People forced into poorly paid self-employment, such as working in the ‘gig economy’, will be further punished by having their benefits slashed under universal credit, according to research group Policy in Practice.
Under universal credit, claimants who have been self-employed for more than a year are deemed to be earning the equivalent of the minimum wage for all the hours they are expected to have worked each month. This is known as the Minimum Income Floor (MIF). A claimant’s universal credit is assessed as if they were meeting the MIF, even if in reality they are earning a great deal less.
Policy in Practice has calculated that in London 91% of self-employed households currently earn below the MIF. Of these, 78% have already been reporting earnings for 13 months and so will be hit by the MIF when universal credit is rolled out in their area.
The report claims that if universal credit was already in place across the whole of London, the average self-employed household would be a huge £344 a month worse off than they currently are under tax credits and housing benefit.
Many people have no choice but to work in the bogus self-employed world of the gig economy because that is the only work that is available.
And for many sick and disabled people, self-employment is the only realistic option because they are so heavily discriminated against in the employment market.
Yet Policy in Practice has calculated that self-employed people could be better off not working because of the effects of the MIF, making a mockery of the founding principle of universal credit, which was to make work pay.