TheGrimSqueaker wrote:rebeccariots2 wrote:@ephie
Can't claim to be expert in UC - but what you have outlined re the car crash coming re self employment and UC is pretty much my understanding.
It is a disaster in waiting. We have to hope Reeves - or whoever - cottons on quick to this if Labour are in power post May. The review of UC should turn up a lot of these disasters in waiting. I think the arbitrary assumption that all self employed people are earning the minimum wage will have to be jettisoned ... but more probably UC itself as set out by IDS will be found unworkable by a thorough review.
UC is, in principle, a good idea; reducing the complexity of the social security system and building in the flexibility to deal with people's rapidly changing job/income situation makes a lot of sense. But something like that was going to take a lot of forward planning and preparation, which Odious' back of the fag packet approach patently failed to do; I've always read Reeves response to UC (and she has been pretty consistent since she took up this role) as saying they will review UC and of what has been done possesses any merit they will build on it, if not it will be binned - I don't think either she or and of us expect it to survive past that review.
It would have been a good idea if it did what it claimed to do - viz, simplify the system.
But it doesn't - it's incredibly complicated and relies on RTI to make it work for anyone who does any work at all.
RTI works OK for most who use it now, apart from problems with tax coding errors.
Every time a claimant's income changes, their entitlement to UC will change too, and unless that change can be calculated in the RTI system and include earnings disregards and housing payment elements, it won't work.
HMRC have expressed concern that, although there is some new IT investment at the service user's end, there hasn't been enough back office investment to keep up - according to Show, people will merrily put in their claims in RTI but the back-up simply isn't there for the sort of numbers involved. I don't know how true or accurate that is!
The various elements of UC regarding work are quite complicated, but I've done some more calculations.
A cab driver with a non-working wife and 2 school-age children, living where I do in a 2-bed council house, earning £150 a week, is currently entitled to: WTC/CTC worth £1,500; HB worth about £4,000; and pays no council tax (he would in England) worth £1,000.
His package of in-work benefits is worth £6,500. His disposable income is £9,300 - pay plus tax credits.
Under UC, all that changes. The minimum income floor applies - so he is assumed to be earning £225 PW even though he actually earns £75PW less. This affects his UC entitlement as all the elements under the UC umbrella are means-tested and the system is assuming he has more income than he actually has. He will lose about £3,000PA overall, so his disposable income drops.
If he doesn't earn more within the timescale set by his adviser, he will have to look for other work; if his cab-driving is deemed not satisfactory he will have to stop being self-employed - if he does that, he'll have less income but will get MORE benefits.
If he becomes unemployed because DWP won't let him be self-employed, he will get a benefits package worth £12,800PA.
So if you work as a self-employed person on less than the equivalent of 35 hours at NMW, you will lose out under UC.
If you cannot increase your earnings, however many hours you work, you will have to stop if you want to claim UC.
You will be unemployed, with less cash for your family, but you will be costing the taxpayer more in benefit overall.
Now, if you are my cab driver, you work, earn, and get top-ups costing £6,500 or so.
Under UC, if you keep working, you will lose a third of your disposable income but the cost is about the same.
If the DWP makes you stop, you will not earn anything and you will cost the taxpayer double what you did before.
If that isn't a recipe for a black market economy I don't know what is.
