Universal Credit: Universal Stitch-up
Reporting requirements and conditionality
LAST SUMMER the Freelance highlighted the parliamentary consultation on the Universal Credit regulations, which will have a severe impact on freelance and part-time workers. LFB submitted views via the NUJ to the consultation, which has also seen responses from organisations such as Gingerbread, Women's Aid, the Chartered Institute of Taxation, UNISON and the Low Incomes Tax Reform Group.
Universal Credit allegedly simplifies welfare by rolling all benefits into one payment that will include working tax credit, child tax credit and housing benefit. But under the new rules self-employed claimants will have submit monthly reports alongside the yearly tax reporting system, and face sanctions if they are not seen to be trying to increase their pay or hours.
After reviewing evidence from the consultation, the Commons social security advisory committee has warned that imposing such conditions on working claimants would be "unworkable and unfair" during a recession. Whether Ian Duncan-Smith and his cronies will pay any notice is another matter. The final debate on the regulations is expected in December. (Watch this space for the Commons Select Committee report on Universal Credit, currently in preparation.)
Currently, to become self-employed all you need to do is register and start paying your Class 2 contributions and fill out self-assessment forms. Working tax credit awards are simply based on self-assessment figures.
The Universal Credit regulations require claimants to submit to a "Gateway" interview - a kind of Tory-style Dragon's Den - where a panel reviews their business ideas. They will have to prove to the Department of Work and Pensions (DWP) that their trade is "done with the intention of increasing the income received to the level we could expect the claimant to make if working full time". Claimants must provide diaries, lists of customers and suppliers, marketing materials, business plans, receipts and bank statements.
And what kind of training and understanding of self-employment will the people making these decisions have? Previous experience with the DWP - and its contractors - does not inspire confidence.
The new regime will require self-employed workers to report incomes and business expenditure on a monthly basis. Expenses will not be carried over to the next month. So if someone spends a couple of grand on computers, software and research, this will only be taken into account for that month. Introducing another reporting system on top of the yearly tax reporting system will involve more paperwork and more functionaries. This may well multiply instead of cut complexity and costs.
It's becoming more difficult for us to maintain, let alone increase, our incomes. But under the new regime claimants earning below a "minimum floor" - the minimum wage for 35 hours, about £212 per week - could experience the harassment already faced by the unemployed: interrogations by clueless functionaries, workfare or pointless courses with "welfare-to-work" (W2W) firms such as the fraud-afflicted A4E.
Furthermore, the proposed regulations state: "In order to meet a given work availability requirement claimants must be available to immediately take up, (or attend an interview for) work/more work/better paid work."
Does that mean the freelances who currently receive any tax credits or benefits must give up a subbing shift or research opportunity for a major article at the say-so of the DWP? And most absurdly, will self-employed or part-time workers who don't earn enough get forced to work for nothing?
The regulations also say: "Claimants who are placed in the no work-related requirements group because of their level of earnings will be expected to continue to keep working at that level. If claimants voluntarily and without good reason or through misconduct cease paid work or lose pay so that they fall below their threshold and as a result become subject to work search requirements then a conditionality sanction will be applied."
If a freelance loses pay and income, how will "good reason" be determined? Imagine the cost of the infrastructure and staff to monitor this, or vast payments to a dodgy private firm for providing these "services".
Will snoopers phone up our clients to ask why they haven't booked us or paid us more? Will they solicit views from our editors? Imagine if one of those clumsy "monitoring" calls came to one of our client on press day. That'd really big up chances of more work!
As with expenses, a payment at the end of a big job will not be applied to later months' income. So a freelance who devotes a month writing a substantial piece will be penalised for not earning minimum wage during that period. While the memorandum says "we will seek to identify patterns of earnings and disregard temporary fluctuations" it misses the point that incomes vary with freelance work. So wouldn't it be much easier to stick to the current annual tax cycle?
It seems that "Conditionality" for working claimants is unlikely to kick in immediately after October 2013, the target date for Universal Credit. A transitional phase comes first, including pilot schemes aimed at "higher-earning" claimants. These schemes are likely to offer prime pickings for "welfare-to-work" scamsters, ready to reap pay-outs for any rises in fluctuating freelance incomes.
As the informative welfare, employment and cuts news blog The Void points out, the new regime transforms the minimum wage from a measure to protect workers from dodgy employers into a cudgel to beat workers who don't earn "enough". It's no longer an employer's responsibility to pay the minimum wage, but a worker's responsibility to earn it!
Welfare-to-work contractors have often proved to be crooked or dismal failures at finding real jobs for people. The investigations of A4e and Working Links for corruption bear this out. Tomorrow's People has been highlighted for misleading the Diamond Jubilee workfare stewards and ordering them into work in dire conditions, violating every health and safety standard. G4S is well-known for its failures on Olympic contracts as well as abuses in its detention centres, where one asylum seeker has died. These firms are all major W2W contractors, and the W2W industry will be able to stick its profiteering snout into our working lives if the new regime is allowed to operate.
LFB's Cashback for Interns campaign and others like it have seen victories where unpaid interns have successfully sued for back payment of wages. The Trades Union Congress, like the Freelance, supports action against the imposition of unpaid work on anyone, employed or unemployed. As a union we should support members who runs afoul of this regime, and collaborate with disabled and unemployed action groups to defeat it.
Last, in a professional capacity we will point out just how badly written these regulations are. For example, the memorandum claims that the aim of the Minimum Income Floor (MIF) "is to encourage and incentivise individuals to increase their earnings through developing their self employment." Incentivise?
A recent comment by one of my editors about what should happen to any writer who uses the word "incentivise" is best not repeated here! The editor certainly has a point in regard to the people responsible for these regulations. At the very least, organisations that commit such vile crimes against the English language should not be empowered to decide how we do our jobs. This only "incentivises" us to get our proverbial proofreading red pencils out and set about deleting this whole cumbersome Universal Credit edifice.
- 4 November 2020: We fixed the external links in this story.