ephemerid wrote:Under UC, the people most likely to be working for not much money (or none to start with) are the self-employed.
There's another provision that might cause problems, especially for the self employed. "Notional income". From the 2012 guidance to the select committee -
"195. As with capital, there may be circumstances in which a person is to be treated as depriving themselves of an income in order to gain or increase entitlement to Universal Credit. A person who has deprived themselves, or whose employer has arranged for them to be so deprived of income for the purpose of securing entitlement to universal credit or to an increased amount of universal credit is to be treated as possessing that income.
196. If a person provides services for another person and the other person either makes no payment for that service or pays less than would be paid for a comparable service in the same area; and the other person was able to pay the going rate for that service, the service provider is to be treated as having received the remuneration that would be reasonable for the provision of that service....."
Similar rules to para 195 go right back to the 1948 Act. Parliament's intent being that employers should not be encouraged to pay low wages in the expectation that the social security system will pick up the tab. Leaving aside that Family Income Supplement onwards have exactly that effect, it's a very difficult situation to prove and is a rarely used provision. Turns up sometimes if a family member employs a close relative and pays them much less than the going rate for the job and the "employee" claims benefits and that's about it.
Para 196 is very interesting. Let's say I decide to set up as a mobile car mechanic. I do my market research and find out that round here the going rate for the job is, let's say £35/hour. Being a new business I decide that I'll charge less, at least until I get established. I'm also really desperate for work, so I decide to charge £24.99 an hour.
For UC purposes is my income going to be assessed at £24.99/hour or at the local rate for "comparable services" which is £35/hour? Where in this is the space for the all-powerful and undodgeable Gods of the Market to do their magic thing and allow businesses to undercut each other? Will I be expected to charge £35 even if that results in me getting less work and therefore less income - and therefore more benefit?
And what, for heaven's sake, is the "going rate" for any service that can be provided by one or more people but is paid by the job not so much per person? For example, musicians when venues pay an amount per band not per musician? If a pub pays a flat £200 fee for a gig then is the going rate for the service the £50 each of a quartet gets or is it the £100 each a duo would get from the same fee?
It's a mess and has all the indications of a minister who is simply not listening to advice from the civil service or the external organisations and campaigns that can pick this stuff to pieces.
The last time this sort of thing was going on was the dying months of Major's government with Peter Lilley frantically ramming dozens of amendments and regulations and a seriously flawed major fraud act through before the election the Tories would clearly lose. Or the Child Support Act/Agency fiasco.
Unfortunately I have little hope that Frank Field will be much use at all in derailing any of Smith's master plans. Field's reputation is largely based on his CPAG work decades ago and being one of the few MPs actually interested in social security policy. So Labour back-benchers seem to just leave it to him to get on with. Trouble is Field has an.... "unusual" view of the world and may not be too unsympathetic to Smith. I hope I'm wrong, but Field's main complaint about Lilley, for example, seemed to be that Lilley's "little list" campaign against single mothers perhaps wasn't quite tough enough.
I'm getting tired of calming down....