Gutted to find that perhaps I could have been buoyed by working tax credits. That I have never claimed. Self-employment hasn't worked out for me - just left me with more and more debt.
Years ago I think the LSE ran a study, that concluded, you may as well just close all job centres, and give a no questions asked hand-out instead. There's a stigma attached to bad jobs, benefits, and poor income - and with some of that lifted, it might provide a better seed-bed for some business.
Benefits are generally designed for short-term-ism, you can survive on not a lot, but opportunities are removed. Even basic socialisation becomes hard: you can't afford a drink in the pub.
That being said, I've never been poorer than being self-employed. I know it works for some, and there are benefits, but it doesn't work for all.