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Universal Credit: Self-employment

Oral Answers to Questions — Work and Pensions – in the House of Commons on 7th January 2019.

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Photo of Hugh Gaffney Hugh Gaffney Labour, Coatbridge, Chryston and Bellshill

What assessment she has made of the effect of universal credit on self-employed people.

Photo of Alok Sharma Alok Sharma The Minister of State, Department for Work and Pensions

Universal credit supports self-employed people to develop and grow their businesses where doing so is the best route for them to become financially self-sufficient. We recently announced changes to the grace period for the minimum income floor and the extension of the new enterprise allowance scheme, all of which provide additional support to self-employed claimants.

Photo of Hugh Gaffney Hugh Gaffney Labour, Coatbridge, Chryston and Bellshill

Citizens Advice estimated in October that self-employed workers could lose up to £630 a year because of the way universal credit payments are calculated. It also stated that 400,000 claimants could suffer losses because of the minimum income floor, which the Minister mentioned. Those claimants are people who are trying to make a living for their families and themselves. Will the Secretary of State commit to reviewing the effects of the minimum income floor on self-employed workers who are claiming universal credit?

Photo of Alok Sharma Alok Sharma The Minister of State, Department for Work and Pensions

As I highlighted in my earlier answer, we have made a change to the minimum income floor. The grace period will be extended to one year for all people coming in who are gainfully self-employed running a business. Ultimately, different businesses take different lengths of time to reach profitability, so, in the period before the minimum income floor is applied, we are giving people a chance to develop their business. That is also why we provide support through the new enterprise allowance.

Photo of Bill Grant Bill Grant Conservative, Ayr, Carrick and Cumnock

Mention was made earlier of the fantastic fall in youth unemployment since 2010—around 50%, I believe. What action can the Minister take, or is the Minister taking, to ensure that that trend continues evenly across the United Kingdom so that our young people get the best start to their working lives?

Photo of Alok Sharma Alok Sharma The Minister of State, Department for Work and Pensions

My hon. Friend highlights a very important point. Youth unemployment has almost halved since 2010, and we have the youth employment support programme to thank for that—the work we do through jobcentres in schools to make sure that people do not end up not in education, employment or training. Ultimately, however, this is about supporting people through the process, and that is what we are doing in universal credit.

Photo of Stephen Timms Stephen Timms Labour, East Ham

I hope it does turn out to be the case, as reported, that the Secretary of State is going to pause the roll-out of universal credit in order to fix it. I hope she has noticed that Mr Duncan Smith congratulated her because he thought that that was what she had decided. Can the Minister assure the House that those who are being transferred to universal credit from other benefits will not have to wait five weeks before they are entitled to support? That is what is forcing them into debt.

Photo of Alok Sharma Alok Sharma The Minister of State, Department for Work and Pensions

I know the right hon. Gentleman cares very deeply about these issues, and we have had many discussions about this. It is precisely to help people with their cash flows that we have made advances available up front—up to 100%, if that is what they require—as well as two weeks of housing benefit run-on.