Another week, another report to tell you about. This week we launched Knocking Down Barriers with Sage, which looks at how business creation can play a vital role in the post-pandemic economic recovery.
We focused specifically on some of the most deprived parts of London and Newcastle. While these areas are undoubtedly deprived in the technical way statisticians at the ONS use the term, they aren’t deprived of entrepreneurial potential. In fact, they are chock-full of inspiring individuals brimming with ideas.
On the back of extensive polling and focus groups by Portland, we found that nearly half of respondents could name an idea for a business or side-hustle unprompted. As I write for Forbes: “That means that just within the deprived communities we talked to there are 234,000 people with business ideas. Extrapolating this trend across the 10% most deprived communities in the UK means there are over a million people sitting on business ideas.”
But ambitions are being thwarted by a lack of confidence and finance. If the right support was in place to overcome these barriers then potential business owners would be, on average, 17% more likely to take the leap. This would translate to 38,000 more people working for themselves in the 12 deprived boroughs and wards we polled alone. If this impact were replicated across the most deprived 10% of communities in the UK, then it would mean 188,000 more people becoming their own bosses and finding more fulfilling work.
So what’s holding them back? Over 80% are held back by fears over administrative, tax and legal compliance. Lack of mentoring is a clear barrier too: 73% of SME leaders surveyed had access to a mentor and more than half sought their advice, but less than half of the 58% of people we polled who have someone to turn to had done so.
And 70% do not feel close to having enough money to start a business. In addition, only a third (34%) feel comfortable taking out a loan and half believe they would not be granted one if needed.
We have policy recommendations to address all of these issues, but the headline one is expanding the New Enterprise Allowance to £100 per week for up to a year, allowing recipients to access more of it upfront, and expanding the eligibility of the scheme to people who have been furloughed in the past 12 months and under 23 year olds earning less than the National Living Wage.
As author Sam Dumitriu explains in an article on the recommendation, the New Enterprise Allowance falls short of the original Enterprise Allowance Scheme (EAS), which had impressive results. Perhaps ironically, for a Thatcherite policy, the EAS helped launch the careers of Young British Artists (YBAs) such as Jeremy Deller and Tracey Emin, as well as Alan McGee’s Creation Records, comedian Alan Davis and Julian Dunkerton’s SuperDry clothing brand.
Sam asks (and answers) the question of what explains the relative failure. He finds a key problem is the level of support on offer: “The EAS offered recipients £40 a week in the 80s, which is slightly more than what they could get from Job Seekers Allowance (JSA). The NEA is a fair bit stingier: you can claim up to £1,274 over six months, roughly 25% less than what you would have got on JSA.”
“The support does not last for long either. At the end of six months, you are effectively on your own. This wasn’t the case for the original EAS, where support lasted for a year. There’s a further complication too. Under Universal Credit, benefits are gradually tapered away, which can create further uncertainty for the self-employed as to what they will have at the end of the month.”
It’s not the only policy idea in the report, so do check it out in full for more. Also, there’s a role for the private sector and charities to help. For example, off the back of the report Sage has announced a partnership with MyKindaFuture to provide training and mentorship via Jobcentre Plus to help disadvantaged and underrepresented groups to develop their business ideas.
The report was featured in The Times here (Paywall). You can read the full report here; read a shorter summary here; and read a Twitter thread here. Any retweets or shares on social media would be greatly appreciated.
Saints, scholars & innovators
Along the same lines, but a bit further from home, the Network For Teaching Entrepreneurship (NFTE) has reached out to ask for connections to entrepreneurs and innovators who are keen to share their insights and experience with the young people they work with in Ireland.
NFTE is a youth entrepreneurship programme that is targeted at young people aged between 10 and 18, but mostly around 15/16 year olds from disadvantaged communities. It is operated by the national youth organisation Foróige, and works with approximately 5,000 young people each year.
The insights could take the form of a short talk, or series of talks on different topics, a pre-recorded video, or access to educational or informational materials that might be useful to the young people starting their first businesses or developing their innovative ideas.
Please just get in touch with me if you want me to connect you with the NFTE. And please share this with any connections you have that might want to get involved. It sounds like a great initiative to me.
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