'Flawed' Universal Credit system leaves self-employed woman worse-off
A self-employed actor and director is challenging the government's Universal Credit system after being left worse-off than if she were unemployed.
Posted on 10 December 2018
Charmaine Parkin, 34, of Brighton, is challenging the government’s decision to apply the Minimum Income Floor (MIF) to her claim for Universal Credit. The MIF is applied only to claimants assessed to be gainfully self-employed and is equivalent to the claimant’s National Minimum Wage for their age group, assuming they worked an expected number of hours each week. Every £1.00 of assumed earnings over and above £192 reduces a claimant’s UC award by 63 pence.
A pre-action protocol letter has been sent to the Secretary of State for Work and Pensions, who has responded. This response was unsatisfactory, and Charmaine’s legal team is therefore preparing to issue judicial review proceedings.
Charmaine has caring responsibilities for her two children and was therefore assessed as being able to work 25 hours a week, this was multiplied by the minimum wage for age group to calculate her MIF, which was set at £788.26 each month.
Charmaine has struggled to make ends meet with her earnings from her self-employment since she moved to Brighton last year and had to claim Universal Credit. She had to move in order to be able to continue sharing caring responsibilities for her children with their father. The nature of Charmaine’s work means that her earnings fluctuate from month to month, however, if she earns less than the MIF she is treated as if she did earn that much, and her benefits are calculated accordingly. One month she earned only £96 but was treated as if she had earned £788.26 and her Universal Credit payment was reduced by £375.64. In other months she had no earnings and her expenses exceeded her income, but the MIF was still applied.
Charmaine raised her concerns on a number of occasions with help from her trade union, Equity, but the MIF continues to be applied.
Her reduced benefit makes it impossible for her to pay her rent and meet essential living costs. Charmaine has been forced to seek assistance with covering basic expenses like utilities bills and has had to get help from food banks on multiple occasions. She is continuing with her work but is finding the process of applying for help from various organisations extremely time consuming in addition to being humiliating.
To Charmaine, giving up her work seems to be the only way to receive the amount of assistance that would be sufficient to feed her family and keep a roof of their heads. An unemployed individual in her position would have almost £400 a month more in UC and this amount would help her cover essential living expenses for herself and her children. It would also give her a stable income and allow her to apply for reduced council tax. It would mean she would have to worry less about putting food on the table for her children every day.
“Working in the theatre has always been my passion and it is what I am trained to do but the nature of the work means that my earnings can vary a lot from month to month. I thought the Universal Credit system would help with this and allow me to top-up my income in the months where my earnings were lower, especially after I moved to a new town. I thought Universal Credit could give me financial stability, help me to budget and settle in. I was very wrong, the Universal Credit system has left me worse off than if I was unemployed, has caused me a great deal of stress and anxiety and has left me seriously considering giving up my work in the theatre. It has made me feel like I have to choose between being a good mother and pursuing my chosen career path because it is no longer possible to support my family by continuing the type of self-employed work that I need to do as a theatre practitioner.”
Tessa Gregory, solicitor at Leigh Day, added:
“According to the government Universal Credit is supposed to ‘make work pay’, however, the MIF system for the self-employed has left my client feeling like there is no other option but to give up work in order to ensure she has enough money to support her family. This is another flaw in the Universal Credit system which is leaving people across the country worse off and turning to charities and food banks just to make ends meet. My client is one of the many self-employed people suffering because of the MIF and the effect is particularly harsh on those who work in industries like the entertainment industry and farming where fluctuations in income are very common.”
Commenting on the effect of the MIF, a spokesperson from Equity, the trade union which has been assisting many individuals including Charmaine, has said:
“Equity has always lobbied against the MIF and continues to do so. Prior to UC, UK social security law ensured accuracy in self-employment income assessments, taking into account any changes and fluctuations in the business and awarding support where the self-employment was assessed as ‘gainful.’ This realistic approach has been replaced with what is effectively a sanction for self-employed people, who are the fastest growing part of the UK workforce. Entertainers form a key part of this - creative industries alone currently contribute more than £92 billion to the UK economy. Those who are not self-employed are not subject to the MIF in UC and we argue this is disproportionate. Charmaine’s example is by no means the worst - other self-employed people may suffer even greater losses with the full MIF applied.”