Mersey Reporter - #Merseybites #News

THE UK faces increasing external economic pressure, with countries such as the United States leveraging business acquisitions and investment influence to shape domestic outcomes. While international cooperation and investment are important, disproportionate reliance on foreign capital may dilute the autonomy of British industries and undermine long term sustainability. But what has this got to do with small businesses in the UK and Universal Credit?

Universal Credit (UC) was introduced with the intention of simplifying the welfare system and providing a safety net for individuals facing financial hardship. It replaced a range of legacy benefits, including:- Tax Credits (Working and Child Tax Credits), Housing Benefit, Income Support, Employment and Support Allowance (ESA), and Jobseeker’s Allowance (JSA).

On paper, it seems straightforward: a claimant must agree to a:- "Claimant Commitment" that sets out obligations to either prepare for work, seek employment, or increase earnings if already employed. However, the reality for many, particularly small business owners and the self-employed, is far from clear-cut. The system’s structural flaws are pushing businesses who have fluctuating income levels, due to the nature of the work, to the brink, with potentially disastrous consequences.

The Minimum Income Floor is the main barrier for Small business owners and the self-empolyed. We would like to remind people that many of them do not get sick pay, holiday pay, or even a protected pension.

A major stumbling block for self-employed claimants is the Minimum Income Floor (MIF). This clause assumes a set level of income for self employed individuals, regardless of their actual earnings. For those with seasonal or fluctuating incomes, common in industries such as:- farming, media, or the arts, this can lead to severe financial instability.

Many small business owners are finding themselves with zero or reduced Universal Credit payments during lean periods, despite still facing ongoing costs. The MIF doesn't take into account the reality of variable income or the substantial expenses involved in running a small business, including:- equipment costs, or seasonal downturns. This makes it extremely difficult for small businesses to survive during months of low income.

The quickest way to highlight this is with what is becoming a farming crisis. 1 of the sectors hardest hit by UC's punitive measures is farming. Farmers have long dealt with income volatility, shaped by:- seasonal factors, crop yields, and fluctuating market prices. The National Farmers Union has voiced its concern that UC is pushing many farmers into poverty, as the MIF doesn't reflect the significant upfront costs many farmers face, such as:- purchasing equipment or seeds.

The unpredictable nature of agricultural work makes it difficult to meet the MIF's earnings expectations, which often don't align with the reality of cash flow in farming businesses. In this context, Universal Credit becomes a vicious cycle, leaving farmers unable to recover financially and forcing some to consider abandoning their livelihoods.

Within the Media and Arts, which are essential but undervalued. The media and arts industries are also feeling the strain of the MIF. Like farming, these sectors often experience significant fluctuations in income. Small media outlets such as local newspapers play a crucial role in combating fake news, informing the public, and driving investment into local areas. Despite their value, the owners of these small independent local news outlets often struggle under the same rigid financial assumptions imposed by the MIF. When income varies month to month, especially when new equipment or resources are needed, small businesses within the media and arts industries are hit hard. Universal Credit's 1 size fits approach is failing to understand the complexities and realities of industries that are vital to society, yet often underappreciated. Also, models and actors are in the same situation, with many forced to leave the industry as they are forced to take up jobs stacking shelves. This results in a massive shortage of talent within the entertainment industry, which is leading to the requirement for work to go overseas or to go unfilled.

We are increasingly hearing that the Jobcentre Plus staff are falling short in helping the self-employed, often due to the rules they have to work with. These rules are too complex and misleading, resulting in claimants having errors and falling foul of the income floor rules. But even beyond the financial structure of Universal Credit, many self employed individuals are encountering difficulties with Jobcentre Plus services. Jobcentre staff, often untrained in the specific needs of the self-employed, are reported to be rude and unhelpful, especially when dealing with the nuances of fluctuating income.

We've heard multiple reports of self employed individuals being told by Jobcentre staff that they could only receive assistance if they closed their business down, essentially being encouraged to declare bankruptcy, due to errors in the system caused by misleading information or lack of support.

We’ve been given and also have access to letters from Jobcentres informing claimants that they cannot get help unless they shut down their business, leaving claimants in a hopeless position. These instances have become increasingly common, and it’s clear that the system is failing those it was meant to support.

This is not a few isolated incidents, but we have heard this time after time. In some cases, the jobcenter staff have told business owners to:- "sack all the staff," adding:- "that will mean you will make the money up" whilst not understanding or being interested in why businesses require staff and how hard it is to get trained, loyal staff. Plus, they do not address the elephant in the room, the fact that if they close a business down that employs other people, or the business fires staff to make up for the financial shortfall, how does that business pay the redundancy? Also, the fact that they make people unemployed, leading to a bigger cost in the long term for the UK economy and then when things get better, they can't react to the changes, as they will have to rehire staff.

For new businesses, the Universal Credit system is also pushing startups under before they even get a chance to get moving. The 1 year to make profit rule is stopping innovation and development. Innovation is something we require even more than ever if the UK is to stay ahead and competitive with the likes of China and the United States, or even Europe! Ever since the Second World War ended, innovation has been increasingly blocked by accountants and political infighting, and the UK is now slipping behind. Just look at where our electric cars, computers, and phones are now being made!

Despite these mounting issues with UC and the growing alarm bells for the UK's future economic stability, we are seeing a distinct lack of political accountability, and UC is just the tip of the iceberg! We need to start somewhere and UC is a new system that can easily be fixed, but Parliament will not address the issues around UC, so what hope do we have for the future of UK businesses?

We have reached out to several Members of Parliament in the Liverpool City Region for comment about the issues faced by small business owners and self employed on UC. Unfortunately, we've received no response so far, further illustrating a lack of understanding or concern from those in power about the severe struggles faced by small businesses and the self employed.

The flaws within Universal Credit, particularly the Minimum Income Floor is now pushing many self employed individuals and small businesses to the brink of financial ruin. The system is failing to accommodate the realities of fluctuating incomes and the unique challenges faced by sectors like:- farming, media, and the arts.

What's clear is that the UK Government must take a step back and rethink the way it supports self employed individuals. Small businesses are the backbone of local economies, and if they're pushed under, the long term effects will be far reaching.

The system must change to better reflect the needs of self employed individuals, from fairer treatment by Jobcentre Plus staff to a reworked Minimum Income Floor that acknowledges the unpredictable nature of self employment. Until then, many small businesses will continue to struggle, with potentially devastating consequences for both owners and their employees.

If we want to protect local economies and ensure that hard working individuals aren't forced out of business, it's time for urgent reform of Universal Credit.

Not only that, but to preserve the United Kingdom's economic resilience and national independence, it is imperative to address the growing influence exerted by foreign powers, particularly through economic leverage and business acquisitions. In response, the Government must take decisive steps to bolster small, independent UK-based businesses across all sectors. A foundational reform to enable this shift lies in revising the Universal Credit income floor, which currently poses a barrier to self employed and startup entrepreneurs.

This week, we're calling on small business owners and the self employed across the UK to share their UC experiences. We've already heard from a handful of local entrepreneurs and others from all over the UK, but to truly spotlight what many are calling a crisis, we need to hear more.

If you're struggling to access support, especially in relation to Universal Credit, and feel your business has been overlooked, we want to hear from you. Your information will remain confidential, and we won't publish any details without your explicit consent. Identities can also be protected upon request.

Our goal is to build a clear and credible picture of the challenges facing independent businesses, so we can press for political response and support the efforts of advocacy groups like Excluded UK in driving meaningful change.