Written evidence from Equity CLP0059
About
Equity is a union of more than 47,000 performers and creative practitioners, united in the fight for fair terms and conditions in the workplace. Our members are actors, singers, dancers, designers, directors, stage managers, puppeteers, comedians, voice artists, and variety performers. Our members work on stage, on TV sets, on the catwalk, in film studios, in recording studios, in night clubs and in circus tents. They are largely in self-employed sectors.
Terms of reference
2. What role have the following factors played in access to the cost of living support payments?
b) Cliff edges: Not being in receipt of a certain means-tested benefit, because households failed to meet certain qualifying thresholds & c) Qualifying period anomalies: issues relating to the timing of benefit payments
- Low-earning UC claimants with fluctuating earnings miss out the cost of living payments if they receive high wages in the qualifying period, regardless of the fact they might receive low earnings in adjacent periods. This is particularly the case for those with precarious work.
- This means that, of two people with the same annual income, one could have received cost of living payments while the other did not, based on how variable their income was month to month. This is clearly an anomaly, in the sense that this would not an objective of the policy design, as well as being unfair.
d) Receiving a nil award on a UC payment, due to reasons such as sanctioning
- The application of the minimum income floor (MIF – see Appendix 1) reduces a UC payment. When it is applied during the qualifying period for the cost of living payments it can lead to a nil UC payment for some self-employed claimants.
- We estimate up to 18,000 claimants could be affected. Calculations are provided in Appendix 2.
- In a month when the MIF applies, the earnings of the claimant are by definition below minimum wage. These are some of the lowest paid working people – the average income of our members is around £11,500 per annum - many of whom are coming out of a start-up period. This rule means they also miss out on the cost of living payments, the very purpose of which is to assist in a time of national hardship.
- It is also noteworthy that, due to the design of the Self-Employment Income Support Scheme, 40% of Equity members received no support over the pandemic.
- Low-paid, precarious people working in the arts and culture – a sector which directly generated £28.3bn in turnover, £13.5bn in Gross Value Added in 2020 – have fared two external crises with little to no support from government.
Appendix 1 – Minimum Income Floor (MIF)
- The MIF is assumed earnings for UC claimants who are deemed gainfully self-employed irrespective of whether those earnings are being received in a particular month. It is calculated based on the National Minimum Wage (NMW) and in a typical case would result in assumed earnings of 35 x NMW per week. On 2022/23 figures (applicable to the January-February 2023 qualifying period), this equates to £311.85 per week or £1351.35 over a Universal Credit monthly assessment period.
- Its effects are unduly harsh to the self-employed with variable and unpredictable income, as is common in our industry. The MIF removes UC payments during a period of low earnings, forcing our members into rent arrears and hardship. The stated rationale for the MIF was to reduce cases of fraud and weed out ‘hobbyists’ who are unable to sustain themselves in self-employment. But it fails to address the issues of those self-employed people with fluctuating incomes, and treats them as though self-employment had the same regular monthly income pattern as employment.
Appendix 2 – How many claimants could be affected by the MIF reducing a UC payment to nil?
- The Department for Work and Pensions has confirmed via a written parliamentary question UIN 36138 that ‘during the qualifying period for the first Cost of Living Payment, 80,660 Universal Credit claimants were subject to the MIF of which, 4860 earned below their MIF and received a nil payment’. This is 6% of people subject to the MIF who did not receive the first cost of living payment.
- Many thousands more are likely to be excluded from the 2023/24 payments by virtue of the MIF, because more claimants are now subject to the MIF than were during the qualifying period for the first cost of living payment.
- This is because 219,340 claimants were in a 12-month start-up period exempt from the MIF during the qualifying period for the first payment (UIN 47702). The start-up period lasts 12 months so will have ended for most of that cohort, making them newly subject to the MIF. If we extrapolate the data from UIN 36138 referred to above to assume that 6% of this group will earn below the MIF and have a nil payment during a qualifying period, a further roughly 13,000 claimants could now miss out on the cost of living payments for this reason.
- The first and second cohorts are mutually exclusive. The second cohort of 219,340 claimants in the start up period could not have overlapped with the first cohort of 4860 (as anyone in the first cohort would not still be in the 12 month start-up period by the time of the second cohort) we can add the two cohorts together, to reach 17,860 claimants who have been denied a cost of living payment as a result of the MIF.
May 2023