Owen Smith, Shadow Work and Pensions Secretary, commenting on new Labour analysis showing 800,000 self-employed workers set to lose another £1,000 a year under Universal Credit, said:

“It beggars belief the Tories are slashing support for low-paid, self-employed workers by nearly a billion pounds a year, more than £1,000 each.

“If Universal Credit was in chaos before Iain Duncan Smith left the Government, it’s now in meltdown.

“The very people it was meant to help - workers struggling to make ends meet, some earning even less than the minimum wage, will be hit the hardest.

“Labour is demanding the new Secretary of State perform his second U-turn in as many weeks.  This time, on Tory cuts to Universal Credit that will act as a work penalty for the self-employed and cost two million families £1,600 a year.”

ENDS

Notes to Editors:

Self-employed workers on tax credits are already set to lose out when the Tories’ new system of in-work support starts to roll out in May.

However self-employed workers earning less than the minimum wage now face losing even more due to the ‘minimum income floor’, meaning their wages will be compared with someone on the minimum wage or more.

The latest statistics show there are 770,000 self-employed workers on tax credits. 

Table 4.25 on page 152 of the OBR Report shows the Government expects to save £800m a year from the minimum income floor.

According to Government guidance “Universal Credit includes a ‘Minimum Income Floor’ (MIF) if you are gainfully self-employed, and your business has been running for more than 12 months. The MIF is an assumed level of earnings. This is based on what we would expect an employed person to receive in similar circumstances.”