An enterprising move, but is it enough?

6 January 2011

I have been arguing for a return of the Thatcher-era Enterprise Allowance scheme for two
years, so I was delighted to see David Cameron announce the extension of the New Enterprise Allowance today. It always made sense to allow as many people as possible to come off the dole and set up
their own businesses. I only hope the inducements will be attractive enough.

I recently came across some brilliant public information films about the original scheme. You can check one out here if you want to be
reminded of the last time the country faced mass unemployment.

The original EAS was effective because it was a straightforward bribe. Recipients were paid £40 a week, significantly more than the dole at the time and were able to stay on the scheme for a

Under the new scheme, budding entrepreneurs will only be paid the equivalent of the dole (around £50 per week) for three months. They will also receive access to business loans and advice,
but it isn’t yet clear where this will come from and who will be providing it.

Claim your gift

Done right, this is a genuinely exciting prospect – especially for young people keen to set up in new media or the creative industries. But everything depends on the quality of the advice.

It would be churlish to pour cold water on the 21st century version of the EAS, especially after making such a noise about bringing it back. But it would be a real shame if the take-up was low, or
the failure-rate of the businesses too high.

Recently, when the enterprise minister responsible for the original scheme, David Trippier, was asked what he would do differently, he said he would have extended it for two years. Three months is
a very short time to get a business off the ground.

Research on the original scheme also discovered that businesses were less successful the more time people had spent on the dole. People should not have to drift towards long-term unemployment
before they qualify for help on the scheme.

But I wish the government well on this one. There is no doubt that small start-up businesses will have to play a part in the recovery (especially in areas where there are no large employers in the
private or state sector).

I just hope ministers have given themselves and a new generation of entrepreneurs a fighting chance of success.

Give the perfect gift this Christmas. Buy a subscription for a friend for just £75 and you’ll receive a free gift too. Buy now.

Show comments
  • rndtechnologies786

    View is nice.

  • Martin Bright

    Jon — Your videos are brilliant. Please get in touch.

  • Edward McLaughlin

    “Done right, this is a genuinely exciting prospect – especially for young people keen to set up in new media or the creative industries.”

    Why would or should the prospect be any more exciting for this particular group, than it is for other budding entrepeneurs?

    What’s the unshakable fixation with this sector? Or, more pointedly, why do you and so many others, neglect those who would carve out a living for themselves by starting up businesses not involved with ‘new media or the creative industries’?

  • Jon Danzig

    In the 1990s I produced video films that promoted and explained the original Enterprise Allowance Scheme. They were shown at Job Centres across the country and featured successful businesses started by people who had previously been unemployed. I believe the scheme was an innovative way to encourage and assist self-employment as a viable alternative to unemployment. My Enterprise Allowance videos can now be freely viewed on my YouTube channel:

  • Naomi Muse

    I remember the previous EAC in the early 90s and the benefit was only £5 per week more than the dole but it did mean that as long as the people attended the courses, they could get a head start with a bank too as the banks were involved with the courses.

    The benefits of the EAS were far greater than could be judged by the money alone. Even so, any prospective businesses, whether lifestyle, plain self-employed or growth businesses, will need more than 6 months to make any inroads even if the people work 6 days a week to get up and running. It would be better to give them stages:

    1. 3 months for core business analysis, business planning, market analysis and marketing, product planning and production of literature and web site.

    2. a further 3 months to see if everything is on track and make adjustments

    3. 6 months of trading and adjustments

    4. 12 months of trading and growth

    It will take 18 months to 2 years to break even unless the business is carrying forward customers/clients from a previous entity.

    That’s what the country needs.

Can't find your Web ID? Click here