From the TUC

Enterprise Clubs: meh

31 Jan 2011, by in Society & Welfare

Today the DWP opened the first “Enterprise Clubs” and publicised a trailblazer for the “New Enterprise Allowance”, due soon. (A ‘trailblazer’ is what the Labour government called a ‘pathfinder’ – launching a new programme or policy on a limited number of places to see if there are any problems.) The idea is that unemployed people who want to become self-employed will get help through the clubs from existing businesses.

This is one of those government initiatives – like the National Insurance holiday – that isn’t actually evil. In fact, it’ll probably do some good – there’s quite a few people who dream of being their own boss and self-employment may be the best option for some people who face serious discrimination by employers.

But you’ve got to say that the tail end of a rather weak recovery isn’t the best time to be starting off in business. Many people setting up their own businesses will be working in personal and household services, so the lousy state of consumer confidence at the moment isn’t exactly encouraging. A study of businesses set up by unemployed people with help from the Prince’s Trust (the best such scheme, in my view) found that people were working long hours for a low income – 65 per cent were working for less than £4 an hour, 20 per cent for less than £1 an hour. Of course, if you’re living your dream that may be acceptable, but if you’ve chosen this route to feed your family it sounds pretty bleak.

We know from the same report that the people who are most likely to succeed in running their own businesses are a rather advantaged group – people whose parents ran their own businesses, white people; people from minority ethnic groups, under-21s and people with no qualifications had low “survival rates”. Earlier studies produced similar results for other schemes, which again makes me sceptical about this approach to bringing down unemployment. Long-term unemployed people tend to be pretty disadvantaged and not to have much in the way of start-up capital. The New Enterprise Allowance is in any case going to be limited to people who have been unemployed over 6 months, and they are unlikely to have any savings left by that point.

But it will do some good. There will be the odd exception who builds up a successful business and starts recruiting unemployed people. There will be a larger group who are just about surviving but still happy to have cut out the middle man and started exploiting themselves. There will be the people who use the new scheme to take advantage of the flexibility that the benefit system should have but doesn’t. That was just what many performers, artists and writers did in the 1980s who got themselves going with the old Enterprise Allowance Scheme and a new generation of alternative comics would be a brilliant outcome.

Still, my main reaction is “meh“. I don’t like the way the DWP can’t resist over-egging the pudding. This is a scheme with lots of problems and it isn’t a substitute for the Future Jobs Fund, but on balance it’s OK. But the Department can’t stop themselves – they call it a

Massive expansion of business opportunities for the unemployed

Chris Grayling says Enterprise Clubs will “support the development of tens of thousands of new businesses to help rebuild our economy and create new jobs.” According to the press release, last week’s feeble work experience scheme was another “massive expansion”.

These are the people valium was invented for: what are they going to say when something really is big?


2 Responses to Enterprise Clubs: meh

  1. Jon Danzig
    Jan 31st 2011, 8:41 pm

    The new Enterprise Allowance Scheme will only work if it comes with high quality training. That’s how the old scheme was successful, not so much because of the £40 a week allowance, but because those interested in becoming self-employed obtained comprehensive training by the UK’s 82 Training and Enterprise Councils – which sadly no longer exist.

    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:

  2. Tweets that mention Enterprise Clubs: meh | ToUChstone blog: A public policy blog from the TUC —
    Jan 31st 2011, 11:37 pm

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