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<p>The Government recognises the need for claimants who are setting up a business
to be given time to establish themselves and develop their business and customer base.
However, different businesses and individuals will take different periods of time
to reach profitability. The intention of the start-up period is to give claimants
the breathing space they need to work out how to support themselves while running
their business - including identifying other sources of income or investment - while
not subsidising claimants indefinitely to pursue unsustainable activities. This strikes
a sensible balance between support for new business, not trapping claimants in welfare
dependency, and protecting public funds.</p><p> </p><p>Extending the start-up period
beyond one year could diminish the incentive effect of the Minimum Income Floor (MIF),
which is to encourage claimants to grow their earnings, whether through self-employment,
combining that with other work, or moving to one of the over 800,000 current job vacancies.
It would also add complexity, with no guarantee of better outcomes for either the
claimant or the taxpayer. The government therefore has no current plans to reform
the MIF or to extend the start-up period for self-employed claimants in Universal
Credit.</p><p> </p><p>In their January 2018 report, the Office for Budget Responsibility
estimated the impact of the MIF on the public purse – their analysis is summarised
in their welfare trends report <a href="http://obr.uk/wtr/welfare-trends-report-january-2018/"
target="_blank">http://obr.uk/wtr/welfare-trends-report-january-2018/</a></p><p> </p><p>With
regards to the estimate of the cost to the public purse of extending the start-up
period for recipients of universal credit who are newly self-employed from 12 months
to (a) 18 months and (b) 24 months, a formal assessment has not been made.</p>
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