Universal credit and self-employment

Meeting: 
MQT on 2017-10-12
Session date: 
October 12, 2017
Reference: 
2017/4096
Question By: 
Fiona Twycross
Organisation: 
Labour Group
Asked Of: 
The Mayor

Question

Research by the Social Market Foundation and Trust for London estimates that around a fifth (19%) of families with an individual whose main job is self-employment are claiming in-work benefits such as tax credits and housing benefit that will be replaced by Universal Credit. Over 190,000 families have earnings below the minimum income floor and so are likely to be worse off under Universal Credit. London is particularly affected as 18 per cent of those in work are self-employed, the highest rate of self-employment of all UK regions. Furthermore, 67 per cent of self-employed Londoners don't earn the London Living Wage.  Will the Mayor raise this as an issue with the DWP, calling for low-paid self-employed individuals being moved from tax credits to Universal Credit to be given a 12-month exemption period from the minimum income floor to give them time to take steps to increase their earnings?

Answer

Answer for Universal credit and self-employment

Answer for Universal credit and self-employment

Answered By: 
The Mayor

I have previously written to the then Secretary of State for Work and Pensions to raise the specific issue of the detrimental effect of the minimum income floor on Universal Credit claimants in low-paid self-employment. His response referred to the six-month exemption period that claimants who are moved from legacy benefits to Universal Credit will receive before the floor is applied. Clearly a 12-month exemption period would be preferable.

As the roll-out of Universal Credit accelerates, pulling in more London households, my officers will actively explore opportunities to work with boroughs and civil society organisations to ensure the effects of this policy's shortcomings are fully evidenced.