Commodity Watch - Proposed changes to welfare reform a raw deal for farmers

Thursday, 7 May, 2015

Commodity Watch - Proposed changes to welfare reform a raw deal for farmers

UFU have become concerned by the lack of consideration given to the realities of self-employment in the proposed changes to welfare support. What is being proposed is that those currently claiming Jobseeker’s Allowance, Housing Benefit, Working Tax Credit, Child Tax Credit, Employment and Support Allowance or Income Support would be transferred to the new system of Universal Credit (UC).

Universal Credit is paid monthly and is based on real-time cash accounts. In other words, it is necessary for a self-employed person to report monthly their actual income from self-employment. HMRC Rule H4006 states that “calculating a person’s earned income for UC in respect of an assessment period should be based on the actual amounts received in that period.” It is therefore impossible to use prospective incomes or losses, which is often what farmers depend on.  the fact that farming is seasonal is well-known and as a result of this, it is important to recognise that there will be long periods of time when a farmer will make a loss in expectation of more profitable times at some other stage during the year. In addition, having to do monthly real-time accounts is an extra burden upon farmers, in an already hard-pressed industry, and to hire someone to prepare these accounts would be an extra expense.

In addition to this, Universal Credit uses a “Minimum Income Floor” which means that even if a self-employed person makes less than what they would be making if they were working 37.5 hours per week at the National Minimum Wage (NMW), they will be counted as having earned that amount(NMW x 37.5) for the purpose of Universal Credit eligibility. Again, this does not take any account of the reality of farming where in almost all years a very substantial part of income is gained from the Single Farm Payment and several months of the year farms are operating at a loss until the SFP is paid. During this time, farmers are more dependent than ever on the benefits which they are entitled to, and it is difficult to see how this “policy innovation” will provide any benefit for farmers and other self-employed people.

Universal Credit is not yet a reality in Northern Ireland, with the well-publicised debate over Welfare Reform rumbling on in the Assembly. The UFU have written to the Minister for Social Development, Mervyn Storey outlining our concerns about the potential introduction of these aspects of Universal Credit and wanted to ensure that he is fully briefed on the realities faced by farmers.  The Minister’s response stated that due to the ongoing delays with the passage of the Welfare Bill through the NI Assembly, he could not give a definitive time for when Universal Credit would be rolled out in Northern Ireland and a meeting with the UFU would be more appropriate once this became clearer.