From August, the government is set to reintroduce the Minimum Income Floor (MIF) for self-employed workers claiming benefits – a move that would reduce these workers’ Universal Credit payments significantly.
The MIF was temporarily suspended in March 2020 as part of the emergency Coronavirus measures and aimed to help those who had lost income due to self-isolation or restrictions.
The initiative applies to self-employed workers who claim Universal Credit. Their payments are based on an estimate of what they could earn each month rather than their actual earnings.
The development comes as part of the government’s plan to roll back Covid-related financial support.
However, according to the charity, Turn2us, reintroducing the MIF could cut the average self-employed worker’s benefit by £3,200 a year.
It also estimates that around 450,000 households would be affected by the change.
Sara Willcocks, Head of External Affairs at Turn2us, said: “Self-employed people have been hit hard by the pandemic, and the suspension of the Minimum Income Floor was a small but vital step in helping this group stay afloat.
“Now is not the time to be cutting people’s income. We urge the government to keep the Minimum Income Foor suspension, otherwise we risk seeing an increase in poverty this winter.”
Figures from trade body, IPSE, showed that when the MIF was suspended, there was a 341 per cent increase in the number of self-employed accessing Universal Credit – this works out at a minimum of 200,000 people.
Fred Hicks, Senior Policy and Communications Adviser at the association, said: “Even before the pandemic, the Minimum Income Floor (MIF) was an unfair impediment to struggling self-employed people: it failed to account for their naturally fluctuating incomes and therefore barred many from Universal Credit.
“During the pandemic, government rightly suspended the MIF and […] indeed, for many of the million self-employed people who are still excluded from the Self-Employment Income Support Scheme (SEISS), Universal Credit has been the only support open to them.
“The self-employed sector has been devastated by the financial impact of the pandemic and for struggling freelancers, this damage won’t disappear as soon as the economy opens up.
“Therefore, we are urging government to scrap the Minimum Income Floor altogether – not only as a support for self-employed people who are still struggling, but also as a way to rebalance the Universal Credit system and make it work for self-employed people in the long-term.”