Self employed after the budget?

dktreesea

NYM wrote: »

I work for several small businesses, ..every single one of them started as 'self-employed' but instead of relying of benefits, all of them approached High St banks with sound business plans that convinced those Banks to lend to them. Some of them used their own homes as security for the loans.

It seems that is an old fashioned now....

I've worked with or alongside quite a few self employed people and have found they fall into two broad groups. Firstly there are those who can't get any further help than they already receive via the benefits system, usually because of other sources of income or their partner's income, or because they have savings beyond the capital threshold (£16k maximum allowed for families, if you want to qualify for certain benefits like housing benefit and working tax credit).



For this group, if they need money to invest in their business they can usually approach the bank. I think of them as cautious investors. They've got a lot to lose if they have borrowed and their business fails.


The other group are usually income and capital poor- they often go hand in hand. They may even be self employed reluctantly, only taking that route because they can't find work as an employee somewhere. This group get high levels of subsidy from the government via the benefits system and that subsidy is their main source of income. They may not be able to grow their business quickly due to lack of capital. Even when they could decide to grow their business, I find, from the accounting advice I have given some of them over the years, that they are motivated to work in such a way that both protects and maximises any benefits they can get.


For this group the minimum income floor will be a financial disaster. I foresee many people deciding to give up being self employed and go back to being unemployed, because at least that way, despite all the conditionality the DWP will impose on them, they can protect their main source of income, their benefits.

dktreesea

PasturesNew wrote: »

The current method means that those "working the system" can seriously undercut the market - and screw it for those genuinely trying to make a proper business from the same idea, but who don't get those top ups.

This means that those who are able to be self-employed in something will find their competition decreases, so their prices can rise, so they can earn a better wage .... rather than "competing" now with people who are "happy" to be earning £1/hour because they know they'll rake in some top ups that they can get.

It'll be the death of the non-business.... good.

it could be the death of some of the non businesses. others will still go on charging their £1 an hour because they are not entitled to benefits anyway - i.e. household earnings from other sources too high.


Undercutting could increase rather than decrease, if businesses now needing more income to survive have to cut their prices to compete properly instead of charging too much and just doing the odd bit of work because they are getting paid through the benefits system anyway so it really doesn't matter if they don't do many jobs.


We've just had a painter and decorator in here in that very boat. He only wants to work he says, if he can cost the job so that he earns £20 an hour. He says once the MIF cuts in, he is going to have to work a lot more than he does at the moment just to survive, and compete on price (£5 to £6 an hour) just to bring his income up the near the NMW and cover the benefits he is going to lose.


Even if he works for someone else on the NMW, the problem is it's all sub contracting so they would only call him in if they needed someone. It is what it is. If the going rate is only £5 an hour, then either work for that or go and try and get a job as a check out chick or trolley dolly (guys who restock the shelves) at a supermarket.


Some of the self employed are going to have to get used to working longer hours for a lower hourly rate. Our population is increasing by 400,000 every year. There's going to be downward pressure on rates for work for years to come.

rogerblack

dktreesea wrote: »

The question is would the DWP sanction people who did have part time work, who claimed they couldn't get full time work but whom the DWP considered were not doing enough to get that full time work?

Yes.
If you are self-employed and claiming to work 35 hours, this does not apply.
The minimum income floor means they are assumed to earn 35*NMW, so that removes them from any conditionality.
It also reduces UC by as much as if you had earned that.

The DWP already has started action on a pilot program sanctioning people if they are not working enough.
If you are in the group expected to look for full-time work, unless you earn 35*NMW, or comply with job-seeking requirements to the DWPs satisfaction, you are at risk of a sanction.

http://www.insidehousing.co.uk/trial-to-sanction-working-benefit-claimants-introduced/7008216.article

It is intended to roll this out nationally.

FBaby

They may even be self employed reluctantly, only taking that route because they can't find work as an employee somewhere.

I don't agree with that. If you don't skills to be employed at any entry job,I can't see how you are going to make a business successful. Self-employment should not be seen as something you can do because you can't do anything else, it should be the exact the opposite.

How likely are you going to make a business successful when you got into it reluctantly? Very unlikely I would think unless lucky to discover a skill you didn't think you had in the first place.

dktreesea

FBaby wrote: »

I don't agree with that. If you don't skills to be employed at any entry job,I can't see how you are going to make a business successful. Self-employment should not be seen as something you can do because you can't do anything else, it should be the exact the opposite.

How likely are you going to make a business successful when you got into it reluctantly? Very unlikely I would think unless lucky to discover a skill you didn't think you had in the first place.

You could have the skills but just not be able to get a job. For an employer's perspective, you could have 600 CVs of which you have a short list of 60 who have the match of skills you're looking for. But only one of those people is going to get the job, even if they are all able to do the job.


There's a difference between being able to successfully interview for and get a job versus the ability to actually do the job.

rogerblack

FBaby wrote: »

I don't agree with that. If you don't skills to be employed at any entry job,I can't see how you are going to make a business successful. Self-employment should not be seen as something you can do because you can't do anything else, it should be the exact the opposite. .

Some jobs - for example making craft or other similar items with actual skill, and selling piecework may be viable for people who would have problems with most employed roles.

If you have a variable health condition, with a couple of good days a week, for example, conventional employment may be almost impossible.

But being able to vary your hours as required, or even to do work at midnight, or around caring responsibilities can make it viable, when the alternative is not work, but sitting idle.

I note also that sitting idle is likely in many cases to worsen health conditions, and put added costs on the rest of us due to the NHS.

dktreesea

rogerblack wrote: »

Some jobs - for example making craft or other similar items with actual skill, and selling piecework may be viable for people who would have problems with most employed roles.

If you have a variable health condition, with a couple of good days a week, for example, conventional employment may be almost impossible.

But being able to vary your hours as required, or even to do work at midnight, or around caring responsibilities can make it viable, when the alternative is not work, but sitting idle.

I note also that sitting idle is likely in many cases to worsen health conditions, and put added costs on the rest of us due to the NHS.

Yes, plenty of people who are self employed probably wouldn't fare well in the working for someone else world. 9 to 5 doesn't suit everyone. Also, I've noticed recently a trend towards making people stand up all day. People with no seat at some supermarket checkouts, bank tellers, post office staff.


Taking the view that if you are self employed then you at least have to be prepared to work enough to earn at least the minimum that an employer would pay you for the hours you are expected to work in one way seems fair enough. But as you say, a fair few of the self employed have health issues.


If the self employed and employed worlds were equal, then it would seem reasonable for the government to expect those who employ themselves to at least be prepared to work hard enough to pay themselves the minimum wage. I'm not so sure it is an equal playing field. Take our council. They could accept lower quotes from very small businesses, and give out the work to a range of them, but instead they go with the larger company even though it costs more. They say it's because they want a reliable, consistent product. Or they'll do things like using the lower quotes to pressure their preferred supplier to lower their rates, instead of going with the lower rate.