Introduction

This chapter explores the relationship between the UK welfare state and disabled entrepreneurs, defined as self-employed people or business owners with long-term impairments or health conditions.Footnote 1 The welfare state can be viewed as a form of government that provides social security or protection to vulnerable groups (Esping-Andersen 1996), or a form of social investment (Morel et al. 2011). As embodied human beings, we are all vulnerable (Fineman 2017), to a degree, and dependent on social relations and institutions. Social security plays a crucial role in the working lives of disabled people by creating more inclusive labour market policies (Etherington and Ingold 2012) and by helping to alleviate the extra costs associated with disability (Mitra et al. 2017).

We examine how a welfare state affects disabled entrepreneurs within the context of the UK welfare reforms, including changes to out-of-work and disability-related benefits (Kennedy et al. 2016). There has been a growing retrenchment of the UK welfare state, particularly since 2010 with cuts in disability benefits (Cross 2013) and the increased conditionality of receiving out-of-work benefits (Heap 2015; Patrick and Fenney 2015). Yet, we know little about the effects of the welfare state, and welfare reforms, on disabled entrepreneurs’ capacity to enter and remain in self-employment. The literature suggests contradictory influences. High levels of benefits can disincentivise entrepreneurial behaviour (Henrekson 2002). The ‘benefits trap’, or the fear of losing the security of regular benefit income in a transition from unemployment into self-employment, can discourage aspiring entrepreneurs (Kitching 2014; OECD/EU 2014). Conversely, social security can create a safety net that alleviates the risk of business failure and might therefore encourage start-up (van Hessels et al. 2007). Whether the policy mechanisms seeking to reduce such risks promote or discourage entrepreneurship is inconclusive (Robson 2007).

Our specific aim is to examine how a welfare state designed in binary terms affects disabled entrepreneurs. The chapter draws on semi-structured interview data from a larger study of UK-based disabled entrepreneurs (Kašperová 2018). We make two contributions to the literature on the relationship between welfare state and entrepreneurial behaviour, one conceptual and one empirical. Conceptually, we frame successive governments’ efforts to reduce the role of the welfare state in terms of problematic binaries that shape policy choices which influence entrepreneurial motivationsand behaviour. The UK policy framework assumes that working-age disabled people are either ‘capable’ of work and thus expected to become financially ‘independent’, or ‘incapable’ of working and ‘dependent’ on welfare. Those caught in between the two poles of this binary are left to choose between full-time work (capacity and independence) or welfare dependence with a restriction on hours worked and, in consequence, earnings. Empirically, we illustrate how the rigidity of this binary, combined with increased conditionality and cuts in financial support, are particularly problematic for aspiring entrepreneurs with fluctuating or episodic health conditions. Building on previous studies, we find that the ‘benefits trap’ continues to disincentivise disabled people from entering self-employment. Yet, we challenge the framing of this issue as an individual fear of losing benefit income alone. We argue that the UK welfare system, designed in binary terms, puts pressure on some disabled people to make an often-unpalatable choice between full-time work or welfare.

We begin by describing the historical policy context within which UK-based disabled people have entered self-employment. The literature on the relationship between welfare support and entrepreneurial behaviour is then reviewed and a theoretical framework developed to explain how policy binaries within the welfare system affect disabled entrepreneurs. This is followed by an outline of the research methodology, findings and conclusion.

Disability and Self-Employment Under a Workfare Regime

Promoting self-employment as a route into paid work for disabled people has been a long-term policy objective of successive UK governments (Boylan and Burchardt 2002; Fisher and Cruse 2004; DWP 2019). Working-age disabled people are more likely than non-disabled people to become self-employed (Boylan and Burchardt 2002; Pagán 2009; Jones and Latreille 2011; Meager and Higgins 2011), partly because of the flexibility and control self-employment offers over working environment, work tasks and hours worked (Boylan and Burchardt 2002; Fisher and Cruse 2004; EMDA 2009; Meager and Higgins 2011; OECD/EU 2014).

Disability and long-term illness have historically been associated with poverty and social exclusion, largely due to considerably lower employment rates and incomes among disabled people (Bambra and Smith 2010). Successive UK governments have addressed these issues in what Bambra and Smith describe as three distinct phases—passive welfarism, active welfarism and workfare. They argue that welfare provision has transformed over the years from ‘welfare’ characterised by unconditional entitlement to support, to ‘workfare’ conditional upon fulfilling certain obligations, such as taking an active part in work experience or training programmes.

Since the late 1990s, several ‘welfare-to-work’ policy programmes (Heenan 2002; Danieli and Wheeler 2006; Heap 2015; Whitworth and Carter 2014; Patrick 2012) have been implemented in the UK to address social exclusion and to promote participation of disabled people in the labour market, while reducing welfare dependency (Hyde 2000). Out-of-work and disability-related cash benefits, such as Employment and Support Allowance (ESA)Footnote 2 and Personal Independence Payment (PIP),Footnote 3 run alongside welfare-to-work schemes. The ‘permitted work’ rules for ESA recipients have been especially important for disabled self-employed (and employees), specifying the level of earnings and hours of work one can undertake while still claiming in-work benefit. These rules enable disabled people to try out self-employment before leaving the security of regular benefit income. Furthermore, disabled people not claiming ESA have been eligible for additional support in self-employment through the Access to Work (AtW) scheme. AtW provides financial assistance with the cost of getting to and from work, adapting premises, using assistive technologies and helping with communication support.

What started as a genuine effort to improve employment support for disabled people has faded in the aftermath of the global financial crisis with major changes in labour market policy priorities (Heap 2015). The UK coalition government (2010–2015) instigated a policy programme intended to improve the public finances following the global financial crisis (HM Government 2010a). This involved a number of reforms to out-of-work and disability-related benefits (Table 1); for example, imposing benefit cuts or increasing use of conditions attached to benefit receipt with the aim of reducing welfare dependency and encouraging more people into paid work (HM Government 2010b; DWP 2015). Some have argued that increased welfare conditionality should have been justified on the basis of providing more and better support for disabled people required to seek work, although the reality is far from it (Heap 2015).

Table 1 Overview of disability-related benefit reforms since 2010
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Putting the reforms into a historical context, there has been a steady rise in welfare spending over the previous 30 years in cash and real terms (OBR 2014). The numbers claiming disability-related benefits have increased; for example, Incapacity Benefit (IB) claimants more than trebled between the late 1970s and the mid-1990s (DWP 2006). Long-term changes in welfare spending were projected to occur mainly in relation to incapacity and disability benefits (OBR 2015). Savings of around 20 per cent on Disability Living Allowance (DLA) expenditure were predicted to see some DLA recipients lose financial support, while the bar for new claimants is set higher (House of Commons Work and Pensions Committee 2012). There was a decrease in AtW real terms expenditure between 2009/10 and 2017/18 (DWP 2018) and funding for employment services is expected to reduce by 75 per cent between 2017 and 2021 (Butler 2017). Reforms were found to have had major consequences for the personal well-being and income of disabled people (EHRC 2018; Saffer et al. 2018), while they had little influence on levels of worklessness (Beatty and Fothergill 2018) and disabled peoples’ transition into paid work (Dwyer et al. 2018). Despite efforts to reduce welfare spending, recent forecasts suggest a projected £13.1 billion real terms rise in spending over the period 2018–2019 to 2023–2024 (OBR 2019).

Welfare State and Entrepreneurial Behaviour: A Literature Review

Scholars and policymakers have been interested in two particular areas of the welfare state—entrepreneurship relationship: (1) the role of the welfare system in shaping start-up motivations; and (2) entrepreneurship as a policy tool for reducing unemployment, poverty, social exclusion and welfare dependency.

First, different welfare state models are believed to have variable effects, both incentivising and discouraging entrepreneurial behaviour, through different types and levels of taxation, benefits (Henrekson and Roine 2008; Stenkula 2012) and support policies (OECD/EC 2014). For example, the UK welfare-to-work regime was found to discourage lone mothers from entering formal self-employment whilst positively encouraging informal work (Marlow 2006). Similarly, the childcare system in Denmark poses a barrier to start a business for women (Neergard and Thrane 2011). Disabled people, women, the long-term unemployed and other groups have been at the heart of policy efforts to develop more inclusive entrepreneurship support and to create social security systems that do not disincentivise or disadvantage self-employed people from diverse backgrounds (OECD/EC 2013, 2014, 2015).

Disabled self-employed people frequently experience difficulties in navigating the benefit system (Boylan and Burchardt 2002; Bichard and Thomas 2008; EMDA 2009) and often lack awareness of existing in-work support (Boylan and Burchardt 2002). Self-employment may be uninviting where pay is not significantly higher than social security (Doyel 2002). Many disabled people find themselves in the ‘benefits trap’—the fear of losing the security of regular benefit income by entering self-employment (Boylan and Burchardt 2002; Doyel 2002; Bichard and Thomas 2008; Kitching 2014; OECD/EU 2014). This fear is thought to be a major disincentive for disabled people considering business start-up or self-employment.

Second, encouraging and supporting entrepreneurship can be a policy tool for reducing unemployment, poverty, social exclusion and welfare dependency (ODPM 2004a, b; Blackburn and Ram 2006; HM Government 2009). Governments in developed economies have initiated policies, such as ‘welfare bridges’ continued regular benefit income, to support the transition from unemployment into self-employment (OECD/EC 2014). Such reforms can be effective in facilitating entry into self-employment among the disadvantaged (Kontos 2003; OECD/EC 2014).

Ensuring benefits are not cut too quickly on transition from unemployment to self-employment is crucial in designing inclusive policies for disabled entrepreneurs (OECD/EU 2014). Yet, the assumption that the transition from welfare dependency into self-employment eventually comes to an end, characterised by financial independence, can be problematic for aspiring disabled entrepreneurs, not least because of local structural issues, such as high levels of unemployment and competition, constraining the individual capacity to succeed in self-employment (MacDonald 1996). Entrepreneurship does not necessarily ‘fix’ poverty and social exclusion, considering the levels of low-paid self-employment that often ensue (MacDonald 1996; Blackburn and Ram 2006; Carter 2011; Kitching 2016). Furthermore, it is assumed that once disabled people transition into self-employment, they are continuously capable of work. This view neglects the experiences of people with degenerative, episodic or fluctuating conditions who may find it difficult to sustain the level of work necessary to become financially independent (Vick and Lightman 2010). Disability can affect one’s ability to break away completely from welfare dependency.

A research gap exists in our understanding of the relationship between welfare state support and disabled entrepreneurs, underpinned by two problematic, interrelated assumptions, that: (a) the transition from welfare dependency into self-employment should culminate eventually; and (b) those in self-employment are continuously capable of work and thus long-term financially independent. Both assumptions reinforce the ‘capable–incapable’ and ‘independent–dependent’ binaries that shape how welfare systems enable or constrain disabled entrepreneurs. The retrenchment of the UK welfare state offers a germane context for exploring what happens when support is reduced or withdrawn from disabled entrepreneurs.

Disability Entrepreneurship and Welfare Policy Binaries: A Theoretical Framework

Disabled entrepreneurs can be disadvantaged in starting and running a business because of the additional barriers they face, such as inaccessible transport and premises (Boylan and Burchardt 2002), and the extra costs associated with disability (Mitra et al. 2017). The welfare state can enable disabled people to enter self-employment by providing financial and other support to help them carry out work and business tasks they might not otherwise be able to undertake. Access to these resources affects entrepreneurial motivations and the capacity to commit to business creation and management. If aspiring disabled entrepreneurs believe that welfare support is inadequate, they might choose not to start a business. Others, however, may enter entrepreneurship even ifresources are perceived as inadequate. Disabled entrepreneurs are often motivated by personal concerns to balance work and well-being (Kašperová et al. 2018). Nevertheless, insufficient welfare support may affect disabled entrepreneurs’ ability to enter, remain and thrive in self-employment.

Reforms initiated since 2010 have altered how the UK welfare state supports disabled self-employed people. Motivated by policy efforts to reduce welfare dependency, the reforms manifested in reduced or withdrawn financial benefits and stricter rules for accessing benefits. We theorise these reforms in terms of policy binaries that shape entrepreneurial motivationand behaviour. Working-age disabled people are typically perceived to be either ‘capable’ of work and thus expected to become financially ‘independent’, or ‘incapable’ of work and ‘dependent’ on welfare. Those caught in between the two poles of this binary are left to choose between full-time work (capacity and independence), or welfare dependence with a restriction on hours worked and, in consequence, earnings. This includes people on ESA placed in the ‘work-related activity group’ (WRAG) whose dependence on welfare is expected to reduce as their earning power increases. Although ‘permitted work’ rule blurs the binary by allowing disabled people to do some work while still claiming in-work benefit, restriction on the hours one can work can trap people in financial poverty.

The ‘capable–incapable’ binary inherent in the UK welfare system may be particularly problematic for disabled self-employed people because of the risks and uncertainty associated with both self-employment and disability. Disabled people are a heterogeneous group in terms of impairment type, onset, severity, stability, visibility and other embodied properties. Some impairments can be highly constraining while others pose little or no limitations to entrepreneurial activity (Kitching 2014). The work capability of entrepreneurs with particular impairments or health conditions can be changeable and uncertain. People perceived as ‘capable’ of work may find it difficult to work continuously, in the longer term, due to the episodic, degenerative or fluctuating nature of some impairments, while those treated as ‘incapable’ may face low expectations and inadequate support to enter and remain in self-employment. The rigidity of the binary can generate flawed assessments of work capacity, with consequences for individual access to welfare support. The welfare system, in the words of Vick and Lightman (2010, p. 78), has been designed to position disabled people so that ‘One must be entirely well or sick, able or disabled, and employable or unemployable rather than occupying an in-between embodiment’.

Welfare dependency is a situation whereby the long-term unemployed are seen to prefer benefit income to working for a living (MacDonald 1996). The independent–dependent binary is crucial to explaining how welfare reforms have impacted on disabled self-employed people. Roulstone (2015) points out, for example, that policymakers have borrowed the term ‘independent living’ inspired by the social model of disability to frame the ‘personal independence payment’ (PIP) extra costs benefit. The language of independent living—where independence is about having the assistance needed, rather than being without assistance (Morris 2004)—was misused to ‘shrink the disability category’ (Roulstone 2015) in the process of changing from DLA to PIP so that fewer people are eligible for benefits and dependent on welfare.

Importantly, this narrowing of who counts as disabled ‘enough’ and welfare-dependent is not simply about differentiating who is incapable of undertaking work, given the number of DLA recipients who are in paid work (Roulstone 2015). The assumption that work capacity and willingness to work is, or should be, associated with financial independence from welfare disregards many self-employed on low income, disabled and non-disabled, who struggle to accomplish financial independence. It fails to acknowledge the structural conditions that constrain the individual ability to succeed financially in self-employment (MacDonald 1996), as if all could be winners in a competitive market economy (Sayer 2014). It also fails to recognise the diversity of entrepreneurs in terms of embodied properties, such as impairment type and severity, that shape individual motivation and capacity to start and manage a business (Kašperová and Kitching 2014).

There is a need to deconstruct and redefine the ‘capable–incapable’ and ‘independent–dependent’ binaries at the heart of the UK welfare state. Rather than assume that these binaries are opposites, which tends to simplify how a welfare system is organised in supporting working-age disabled people, one might transcend the binaries and conceptualise human capacities as shifting states of being throughout the life course. A person’s dependency on others varies during childhood, adulthood, in old age, or following the onset of ill-health. Acknowledging that as embodied human beings we are all vulnerable and dependent on social relations and institutions (Fineman 2017), including social security systems, is necessary to help create conditions that enable, rather than constrain, aspiring disabled entrepreneurs.

Methodology

The chapter draws on qualitative data from a study of disabled entrepreneurs in the UK (Kašperová 2018). One aspect of the study was to explore respondents’ experiences of business and welfare support. Semi-structured interviews were carried out with 43 entrepreneurs between 2013 and 2015, offering a snapshot of entrepreneurs’ experiences of welfare reforms since 2010. Participants were asked about the challenges or barriers they faced in starting and running a business, and the role of government support in facilitating self-employment and business ownership. More than half of the sample (N = 22) had some experience of interacting with the welfare system in the process of starting and managing a business.Footnote 4 This chapter uses data from 12 cases that best illustrate and develop our theoretical understanding (Table 2).

Table 2 Sample of respondents and their business and personal characteristics
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Our realist analytical framework promises a deeper causal explanation of policy interventions and programmes and their effects (Pawson et al. 2005; Greenhalgh 2014). Interventions provide resources to agents who choose to act on them, or not, and that is what makes programmes effective or ineffective (Greenhalgh 2014). Interventions incorporate a ‘theory’ about the mechanisms through which they generate business impacts. Realist policy analysis seeks to explain the relationship between ‘the context in which the intervention is applied, the mechanisms by which it works and the outcomes which are produced’ (Pawson et al. 2005, p. 21). Welfare reforms are a specific type of policy intervention (for example, changes in the types and levels of financial and other support, and conditions of eligibility). Reforms generate diverse effects for the self-employed, contingent upon their specific contexts, and their variable responses to the intervention.

Disabling Welfare State: Findings

Our findings explicate the problematic binaries at the heart of the UK welfare state and their impact on UK-based disabled entrepreneurs. We illustrate how the ‘capable–incapable’ and ‘independent–dependent’ binaries that underpin policy efforts to reduce welfare dependency are actualised through the mechanisms of increased conditionality and the narrowing of the disability category, with specific consequences for disabled people’s entrepreneurial motivationand behaviour.

  1. 1.

    The ‘capable-incapable’ binary and the ‘grey area’ in between

The UK welfare system assumes two categories of disabled people: (1) those who are assessed as ‘capable’ and therefore encouraged to work; and (2) those perceived as ‘incapable’ and often actively encouraged to stay on benefits. The system fails many disabled people who find themselves positioned in between the two categories; for example, those perceived as incapable who can and want to work, with the right support, or those viewed as capable whose work capacity may fluctuate. Ben might be categorised as someone who is placed in the ‘support group’ of ESA—that is, severely disabled people who are not expected to meet the conditions for benefit receipt, such as looking for a job. People placed in the support group often face low expectations from Jobcentre staff, as experienced by Ben.

At 17, I went to the Jobcentre and they said ‘Yeah, you may as well stay in the benefit chain because if you get a job, we’ll have to pay you. To get off the benefits, you need a qualification’. I was getting too much benefit money, more than a minimum wage job. So, they advised me to stay on benefits. I felt suicidal, I felt useless and I felt lonely. [Ben]

Dara, on the other hand, has a less visible and severe condition but one that affects her ability to work. Yet, previously she had been assessed and placed in the ‘work-related activity group’ of ESA and expected to look for and enter work. She describes the challenges of moving off benefits for someone whose work capacity fluctuates.

You’re either sick, or you’re well. Ideally, you could be not well enough to do any jobs that you’re qualified to do. But you still want to work. But you can’t. But you’re not so ill that somebody would say ‘Yes, you’re entitled to so and so.’ So, you fall into this grey area where it’s very scary. If you’ve managed to get that benefit, it’s not a great deal of money by any means, but it was all I had at that stage. So, it was very hard to come off that. It’s very hard to get it, and then once you’ve got it, you’re scared that you’re going to lose it. [Dara]

The ESA system, underpinned by the ‘capable–incapable’ binary assumes that those with severe conditions have limited capacity to do any work, or are too costly for the welfare system to support. Conversely, those with less severe, often invisible, conditions are believed to be well enough to work, justifying benefit conditionality or withdrawal of support.

Schemes such as Access to Work (AtW) and Personal Independence Payment (PIP, previously DLA), are crucial in enabling disabled people to enter and remain in work and self-employment. Lack of support can put entrepreneurs like Sarah and Leonard, both with severe physical impairments, at a significant disadvantage in relation to non-disabled competitors. Connie—a web developer, blind since birth—had to pay privately for support when AtW failed to provide the level of assistance that she needs.

I asked them [AtW] for 30 hours a week of support. They gave me 12. Every time I get a new contract, I have to negotiate with [AtW] and they do not want to give me the help. So, I had to go to my MP and I had to use social networking and different mechanisms to kind of force them to give me the help that I needed [sighs]. Some of the hours that my [support worker] does are not being paid by [AtW], they are paid by me. Because, like I said, I wouldn’t be able to do my job without having the support. I was lucky this time to get this big contract. If I was just starting up, I wouldn’t have been able to afford to employ [a support worker] for the extra hours that [AtW] wouldn’t pay for. [Connie]

Connie’s experience likely reflects changes to AtW with the introduction of the cap in 2015 on the amount of support one can receive each year (Table 1). The cap was believed to disproportionately affect those with high support needs (Pring 2018), particularly people with sensory impairments, and was eventually raised in 2018 following criticisms.

  1. 2.

    The ‘benefits trap’ and ‘making the leap’ into self-employment

The transition from unemployment into self-employment can be difficult for aspiring entrepreneurs. The ‘benefits trap’, or fear of losing the security of regular benefit income by entering self-employment, is a major disincentive, particularly for disabled people and those with long-term health conditions. The benefits trap is arguably a manifestation of the ‘independent–dependent’ binary that underpins the welfare system. Rather than indicating a preference for benefit income over paid work, choosing to remain on welfare support is often a way of avoiding the transition into ‘financial independence’ that could result in greater financial poverty in the long-term.

The unpredictable or severe nature of some impairments increases the uncertainty surrounding income generation associated with business creation. This can be countered, to a degree, by ensuring that the welfare system does not cut benefits too early in the transition process (OECD/EU 2014). Yet, we found that the UK welfare system creates conditions that pressure aspiring entrepreneurs to make a choice between staying on benefit income (welfare dependence), not working or working limited hours, or coming off benefits and moving into full-time self-employment (financial independence), even if it generates low income.

It was really difficult to make that leap from being on benefits to being on a full-time wage. That was the barrier I faced, just the financial side of working out what you are and aren’t allowed to earn and claim. That was really difficult because unless you can go straight into a decent salary job, you essentially end up working for free with the money that you’re taking away [from work] and the benefits that you lose. I still get [DLA], but things like income support and incapacity benefit, it’s only like 20 hours a week you’re allowed, can earn [in order to keep these benefits]. And then any more you earn, they essentially take off your benefits. So, unless you can straight away be taking £20,000 out of the business a year, then you end up being much worse off. [Peter]

The ‘permitted work’ rules under ESA enable aspiring entrepreneurs like Peter to try out self-employment by working up to 16 hours a week while still claiming in-work benefit. This allows some flexibility in the relationship between welfare dependency and financial independence. However, the risk of losing financial benefits by increasing one’s work hours is often perceived as too high, especially for those with fluctuating health conditions who may be able to work full-time some weeks but only part-time, or not at all, in other weeks. Both Alan and Dara have conditions with fluctuating symptoms which means that maintaining regular working hours can be problematic.

The benefit system encourages you to stay on benefits via a fear process. If I say ‘Right I’m going self-employed today’, I’ll lose all my benefits. The only thing I have, I get [DLA] because some days I cannot get out of bed anymore. So, that is a big fear. You can go onto permitted earnings which allows a person with the disability to go and work for about a £100 a week. That’s what I’m doing at the moment. But you’re not allowed to work more than 16 hours a week [to keep the benefit]. You’ll also keep things like…, you wouldn’t have to pay council tax. Or, I lost my house, and I’m now in council housing, you still wouldn’t have to pay rent. So, to say I’m going self-employed tomorrow, I would lose that. I would immediately have to find £120 a week for the rent and £25 for Council Tax. [Alan]

Loss of regular income support and associated benefits can discourage self-employment. Participant entrepreneurs in these circumstances often rely on disability benefits for income. Alan and Peter both highlight the importance of DLA as a safety net in the face of losing income support when transitioning into self-employment. Fear of losing income support was exacerbated by the introduction of a one-year time-limit on claiming ESA in 2012 (Table 1), as illustrated by Dara. The time limit, introduced to reduce the cost of contributory ESA and to incentivise more people into full-time work, was eventually removed in 2017 in response to criticisms that it was too restrictive.

Although they [the government] do have these permitted work rules where you’re allowed to do a small amount of work, you can only do that for a set period of time and then you have to decide whether you’re going to come off benefits and work, or whether you’re still too ill to work. So, I had to make a decision whether I could earn as much as self-employed as I was receiving on benefits which was basically about £95 a week. So, I had to really take a gamble that I could do enough to make it worthwhile. [Dara]

While Peter and Dara have moved into self-employment, despite fears for sustaining their income, Alan was still at the pre-start-up phase at the time of the interview, deliberating over whether he could afford to make that leap given the risk of losing several benefits. Our findings build on previous studies identifying the ‘benefits trap’ as a major disincentive to entrepreneurship for disabled people (Kitching 2014; OECD/EU 2014). Yet, one could argue that framing this issue solely in terms of individual fear of losing benefit income disregards the systemic pressures disabled people face to make a binary choice between full-time work or welfare.

While ‘permitted work’ rules allow some flexibility for those in the ‘in-between’ space, our respondents reported on the difficulties this presents when making the leap into full-time self-employment with potential to increase one’s earnings. The fairness of ESA has also been questioned (Gulland 2011), given that its introduction was motivated primarily by efforts to reduce the number of successful claims and to increase the conditionality of benefit so that those who qualify are expected to move into work. Gulland notes that in the early implementation of ESA, two-thirds of applicants were found ‘fit for work’ and thus failed to qualify for ESA, suggesting that the work capacity assessment has been used to shrink who counts as disabled and ‘incapable’ of work or having limited work capacity.

  1. 3.

    Narrowing of the disability category and reduced benefit eligibility

One of the key mechanisms underpinning UK welfare reforms has been what Roulstone (2015) describes as ‘the shrinking disability category’, whereby some people are categorised as not disabled enough to justify support. For example, replacement of the DLA extra costs benefit with PIP was accompanied by tighter eligibility rules and the PIP assessment to determine entitlement. The assessments regime has been used to reinforce the capable–incapable, independent–dependent binaries and, in so doing, to reduce benefit eligibility. Narrowing the definition of eligible disability does not, however, reduce the support needs of those now categorised as ineligible. Because of the regime, Anne finds that some of her disabled clients now think, wrongly, that they must emphasise work incapacity to retain disability benefit.

The problem is now that people believe that they have to say that they can’t work in order to get disability benefits, whereas it’s not like that. [DLA disability benefit is awarded to disabled people regardless of work status] So, people have got lots of fear. [Anne]

Gulland (2017) correspondingly anticipates that the benefit regime (and its gradual replacement with Universal Credit) characterised by constant scrutiny of benefit claimants might make claimants wary of ‘doing anything that could be described as work’. Both DLA and ESA claimants have been subject to reassessments, shifting the burden of proof onto them, to demonstrate that they are disabled. Those with invisible or less visible impairments have been particularly affected by this narrowing of the definition of disability. Some respondents, perceived as not disabled enough, failed to meet eligibility criteria for benefit receipt. Dara who suffers from Ehlers-Danlos Syndrome (an inherited, fluctuating condition causing fatigue and joint pain) describes the challenges of claiming DLA for someone with a condition invisible to others.

The problem I had was that I didn’t qualify for [DLA] … The DLA rules are extremely strict. They get even more strict with [changes to] the Personal Independence Payment. It’s very hard if you have a fluctuating condition, because they [disability benefits] are not designed for people with that. They are designed for, if you’re paralysed from the waist down. So, then you can tick the box saying ‘I can’t walk more than 50 yards’. But if you have a condition like mine where some of the days you look [fine], it’s very difficult for other people to see what the issues are. It’s an invisible condition. It makes it very hard for you to claim anything and I think that’s a really common experience. [Dara]

Aspiring entrepreneurs with mental health conditions experience similar difficulties because of their less visible or invisible conditions. Sophie, who was diagnosed with Emetophobia (a condition that causes intense anxiety), experienced Jobcentre staff reluctance to classify her as sufficiently disabled to be eligible for ESA.

It was hard getting into a routine of working again [when I started the business]. I was on Jobseeker’s Allowance and you’ve got to sign it to say you’re looking for 40 hours a week. I said ‘I’m not looking for 40 hours a week. I can’t, I don’t want that.’ And they said ‘Well, you’re not ill enough to not work.’ I said ‘No, but I’m not well enough to do 40 hours a week, I just can’t do that.’ So, reluctantly, they agreed to ESA for a while so that helped me out. I think for the first year they [ESA] paid £40 a week because you start off with a few customers and you’ve got to build it up. So, they gave the benefit to top my wages up for the first year. [Sophie]

Finally, participants reported on the cuts or withdrawal of financial support previously received through AtW, DLA and other benefits. Matthew, a disability risk management consultant and activist, notes that some disabled people have lost jobs because of cuts in support. The narrowing of the disability category and the assessments regime has led to a widespread fear among disabled people about possible future benefit loss, causing anxiety to entrepreneurs like Rachel who runs a successful accessibility consultancy.

It never used to be like that. It’s happened recently, since the cuts, with [AtW], with Independent Living Fund [DLA]. I mean, I’m being reassessed this year. I might lose my car. What am I going to do then? I just don’t understand this government at all. If they look at how much tax I’ve paid, particularly through my business, they can really justify giving me the money towards the car. They don’t look at it like that at all. They just look at this kind of skewed ‘We’re in recession and we pay you money. Do you deserve it?’ And the level of deservedness is based on how disabled you are rather than what you’re contributing because of that thing that you’re getting. It’s a very weird system. [Rachel]

The tightening of eligibility criteria for disability-related benefits has had profound effects on participant entrepreneurs, particularly those with less visible or invisible impairments or health conditions who may not be perceived as disabled enough to qualify, yet still face significant disability-related barriers. This has also led to frustration among those with severe, more visible conditions, including Michael—a wheelchair user with Multiple Sclerosis—whose social care support was reduced because he failed to emphasise the severity of his disability despite high support needs.

Welfare support is crucial in creating a level-playing-field for disabled people aspiring to create and manage a business. Our findings illustrate how the problematic binaries at the heart of the UK welfare system can disincentivise or disadvantage entrepreneurial activities among disabled people. We have shown how a welfare system designed in binary terms does not work for many people who find themselves in the grey area between incapacity-dependence and capacity-independence, particularly those with fluctuating conditions. Those perceived as incapable by employment support professionals often face low expectations and are left with inadequate support. On the other hand, those viewed as capable and expected to move into work face restrictions on work hours and earnings while still claiming benefit, or risk complete loss of benefit as their earning power increases.

Conclusion

This chapter has examined the relationship between the welfare state and disabled entrepreneurs in the context of the UK welfare reforms since 2010. Investigating what happens when work and disability-related benefits are denied, reduced or withdrawn, has provided new insights into the effects of the welfare state on disabled entrepreneurs. Our chapter makes several conceptual and empirical contributions.

Conceptually, we framed successive governments’ efforts to reduce welfare dependency in terms of problematic binaries that shape entrepreneurial motivationand behaviour. The UK welfare system categorises working-age disabled people as either ‘capable’ of undertaking work and thus expected to become financially ‘independent’, or as ‘incapable’ of work and therefore ‘dependent’ on welfare. Those caught in between the two poles of this binary are left to choose between full-time work (capacity and independence) or welfare dependence with a restriction on hours worked and, in consequence, earnings. The ‘permitted work’ rule—allowing small amounts of work while retaining benefit—leaves many in fear of losing income support. As work hours and earnings increase‚ claimants are expected to become financially independent, even if their work capability continues to be changeable and could lead to financial poverty in the longer term.

Empirically, we illustrated how this binary, combined with increased conditionality and cuts in financial support, are particularly problematic for aspiring entrepreneurs with fluctuating or episodic, often less visible yet still inhibiting, health conditions. Those assessed as capable of work and expected to move out of welfare dependency may still face significant barriers to working, while those perceived as incapable often face low expectations, inadequate in-work support or active encouragement to stay on benefits not working. There is a large ‘grey’ category in between that the UK welfare system fails, including people who can and want to work, given the right support, but whose work capacity may fluctuate. These people may frequently move between being able to work full-time to part-time, or not at all, requiring more flexible welfare support. The unpredictability of work capacity means that financial independence may be difficult, if not impossible, to accomplish, leaving many in part-time work and/or financial poverty while dependent on welfare.

Building on previous studies (Kitching 2014; OECD/EU 2014), we find that the ‘benefits trap’—or fear of losing income support in the transition from unemployment to self-employment—continues to disincentivise disabled people from becoming self-employed. Yet, we challenge the framing of this issue as an individual fear of losing benefit income alone. The UK welfare system, designed in binarity terms, puts pressure on some disabled people to make an often-unpalatable choice between full-time work or welfare.

For those with severe, episodic or fluctuating conditions, continuous support may be necessary to enter and remain in self-employment. The risks associated with business creation can be a challenge for all entrepreneurs. Disabled entrepreneurs face higher levels of risk and uncertainty because of the unpredictability of both business start-upand the effects of disability. Continuous in-work support may be necessary for some people to meet the extra costs associated with disability, for instance, employment of support workers, and to assist in carrying out work and business-related tasks. Our findings concur with earlier studies highlighting that self-employment may be unviable for many part-time, self-employed disabled people on low income without access to adequate welfare support (Boylan and Burchardt 2002).

To correct these flaws would require a commitment from policymakers to transcend the problematic binaries within the welfare system and reframe the notion of welfare dependency to effectively support disabled people aspiring to become self-employed. We must actively integrate people with ‘vulnerable bodies’ into the workforce by promoting access, inclusion and equity (Vick and Lightman 2010). The state, as a legitimate governing entity, must be responsive to the realities of human vulnerability and social dependency (Fineman 2017). An enabling welfare state might conceive of vulnerability and social dependency as a shared human condition, rather than an individual pathology, and respond by creating conditions that support, rather than disable, a person’s capacity to realise their potential.

To conclude, we propose a number of avenues for future research. First, how do aspiring disabled entrepreneurs disclose impairment or health condition in the context of welfare system? And how do they negotiate access to support with employment professionals? Our findings illustrate that impairment or health condition visibility can influence employment support professionals’ perceptions of individual work capacity. Yet, there appears to be a dearth of understanding of disability, including the effects of visible and less visible impairments, among professionals. Second, future studies of the welfare state—entrepreneurship relationship could examine the potential of universal basic income (UBI)—a regular, unconditional cash payment given to all without means-test or requirement to work—as a solution for supporting aspiring entrepreneurs who find themselves in the ‘grey area’ of changeable work capability. Although empirical evidence of UBI implications for work outcomes is limited, existing studies found no significant disincentive to work (Gentilini et al. 2020). Finally, as welfare rules change with the roll-out of Universal Credit (Gulland 2017), including removal of the permitted work rule and the limit on the number of hours one can work while still claiming benefit, future research is needed to investigate how the new regime shapes disabled people’s entrepreneurial motivationand behaviour.