Question to the Department for Work and Pensions:

To ask the Secretary of State for Work and Pensions, if she will make an assessment of the effect of the minimum income floor on self-employed people.

The aim of the Minimum Income Floor (MIF) is to encourage gainfully self-employed claimants to grow their business. It addresses flaws in Working Tax Credits and Housing Benefit that provided full support to claimants reporting persistently low (or zero) earnings from self-employment. Only Universal Credit claimants with a work expectation will have a MIF applied to their Universal Credit. A claimant’s expected hours of work depends on their circumstances. Where a claimant has limitations on the hours they can reasonably be expected to work, their MIF level is reduced. This ensures the level of the MIF matches the work expectations of other claimants in similar circumstances.

One of the announcements in Autumn Budget 2018 was that the 12-month start-up period, where claimants are exempt from the MIF, will be extended to all gainfully self-employed claimants, new to Universal Credit, or new to self-employment. We plan to introduce this from July 2019 with full implementation from September 2020. This will provide time for self-employed claimants to establish and grow their business, and strikes a balance between support for new business, not trapping claimants in poverty, and protecting public funds.

Plans are in place for an evaluation of the MIF and a large-scale tracking survey of self-employed Universal Credit claimants with a MIF applied to their claim

Universal Credit encourages all claimants with a work expectation to find and progress in work. To support those already in, or considering self-employment, we are also extending the New Enterprise Allowance (NEA) scheme from April 2019 onwards. The NEA provides support and mentoring for claimants who are looking to start or develop their business.