Universal Credit… the warning

According to the Shadow Employment minister Stephen Timms, the current tax credit system was better at supporting people who wanted to escape unemployment by setting up their own business.

However, Labour has claimed that the Government’s Universal Credit could hit small business start-ups, .

During Work and Pensions Questions in the Commons Stephen Timms said:

“The Low Incomes Tax Reform Group has said tax credits today support self-employment much better than the proposals for universal credit will in the future. This is because universal credit will assume people are earning at least the minimum wage which is completely unrealistic in the early years of self employment.

He asked the government to look again at this particular issue with universal credit, at least for the first year or two of self employment…

Employment Minister Chris Grayling said:

We will be monitoring very carefully how decisions we take around Universal Credit work.