New Enterprise Allowance Statistics: More Hare-Brained Schemes.

Great Britain New  Enterprise Allowance  Statistics. 17th June 2014.

“On 6 October 2010, a plan was announced by Work and Pensions Secretary Iain Duncan Smith to revive the scheme, giving mentoring and funding of up to £2000 to those unemployed for over six months and wishing to start up their own business.^[6] The funding would include a weekly payment linked to the value of their benefit, and £1000 for the purchase of equipment.”

1. New Enterprise Allowance (NEA) aims to help unemployed people claiming out of work benefits who wish to start up their own business.
2. Initially, participants in NEA work with a business mentor to develop their business  idea. Once they have started trading and left benefits, they receive a weekly
allowance.
3. This publication records the number of starts where people have started working with  a business mentor and the number of starts where people have started receiving the
allowance as recorded on the Jobcentre Plus’ Labour Market System.

The key findings are:

 Since NEA was rolled out in April 2011, up to March 2014, 93,880 starts have  been made where people have begun working with a business mentor;
 During this period, 46,000 of those mentor starts have progressed to start  receiving the weekly allowance.

But has it worked?

How many enterprises have succeeded?

We know the “take up” but not these figures.

We are reminded of this comment on its launch,

Accountants slam New Enterprise Allowance as ‘hair brained’.

David Ingall, partner at JWPCreers and a member of UK200Group, described the New Enterprise Allowance, which the government says will create up to 40,000 new businesses by providing financial and mentoring support to unemployed people, as a “New Year fantasy”.

It comes, he added, “at the same time that HM Revenue and Customs has announced it is to target 50,000 businesses a year over the next three years to see whether their accounting records are adequate or accurate.”

Ingall continued: “The estimate from HMRC is that they are going to raise millions in penalties from those businesses, so on the one hand the government is offering to help businesses and on the other they are looking to punish them.

“It concerns me that the assistance will be offered to those with a viable business plan. Judged by who?

“I can see the only beneficiaries will be those offering to write business plans for the applicants, who probably will not understand what is being put forward in their name. I am sad that such a hare-brained scheme is being proposed by the government.”

Daniel Shear, another member of UK200Group, was equally scathing saying the NEA was a “headline grabbing proposal that may not actually make an awful lot of difference”.

“The scheme provides allowances of £1,275 over six months and a £1,000 loan to cover start-up costs,” he added. “Whilst welcome, the quantum of the allowance/loan is small compared to the cost of launching most new enterprises, meaning the proposals may make little discernable difference to potential entrepreneurs.”

The NEA will be launched in Merseyside later this month and rolled out nationwide in the Autumn. Around £50m is expected to be available.