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Budget Universal Credit reforms disincentivise employees and self-employed alike

Responding to a Resolution Foundation report out today, IPSE has said Universal Credit doesn’t just disincentivise workers and employees – it discourages people from striking out on their own too.

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The Resolution Foundation report out today said that after the Budget 2018 changes to Universal Credit, work incentives “remain worryingly weighted towards avoiding worklessness in households rather than supporting secure work and earnings progression.”

By penalising the self-employed for their fluctuating incomes, however, Universal Credit also discourages people from striking out on their own and becoming self-employed. There was nothing in the Budget to address this imbalance, and evidence to Parliament has shown that the self-employed can still miss out on up to £3,000 a year under the current system.

Andy Chamberlain, IPSE’s Deputy Director of Policy, commented: The Budget was a grave disappointment for the self-employed in many ways. It was a particular disappointment for the UK’s more vulnerable self-employed, however, because it did very little to address the structural bias of Universal Credit against people who work for themselves.

“At present, the self-employed can miss out on up to £3,000 a year. That is a cost that many simply cannot afford, and it is a major discouragement against becoming self-employed at all. So let’s not forget that as Universal Credit stands, it is not just standard employment that it disincentivises: it also severely discourages many from working for themselves.”

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