The Conservative Party Conference has raised to the fore the issue of tax credits. Working Tax Credit, Jobseeker’s Allowance, Housing Benefit, Child Tax Credit, Employment and Support Allowance and Income Support are all currently being phased out, to be replaced by Universal Credit. The removal of Working Tax Credit in particular raises some worrying issues for authors and other creators on low incomes. The SoA calls on the Government to address these gaps and protect benefits for authors and other self-employed individuals.
Chief Executive Nicola Solomon says:
David Cameron spoke in his conference speech of a party of working people. The Government is about to publish a new white paper on culture. In the introduction, Ed Vaizey MP quoted Jennie Lee, the first Minister for the Arts, who 50 years ago published the first (and latest) White Paper on the arts. He says: ‘In it, she talked about the “drabness and joylessness of the social furniture” and the important role of the “living artist” in addressing that.’ If the Government wants a vibrant and enriching culture then authors and other ‘living artists’ deserve support and a living wage.
While those who are employed will feel the boost of the new national living wage, this will have no impact on those who are self-employed and there is a lack of clarity about how Universal Credit will operate and support these people. There are a number of striking areas that would appear to cause concern in the Government’s own guide to UC for the self-employed:
Minimum Income Floor
- The ‘Minimum Income Floor’ (MIF) is set at the national minimum wage for 35 hours a week, which amounts to something in the order of £950 a month. A recent analysis of the government’s Family Resources Survey suggests that a striking 36.6% of all self-employed people would fall below the minimum income floor as it stands (with lone parents worst affected). Authors are particularly at risk as, according to the recent ALCS survey, the average median income is £11,000 a year.
Those claimants starting their own business are given a special allowance, a ‘Start-up Period’ whereby they would effectively be exempt from reaching the minimum income floor for a period of a year – and they can start a new business and receive the same leeway. It seems only fair that authors, whose first book will often take over two years and who may not receive royalties for a further year, should be given the same flexibility.
Universal Credit will assess the circumstances of the self-employed on a monthly basis rather than an annual one. This assumes the income of business owners to be steady. In reality, the earnings of the self-employed, particularly creators, are highly variable, with long periods of minimal-to-zero income punctuated by short periods where there are bursts of cash. One (anonymous) member reflects on his ability to maintain a career over two decades with the help of Working Tax Credit for a brief period:
At my lowest ebb I received Housing Benefit and Working Tax Credit for about eighteen months, which made the difference between sinking and swimming. I had one year writing for a TV soap, and paid back £17,000 in debts, loans, overdrafts and taxes. That is how a writer’s life works: swings and roundabouts, boom and bust. If I am viable now on my old age pension and various commissioned work, plus some PLR and royalties, it is because I was able to keep writing through thick and thin when I was earning next to nothing. I am grateful for the help I received, proud that I never went on the dole, glad that I always paid a pension contribution, even though it was sometimes as little as £10 a month.
Authorship as a profession is very different from, say, someone starting a website design business. The ‘business plans’ and proof of ‘growth’ that will be demanded will be strikingly different if not irrelevant. As one (anonymous) member has commented, the idea of ‘gainfully employed’ is far from straightforward:
Organising and running workshops, pitching ideas, liaising about projects which might get commissioned, doing little bits of time-consuming work as a mentor (paid and unpaid) or tutor, and thinking – on the page – aka Actual Writing; short term, medium term, and long term writing, often without any contract, for stories and books which might eventually result in publication. I’d call that ‘growing my business’, but it would be hard to quantify why it works, because this business is not like a series of shops all selling baked beans.
It is unclear how work advisors will be trained to consider the particular needs of those in creative professions.
But most worryingly of all, perhaps, is this seeming ‘catch-22’:
- Q. Can I claim Universal Credit if I am self-employed?
- Normally you cannot make a new claim for Universal Credit if you’re self-employed, a company director or part of a limited liability partnership. Once you have an established Universal Credit claim, if you decide to become self-employed, Universal Credit will provide support to help you grow your business.
This would seem to suggest that those who do not currently receive Working Tax Credit will find it impossible to take advantage of Universal Credit should they find themselves in changed circumstances.
Both the intrinsic issues for current claimants and the barrier to new claimants will serve to make authorship a preserve of the affluent. As one member puts it:
Iain Duncan Smith’s Universal Credit plan would have the effect of forcing the low-income self-employed in the creative industries – those on intermittent and unreliable income, who form the base of the pyramid which peaks in J. K. Rowling or (choose your own acclaimed artist or writer) – into an impossible situation…
A. L. Kennedy recently wrote in The Guardian of her own experience of receiving benefits:
Being on one’s own with time is what will teach a writer to write. Although I was terrified at the time, the space that state benefits bought me allowed me to make many – if not all – of the major decisions that have governed my working life. I was able to set up house in a tiny bedsit and write job application letters by day and short stories at night. Without that initial breathing space, I’d have been sunk. Since then – having received benefits for something like 15 months – I have earned money every year and paid tax every year. I love paying tax, if it can mean I’m passing on that favour.
The Government must tackle these issues and ensure that authors are to be valued and supported for their contribution to society – both as the producers for a hugely significant market at home and abroad and as bringers of inspiration, entertainment and information to readers.