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The Tories’ flagship benefit shake-up is branded a a “very real risk” to self-employed strivers today in a damning report.

MPs warn struggling entrepreneurs face being “crushed” by a crackdown under Universal Credit.

Self-employed UC claimants are banned from getting more benefits than if they earned minimum wage in a regular job.

This ‘Minimum Income Floor’ means their benefits are capped each month - even if their firm makes a loss.

Tory ministers claim this will “incentivise” the self-employed to make their firms “self-sufficient”.

But it will slash £2,927 a year off 432,000 people’s benefits by 2023, according to the independent Office for Budget Responsibility.

The Commons Work and Pensions Committee today warns this “threatens” Tory vows to back entrepreneurs and “risks denting the case for UC overall.”

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Chairman Frank Field, a Labour MP, said: “Universal Credit was not designed with self-employment in mind and it shows.

“Its current set-up for people starting and running their own business risks crushing potentially viable, productive enterprises.

“At the same time, it risks throwing away the significant investment of taxpayer’s money in them to that point.”

Today’s report calls for the “start-up period”, where new strivers are exempt from the cap, to be extended from one year to three.

And it says the one-month periods for calculating income should be extended to a year for people with “volatile” incomes.

MPs also attack plans to publish no “significant analysis” of the policy’s impact until Autumn 2019 - four years after UC started rolling out.

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Federation of Small Businesses chairman Mike Cherry warned the policy will “force” disabled people to “take a job rather than create one”.

He added: “The Minimum Income Floor is bad for entrepreneurialism, pure and simple.

“It generally takes two to three years to get a viable firm off the ground.

“The Universal Credit system fails to recognise that fact and, in doing so, threatens the futures of successful firms.”

Luke Johnstone, who founded his smoothie firm Pack’d while on benefits, told MPs it took him two years to make his firm successful.

“Moving to Universal Credit would give me too short a window to create a viable business,” he told the committee.

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Citizens Advice Chief Executive Gillian Guy warned the policy “could leave self-employed people hundred of pounds worse off each year, compared to employees.”

Shadow Work and Pensions Secretary Margaret Greenwood added: “This report is absolutely clear: the Government’s Universal Credit programme is failing self-employed people on low incomes.

“The Tories must pause the roll out of Universal Credit and fix the way it works for the self-employed.”

A DWP spokeswoman said: “Through Universal Credit people can receive support from dedicated work coaches as well as access to business mentoring support from the New Enterprise Allowance.

“We recognise the important role of entrepreneurs in boosting the economy, however it’s unsustainable for Universal Credit to prop up unviable businesses that may not be working.”