Universal Credits - Self Employed

pentiumofborg

What do you mean by without conditionality? Sorry, I'm kindof new at this.

Yamor

Hi there, I have a slightly technical question:

Since one can opt out of the MIF by agreeing to the conditionality rules, what has DWP gained by creating the MIF rule? As far as I can see, it's just increased the options for self-employed people.

Here's why:
Without the MIF rule, anyone earning less then (NMW*expected hours) would have been subject to conditionality.
With the MIF rule, that person can CHOOSE to either be subject to conditionality, or to be deemed to be earning (NMW*expected hours).
I would think some employed workers would love to have such a choice (e.g. someone earning just under (NMW*expected hours))!

Basically, the complaints people have about the MIF are really nothing to do with the MIF. They're complaints about the whole idea of in-work conditionality applying to someone earning less then (NMW*expected hours).

dktreesea

Yamor wrote: »

Hi there, I have a slightly technical question:

Since one can opt out of the MIF by agreeing to the conditionality rules, what has DWP gained by creating the MIF rule? As far as I can see, it's just increased the options for self-employed people.

Here's why:
Without the MIF rule, anyone earning less then (NMW*expected hours) would have been subject to conditionality.
With the MIF rule, that person can CHOOSE to either be subject to conditionality, or to be deemed to be earning (NMW*expected hours).
I would think some employed workers would love to have such a choice (e.g. someone earning just under (NMW*expected hours))!

Basically, the complaints people have about the MIF are really nothing to do with the MIF. They're complaints about the whole idea of in-work conditionality applying to someone earning less then (NMW*expected hours).

But as things currently stand under UC, a self employed worker doesn't have to agree to any conditionality, even if they earn less than the FT NMW. They just have to take the cut in support when their income for benefits purposes is deemed to be 35 hours per week at the NMW.

And yes, if the children are of an age where both parents would be required to work FT at the NMW, so both deemed to have 35 hours pw at the NMW incomes, and they have a couple of kids, say, maybe this support could drop by £15k a year or so.

But they are free to decide. If they only earn a couple of thousand in profit a year, they are free to continue to collect their £20k a year subsidy, (and before people say "oh no, it couldn't possibly be that much", try a benefits calculator, 3 bedroom house privately rented, £2,000 a year in profits, both parents working 30+ hours a week in the business, and see just ow much is returned for the subsidy) and accept the conditionality, i.e. look for better paid work.

A lot of people are self employed because they can't get PAYE type work. Maybe they have a health condition, one which doesn't entitle them to disability benefit but nevertheless may be visible enough to deter would be employers. Maybe they are over 50 or have out of date skills they can't afford to update. Being self employed can be quite isolating. It isn't for everyone. Not everyone does well at it, not because they couldn't if they really applied themselves, but because they can't cope with how strenuous it can be mentally.

dktreesea

pentiumofborg wrote: »

What do you mean by without conditionality? Sorry, I'm kindof new at this.

Say you are a self employed gardener. The going rate for a gardener might only be £3 an hour in your area. You work full time, and by the time you take off your vehicle expenses, the lease cost of the van, the petrol, insurance, something for the tools replacement, let's say you clear £2k for the year.

Under the current guidelines, you get the maximum in benefits, year in year out, and don't ever have to look for better paying work.

Under universal credit, you either have to try and get better paying work (and if the job centre find you a job that pays NMW full time or better, you may have to take it) - that's the condfitionality part - or you say "no thanks, I'm not working for anyone else, I'm happy earning what I earn", in which case the government will say "Fair enough, your choice, but for the purposes of the benfit calculations, we are deeming you to have a profit before tax and NI equivalent to 35 hours per week at the NMW." Say that works out to around £10k per annum, by the time allowances for things like the income disregard, tax and NI are "deducted".

So here's the choice:

Maintain your current income and keep your benefits, but jump through all kinds of hoops and put lots of time into getting a better paying job:

Profit per annum £2,000
Benefits £20,000 based on £2k net income per annum
Total income £22,000

or
Maintain your current income, keep your lifestyle, don't look for better paying work and take the benefits hit:

Profit per annum £2,000
Benefits £12,000 based on deemed net income of £10k per annum
Total income £14,000

The current situation is quite fluid. Nothing is set in stone yet regarding self employment. It's all still up in the air because that second scenario is still not what they want. If the people in the second scenario just decide to take the hit and reduce their standard of living accordingly, the government is no further ahead.

Then there are the farmers. They will have no choice, if they want to stay on their farms, but to take the second option. You can't be milking your cows and staffing the checkout at Tesco full time. When Labour gets on the election bandwagon, and starts rolling out the farmers who have had to take huge income hits due to UC, I can't see the coalition surviving 2015. Can you?

Icequeen99

Yamor wrote: »

Hi there, I have a slightly technical question:

Since one can opt out of the MIF by agreeing to the conditionality rules, what has DWP gained by creating the MIF rule? As far as I can see, it's just increased the options for self-employed people.

Here's why:
Without the MIF rule, anyone earning less then (NMW*expected hours) would have been subject to conditionality.
With the MIF rule, that person can CHOOSE to either be subject to conditionality, or to be deemed to be earning (NMW*expected hours).
I would think some employed workers would love to have such a choice (e.g. someone earning just under (NMW*expected hours))!

Basically, the complaints people have about the MIF are really nothing to do with the MIF. They're complaints about the whole idea of in-work conditionality applying to someone earning less then (NMW*expected hours).

The question is now irrelevant because now the final draft regulations have been published there is no choice given in them.

If you earn less than the MIF, you are subject to it. You can't opt out of it by accepting conditionality. So very few peoplem if any, who are 'gainfully' self-employed (i.e. it is their main employment) will be subject to conditionality because they will be deemed to earn at least the conditionality threshold due to MIF.

Only those who are no gainfully self-employed will be subject to conditionality, but those are people who don't spend all of their time on self-employment anyway.

IQ

Yamor

Ah, didn't realise that. There's no way to say that you're looking for other work, but continuing in your self-employment, because that's better then nothing?

John_Pierpoint

.....and you don't become an unemployment statistic ?

Xign

What if you got a fit or sick note saying you can only work a certain amount of hours?

Icequeen99

Xign wrote: »

What if you got a fit or sick note saying you can only work a certain amount of hours?

The minimum income floor doesn't apply to people who are not subject to all work requirements. So if you have a disability or fall into one of the other categories that allows you to work less than 35 hours you will be fine.

IQ

MissMoneypenny

dktreesea wrote: »

Then there are the farmers. They will have no choice, if they want to stay on their farms, but to take the second option. You can't be milking your cows and staffing the checkout at Tesco full time.

Except farmers don't just get handouts from the UK welfare state; they get handouts from the *EU too. 51% of the entire EU budget is spent on faming. Even with the new EU budget cuts due, farmers are still getting the biggest slice of the EU budget; 38% of the EU budget! It's obscene.

Many UK farmers claim tax credits too, as they use accountants to massage their figures so that they qualify for these welfare payments; while sending their children to private schools/driving around in new cars. Their wives don't need to do much on the farm (or get a job).

Someone posted on these boards about the moaning (even more moaning that usual:D) at a farmers union meeting, as they realised UC will mean they can no longer use their accountants figures to claim Tax Credits. Most can easily afford to lose their tax credits, but they have got use to getting this extra money. For those that do rely on their tax credits as they don't have a productive business; their wives don't want to get a job to make us this loss, as they have been use to having the welfare state support their lifestyle.


* EU.
I know a few farmers and thay are all happily amazed at how much they are given from the EU budget. One farmer I knew only had 100 acres, yet just one on the many cheques he got from the EU that year, was 26k. Another was getting £500 each acre, not to grow sugar beet, but he could grow other crops on that same land: imported sugar cane is cheaper; and sugarcane is better than the sugarbeet the EU was growing.

I recall the first scandles 25 years ago, about EU farming handouts, was the butter scandle; where huge barns of butter were stored. Rather than flood the market and reduce the price of butter for the EU citizens (who had after all, paid the farming handouts) they gave it away to other non-EU countries. And then there was the wine lake scandle. So many scandles like this now with farming, that we have got use to these rip-offs.