The National Enterprise Network is calling for “a properly funded national 9-month enterprise programme” as part of a Select Committee Report. The report demonstrated the impact of ending its 13-week New Enterprise Allowance Scheme (NEA) in addition to other recent changes in business support funding, on the self-employed and in particular, the disadvantaged groups.
The call from NEN is featured in the House of Commons Work and Pensions Committee Plan for Jobs and Employment Support which considered ways in which the government could help support people who are economically inactive move into work, in particular, young people, people over 50 and people with disabilities and long-term health conditions who have experienced high levels of economic inactivity post COVID.
NEN chair, Alex Till, was quoted that there is now “an increase in […] people coming forward for self-employment and asking for a new self-employment programme …[which] would offer a critical route into work for many jobseekers including those from disadvantaged groups.”
The report considered the impact of recent changes to self-employment support, including the NEA which served as the primary self-employment support initiative provided by the Department for Work and Pensions (DWP) and offered mentoring, support and financial assistance in the form of a weekly allowance to aid new entrepreneurs during their initial startup phase.
The NEA stopped taking new applications in 2022, leaving a void in dedicated self-employment support, particularly for older individuals (over 50) and disabled claimants which between them accounted for almost half of all businesses helped by the scheme.
Statistics released by DWP in 2022 demonstrated the NEA’s success, revealing that between April 2011 and December 2021, there had been 299,000 starts on the NEA programme by 276,000 individuals, and 161,000 businesses had been set up by 157,000 individuals. This means that 57% of individuals starting on the scheme successfully progressed to setting up a business. Notably, NEA played a significant role in aiding older individuals (over 50) and disabled claimants, with over 36,000 (23%) businesses and 33,000 (21%) businesses initiated respectively.
The report recommends that DWP should evaluate the NEA and consult with external organisations that operate self-employment support schemes to design a new self-employment support programme that offers effective and inclusive support.
It also considered the impact of the transition of funding from the European Union Social Fund (ESF) for employment and skills initiatives for disadvantaged communities to the UK Shared Prosperity Fund (UKSPF). The report noted that the UKSPF funding, while significant, may not match the levels of support previously offered by the ESF and does not include ring-fencing for disadvantaged people and skills provisions, particularly in the initial years, which has raised fears about the potential closure of critical support organisations and a reduction in available services.
An example is the impact on employment support organisations. A significant number of ESF-funded services offer high-quality support to economically inactive people. According to a recent analysis from the Northern Powerhouse Partnership, the north alone is losing £331m compared to before Brexit – a 34% cut. The Employment Related Services Association stressed that the funding gap could potentially lead to the closure of important employment support organisations which will impact the extent of support available to economically inactive people.
The Flexible Support Fund (FSF) offers organisations access to a limited amount of funding for the delivery of employment support programmes and the Report recommended that DWP should expand FSF to help mitigate the loss of essential services for economically inactive people.
Carol Daniels, Operations Director has said that NEN will be making contact with Mel Stride, Secretary of State for Work and Pensions asking for a meeting to discuss the findings of the report in particular the recommendations for a fully funded business support programme and the gaps in UKSPF funding.