How the New Enterprise Allowance can help start-up businesses

Entrepreneur William Berry discusses how the government-backed scheme is helping to turn Britain’s job-seekers into business owners

The government can do more to help nurture the talents of our future entrepreneurs but, ironically, its non-business policies have already pushed people into self-employment.

Severe benefit cuts aren’t usually considered a good thing but despite the detrimental effect the coalition’s policies have had on many, they have also had an unexpected upside.

Unemployed to self-employed

According to the Bank of England, a ‘striking’ feature of the economic recovery, which has included a cap on benefits, has been the record number of Brits becoming self-employed. There are a total of 4.5 million people in the country who are now self-employed, rising by more than 600,000 since 2010 and accounting for a third of the 1.5 million jobs created in that time.

The Bank believes the £26,000-a-year benefits cap has pushed people back into work. While young people have been hit hardest by lack of jobs and welfare cuts, it is those aged 50 and over who have been the most proactive when it comes to moving into self-employment, with over 50’s accounting for more than 70% of the increase in the number of self-employed since 2008.

For older people who have had many years to establish themselves in an industry, becoming self-employed may be the next step before retirement – a part-time retirement if you will.

Encouraging young entrepreneurs

What we need to do now is to encourage younger people to exercise their entrepreneurial spirit, particularly those who are being resigned to the benefits scrap heap and struggling on a week-to-week basis.

Of course, they will not be as well established in an industry as an older worker and may not yet have the skills they need to get a business of the ground, or even to get their idea heard. This makes for a frightening double hurdle of lack of money to invest in an idea and lack of experience to make an idea work.


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For younger people who fear they are reduced to a life on benefits thanks to the difficulty in securing enough hours of work or a job at all, there is help at hand.

The New Enterprise Allowance

The New Enterprise Allowance scheme is helping individuals to get off benefits and get their business idea off the ground.

Those aged 18 and over claiming one or more of jobseeker’s allowance, income support as a lone parent, or employment and support allowance, now have the chance to put their business idea forward.

If the idea is given the green light by the government’s panel, they could receive money and help to kickstart their business. This includes a loan and a weekly allowance to cover costs; with the former having to be paid back but the latter doesn’t have to be.

The scheme also gives those with an accepted business plan access to a mentor so they really do have the best chance of making their dream business a profitable reality.

The value of the Enterprise Allowance to Britain’s economy

The New Enterprise Allowance is recognising the problems of both cashflow and experience in getting people to move from benefits to self-employment and addressing both, which is to be applauded.

There is a lot of criticism of ‘benefits culture’ in the UK and praise of those who turn a bad situation – such as redundancy – into a positive by starting a business. However, there is a tendency to overlook the fact that for the majority on benefits, getting a job is their ultimate aim but in the current job market it is not that easy.

The New Enterprise Allowance is giving everyone a chance to start a business and stop relying on changeable benefits and a recovering jobs market. Under the scheme, it looks like the number of self-employed will soar even higher and, hopefully, will provide a new swathe of contributors to the UK economy.

William Berry is a serial entrepreneur and in 2006 was named a Young Gun by Growing Business. He is the founder-director of accommodationforstudents.com, and Vincentbond.com. William is also CEO of the new video start up p6.com, based in California.

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  1. There is no funding that i have been able to find for my industry (commercial breeding of true captive bred seahorses for the pet aquarium industry) we are making small regular sales but we keep running out of stock and are loosing sales because of this, so we need to expand but there is absolutely no funding help! I started this business out of a hobby when i lost my job so i wouldn’t have to go onto benefits but the brick wall i keep running into when it comes to funding is making things impossible for me which is a shame as i am the only cefas certified commercial seahorse breeder in the northwest, possibly even the whole of the uk! 🙁