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7 June 2017updated 04 Aug 2021 9:06pm

Universal credit is being used as a hit on the self-employed

The Conservatives are no friend of small businesses in this election, says Labour candidate Seema Malhotra.

By seema malhotra

If you thought that Theresa May would be supporting small businesses and the self-employed if she wins this election, think again. Not only has Theresa May hit small businesses hard in the last parliament, but much more is set to come.

The Conservatives have lost credibility with the public with their un-costed manifesto, their U-Turn over the dementia tax, and their threat to jump off the Brexit cliff edge on the basis that “no deal is better than a bad deal.” It’s not surprising we reach the end of the election campaign with a narrowing of the polls and Theresa May with considerable damage to her reputation and trust.

But the drop in trust with business must now be causing further earthquakes in Conservative Central Office. On Monday I spoke at a business hustings organised by the Hounslow Chamber of Commerce. My Tory opponent struggled to do anything other than hold to a tight Tory script about Theresa May – a script wearing so thin you could almost see right through it.

The Daily Telegraph last week headlined and article with “Tory policies slammed by SMEs as bad for business”. The piece described how “a vanishingly small proportion of companies support the manifesto”.

May is no friend of business – she has presided over increases in business rates hitting local businesses in my community and across the country hard. And her proposed increase in National Insurance contributions was brought in without consultation or engagement.

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During this election a further hit on business and the self-employed has emerged from mums at the school gate who have approached me with heartbreaking stories about the impact that Universal Credit is having on their lives. One mum described how after the move to Universal Credit she can no longer plan the household budget.

The reason is because of the way UC has been implemented. If her partner has good earnings in one month, their universal credit is reviewed and the award reduced for the following month. If in that month her partner had a low income, then any rebalancing won’t take place for another month. The fluctuation in income has resulted in her family being pushed to use foodbanks when they can no longer make ends meet. Something she had never expected to happen to her and her children.

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That woman’s experience is backed up by new analysis we have undertaken suggests that one million self-employed workers face £1,500 cut because of “hidden” universal credit rules for the self-employed. Figures buried in documentation from the Office for Budget Responsibility suggest that the operation of a “minimum income floor” which is used to estimate the earnings of the self-employed for the purposes of calculating the UC payment is expected to save the Government £1.5bn by 2022 – effectively costing around one million self-employed workers as much as £1,500 a year.

It is nothing short of a “hidden raid” on self-employed workers’ incomes in the wake of the Government’s abandoned attempt to increase their National Insurance Contributions.

A growing proportion of Britain’s workforce are self-employed, accounting for much of the new employment we have seen in recent years, and in many cases being the local businesses that are the backbone of our local economy as well as the innovative businesses upon which our future productivity and competitiveness depends. In Feltham and Heston the number of self-employed people has doubled over the past 15 years.

But instead of putting in place the support that could allow us to make the most of their hard work and initiative, the Tories are making life harder and harder for them.

It has become clear that Universal Credit is being used by the Government as cover for another hidden raid on self-employed workers’ incomes – and on polling day, we should send that message loud and clear.

Seema Malhotra is the Labour and Cooperative Candidate for Feltham and Heston, Vice President of Labour Business and former Shadow Chief Secretary to the Treasury