour offering to do it immediately kind of shows its a more from a populist, trump esc angle.

The low wage economy has so many strands that as politics has become so partisan not only with left v right but with brexit on top it is difficult to unpick.

No one on the left or the right has answers to this situation at the minute, and UBI is not the magic bullet that the left think it is (preempting responses)

I think they’ve recently changed the system to stop people taking the piss. Not so long ago you used to hear of people claiming to be self employed hairdressers doing their mates hair in their living room a couple of times a week and getting max tax credits but I believe that’s been stopped.

@Unfinishedkitchen

I think they’ve recently changed the system to stop people taking the piss.

For goodness sake, read the thread. People were deliberately encouraged to go self employed to keep the unemployment figures down. If anyone was taking the piss it was the DWP/Job Centres.

" This idea that benefits are a "safety net" is outdated. Working people of all kinds get benefits. "

Single people who work full time don't get any benefits. The benefits for families are mainly what you'd get in other countries happening directly through PAYE. In many continental countries there's no need to claim tax credits as people with dependants automatically pay less income tax.

I've not read the article but just from the quote....if I was a children's entertainer like the one interviewed I would have done it as a second job...like a hobby job.

I'm self employed, I also receive state support in the form of tax credits because I only work 2 days a week at my job. I could work more hours, as in they are available, but I am not physically well enough to be able to do so. Isn't it better that I work my 'non-viable' business this way and receive some help, than try to work more and end up so ill i have to claim sickness benefits and not generate any of my own income?

Moreisnnogedag couldn't agree with you more. For a policy that is designed to be more agile UC goes out of its way to penalise self employed seasonal workers. It's massively unfair that f/t employees paid the same yearly wages will get UC whereas seasonal workers won't when they're on the same money.

Gwenhwyfar - Single people on low wages can certainly get all kind of benefits if their wages are low enough - working tax credits, Universal credit, housing benefit.

I guess I'm one of them, I have a buisness that makes around 16,000 I'm self employed and it's seasonal. It fits around my family, I'm a single mum.Although the profits (my wages) are 16,000 the turnover is 70,000.
The rest of the money is spent on stock (boosting other businesses) , rent & business rates(boosting local council revenue) I bought a van etc etc.
15% of the workforce are self employed so you can see that the contribution of the self employed sector to the economy is quite huge when you consider most turnover to profit ratios are 20% profit of the turnover.
You can't run an economy without actively encouraging business even if most are not that successful.

"Gwenhwyfar - Single people on low wages can certainly get all kind of benefits if their wages are low enough - working tax credits, Universal credit, housing benefit."

Working full time? It's very difficult for a single person working full time to be under the limit for these benefits.

Basically the state is just subsidising Deliveroo’s profits isn’t it?

If this means people don’t take gig economy jobs then good. Deliveroo should be forced to make their jobs more attractive to make it worthwhile.

The people saying it's unfair that seasonal workers and employees making minimum wage are treated differently even if they earn the same amount annually, surely the difference is that seasonal workers could in theory find other work during the off season. If you're a gardener who only averages six hours a week during the winter months (as someone suggested in an example upthread) then it would be easy to fit in a temp job as, say, a call centre worker or warehouse picker during those months. If you're already working 37 hours a week then it's much harder to do a second job on top of that.

I used to be self employed as a tutor, which meant lots of work from January to May/June and then 'very little once GCSEs and A-levels were over. Should I have expected the government to subsidise me for the six months or so where I was only doing an hour or two of paid work a week?

(I'm only talking about people with predictable seasonal work cycles here by the way. I can see how it would be harder for contractors and other people whose workload fluctuates unpredictably.)

I'm not sure how many seasonal call centre jobs there are psychomath?

Maybe not seasonal specifically but there are plenty of temporary call centre jobs, and even if they're not advertised as temporary there's nothing to stop someone taking a job for 4-6 months and then leaving. That kind of work has a high turnover, so leaving after a relatively short time doesn't look bad in the same way that leaving a 'career'-type job would.