Former Liberal Democrat Leader Tim Farron has written to the Department for Work and Pensions asking for an immediate review into a ‘hidden clause’ in Universal Credit which could see local small business owners lose thousands of pounds.

The Minimum Income Floor, requires the self-employed to prove they earn at least the National Living Wage consistently in order to receive entitlements in full each month.

Unlike the previous tax credit system, Universal Credit is not calculated over a year but instead every month.

It means one bad month of earnings could suddenly see a small business owner lose their universal credit for the following four weeks.

New analysis suggests that one million self-employed workers across the country will face a £1,500 cut because of the new rules.

According to South Lakes Citizens Advice, 6000 families in Westmorland and Lonsdale will be receiving Universal Credit by 2022.

Tim said:

“These changes will have dire consequences for small business owners in the South Lakes.

“The simple fact is that for small businesses, especially those that are just starting out, there can be no guarantee that the employer will be able to earn the National Living Wage every month.

“Strivers and entrepreneurs are absolutely crucial to our local economy, but they stand to be punished by a government who are completely out of touch with the needs of the self-employed.”