The DWP just snuck out another Universal Credit cut

The Department for Work and Pensions (DWP) is cutting payments for some Universal Credit claimants. It’s starting from Sunday 1 August. But the DWP barely gave claimants a month’s notice.

Universal Credit and self-employment

As the website Turn2Us said, the Minimum Income Floor (MIF) is for self-employed people. It stated that:

If you are self-employed and your earnings are low, your benefit may be worked out on higher earnings than you have… [The MIF] is set at the level of the national minimum wage at the number of hours you would be expected to work. How many hours this is depends on your circumstances. For many people it will be 35 hours per week but if you have a disability, have caring responsibilities, or look after children, it might be less.

The minimum income floor only applies to Universal Credit and to some Council Tax Support schemes, not to other benefits.

In other words, the DWP says if you’re self-employed, you’re expected to be earning the full-time minimum wage. And your benefits are calculated accordingly. It stopped the MIF in April 2020 because of the coronavirus (Covid-19) pandemic. But now, from 1 August, it’s bringing it back – which will mean an effective cut to some people’s payments.

Another DWP cut

The Mirror reported on 8 July that the DWP was starting the MIF again on 1 August. At the time, the department said it would give people a month’s notice. Then, on Thursday 29 July, the DWP confirmed the cut would be going ahead. Some claimants won’t see the effect until September. The Mirror added that:

Jobcentre work coaches will also have new powers to suspend the MIF for two months at a time, up to six months in total, on a “case-by-case basis”.

And it said that:

The minimum income floor applies if you are working or looking for work, but not within the first 12 months of you working for yourself.

You need to be in the “all work-related requirements group” for the minimum income floor to apply to you.

Charities and campaign groups have been warning that the cut could seriously hit some people.

Hitting hard

The Institute for Fiscal Studies (IFS) said that the DWP could be cutting around 450,000 households’ money by up to £3.2k a year. Citizens Advice went further, saying it could be up to around £7.6k a year. But of course, the problems surrounding the MIF aren’t new. In 2020, parliament’s Economic Affairs Committee took evidence from people for an inquiry into Universal Credit. One anonymous person summed up the situation with the MIF. They stated that:

Almost a million people are now in zero-hours jobs… Unscrupulous employers classifying people as “self-employed” can evade workers’ rights and leave those on UC [Universal Credit] vulnerable to the Minimum Income Floor, where they can end up with nothing. The MIF doesn’t work for people whose hours vary. It also doesn’t work for many who run their own business. Calculated monthly rather than spread across the year, it completely fails to take into account that income can be seasonal.

They also noted that:

UC is designed to force everyone to work for 35 hours or more a week, regardless of job suitability, with few exceptions. This puts immense pressure on people who are already in work but can’t increase their hours… The MIF makes businesses that might otherwise have survived go bust, a bad economic strategy that fails to recognise the many contributions lower earners make to society. Art, music, literature and other creative businesses are dismissed as “hobbies”, only available to the financially comfortable or retired, creating a cultural deficit.

Cutting to the bone

Of course, this cut comes as the DWP is also cutting the £20-a-week uplift in September. Yet the department seems unwilling to budge. A minister said:

Our specialist Work Coaches will consider the circumstances of each claimant individually, so it will take time to return to our normal processes.

We have always been clear that these would be temporary measures, keeping them under review in light of the latest economic and public health context – as such, we have extended the MIF suspension on two occasions since March 2020.

This will be little comfort to around three quarters of a million self-employed people who claim Universal Credit. The DWP may now be pushing countless more people further into poverty.

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