National Enterprise Network criticises Government’s scrapping of the New Enterprise Allowance

National Enterprise Network criticises Government’s scrapping of the New Enterprise Allowance

“Self-employment and start-up businesses have always been the backbone of the economy. Now is the not the time to stifle budding entrepreneurs and innovators.”

England’s network of enterprise support organisations have expressed significant concern and disappointment at the government’s plans to scrap the New Enterprise Allowance (NEA), with effect from 31 December 2021. No plans have been announced to replace the NEA, which enables enterprise support providers to offer group training and 1-1 support to individuals in receipt of benefits, as they develop a viable business plan.

National Enterprise Network (NEN) represent Chambers of Commerce, Local Authorities and Enterprise Agencies, including specialist training providers and business support organisations offering mentoring and advice. NEN members, including social enterprises and community interest companies, rely on the NEA to deliver vital business support to start-ups in their region.

Addressing policy makers on 27 September, Chairman Alex Till said;

The impact on business support providers and the beneficiaries in those communities cannot be underestimated. Removing the NEA – with no plans to replace it – just as people are coming off furlough, will directly affect the small businesses we are working to support, and particularly those who are furthest from the labour market. There has to be an alternative provision.

Across the national enterprise support sector, there had been hopes that the New Enterprise Allowance, which has been part funded by the European Social Fund, would be replaced by a core national fund, ensuring skills and employability training reaches every corner of the country. This was the approach that UK government was expected to take as part of the Levelling Up agenda.

But the delay on the launch of the Community Renewal Fund and the lack of information from central government around the upcoming Shared Prosperity Fund, has left enterprise support organisations unclear about what funding, if any, they will receive in 2022 and ultimately questions the government strategy for business support.

NEN member Somerset Business Association (SBA) provide enterprise support in the South of England, and offer valuable insight into entrepreneurship within rural communities. SBA’s CEO and NEN Board member Patricia Marks added this statement;

As a result of the pandemic, referrals this year have doubled compared with 2019-20 and the end of furlough will see another surge: now is the not the time to stifle budding entrepreneurs and innovators.

Self-employment and start-up businesses have always been the backbone of the economy and are needed more than ever with the uncertainty around economic prosperity and opportunity.

Another NEN Board member, Paul McEldon, was awarded an OBE this year for his work supporting emerging businesses in England’s North East. Mr McEldon shared his apprehension about the longer term implications of scrapping the NEA;

The New Enterprise Allowance has supported people from unemployment through to taking the brave step of becoming their own boss. Without this funding, many enterprise support hubs will no longer be able to offer start-ups the essential skills development and mentoring in their first year of trading. This means that many will set off unprepared and unsupported, or will not have the confidence to start at all.

Mr Till continued;

There is a massive need for employment, including self-employment, across across multiple sectors, yet the investment in skills development is being cut. Entrepreneurship has been a route out of unemployment for thousands of UK citizens. Removing this financial support creates a barrier that many high potential entrepreneurs will be unable to overcome. People who would have gone on to become successful business owners, with ambitions to employ staff in next year or two, will now be left claiming income support and universal credit as a result of these cuts.

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