Newly self-employed people are being penalised by up to £630 a year by the new Universal Credit system if they do not meet minimum income requirements.
Citizens Advice estimate that 400,000 claimants could suffer losses because of the minimum income floor – despite the fact that many new businesses take time to reach profitability.
Coatbridge, Chryston and Bellshill MP Hugh Gaffney raised the issue with the Secretary of State for Work and Pensions after being contacted by a constituent, William Hogg, who has been forced to abandon self-employment because of the issue.
After leaving college and becoming self-employed Mr Hogg successfully applied for UC, but has not yet received a penny because his earnings have not reached the minimum floor income.
And over the festive season Mr Hogg was unable to work because of the flu, leaving him with no money to support himself.
Mr Gaffney’s intervention secured a clarification that the “grace period” for reaching the floor income level has been extended from six months to a year. But it comes too late for Mr Hogg and thousands of self-employed workers across the country.
Mr Gaffney said: “The Tories claim to be the party of business, but the truth is they are only the party of big business. When it comes to self-employed workers – the plasterers, the bathroom fitters, the bricklayers who are the backbone of Britain – their actions speak louder than words.
“As a society we should be supporting the people who get out of bed every morning to provide for their families and make this country tick. Instead this policy is a kick in the teeth – another Universal Credit failure.
“An extension to the grace period is welcome, but we now need a proper assessment by the UK Government of how many self-employed workers have been hit by this and positive steps to support the newly self-employed through the welfare system.”