Is self-employment the best way forward?

1 June 2011

As pressure on claimants increases, Benefits and Work asks whether setting up  ‘micro-businesses’ and trying to negotiate thousands of pounds in payouts from work programme providers may be the way forward for a minority of claimants. 

More and more sick and disabled claimants are either being forced onto Jobseekers’ Allowance (JSA) or are trapped in a seemingly endless cycle of failed employment and support allowance (ESA) medicals followed by successful appeals.

With the introduction of the new, harsher work capability assessment, the migration of claimants from incapacity benefit (IB) to ESA and the proposed 12 month cap on contribution-based ESA the situation will only get harder for many claimants.

In addition, the new Work Programme comes online in June and schemes such as mandatory work activity are already in place, meaning the pressure to attempt some form of paid work will continue to increase.

Clearly, for many claimants work is simply not a realistic possibility - no matter what the opinion of Atos and the DWP might be about their health condition.  For these people, resisting the increasing pressure will be the only option.

But for some claimants, self-employment on a very small scale, and financially supported for two years by no doubt reluctant work programme providers, might seem worth considering.

The aim might not be to make a substantial profit from being self-employed.  It might not even be to make any profit at all, but to be legitimately trading and thus able to escape the endless cycle of ESA medicals and still able to maintain a similar level of income.

In this regard, the work programme may present real opportunities for some claimants.  For example, if you’ve been on long-term IB and get transferred to ESA then work programme providers will be able to claim up to  £14,000 if they can get you into full-time work and keep you in it for two years.  They get paid the money in stages as long as you stay in work.  And it’s entirely up to them how they keep you in work. 

Which potentially puts you in a very strong bargaining position.  The providers will expect to have to spend money on claimants to get them working.  So it’s mostly a question of how much you can get out of them.

You could just suggest a straightforward:  ‘Pay me £50 a week to help me through the first two years  and I’ll attempt self-employment.’  As far as we know there’s nothing to prevent this.

Or you could ask for other types of support,  with more being provided say every three months that you stay in work.  It could be a shopping list of  things like:

• Training
• Help from a  bookkeeper to do your accounts
• Specialist equipment for your trade or profession or in relation to your impairment
• The quarterly rental on a second phone line
• High speed broadband
• Adaptations to a vehicle
• Public liability insurance
• Goods to trade online
• A criminal records check if it’s needed for your line of work

In the end you can probably ask for anything you like, the only question will be whether a particular work programme  provider thinks there will be enough profit left for them to make it worth their while.

That, at least, is how we understand the work programme could be used.  We’ll know more once it has been running for a few months.

Of course there are a huge number of practical issues to contend with, such as: 

• what sort of business to take up,
• the possible effect on entitlement to DLA, the complexities of keeping accounts,
• the effects of a variable condition on your ability to do even a limited number of hours,
• working out how much better or worse off you are likely to be, both now and potentially on the introduction of universal credit (UC)
• what happens if you have to stop work again
• what happens when support from the work programme ends.

But the potential advantages may be considerable too:

• no more ESA medicals, at least for a couple of years,
• being able to say that you are self-employed rather than a claimant,
• being able to work your own hours,
• possibly having more money.

Some people may already have saleable skills because, for example, they had a trade or profession before becoming ill or disabled.  So, you might be  an expert in planning law and  be capable of doing small amounts of work sporadically.  In which case setting up a business might be as simple as creating a website with a PayPal button on it so that people can pay in advance for your help and then finding ways to advertise your service.

Or you might have to look at a range of activities, which together would constitute enough self-employment.  This might be offering your services as a pet-sitter, plus selling things on EBay and running a website which you use to sell affiliate products.

So, is self-employment a possibility that some claimants might want to seriously consider?  Let us know what  you think?