November 2010 New Enterprise Allowance Not New and Not Better

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The DWP has published an update about the new enterprise allowance that was announced by the Secretary of State, on 5 October 2010.


The update advises that the Allowance will initially be available in 'those areas which face the greatest unemployment challenge' and that it will be for claimants who have been on jobseeker's allowance for more than six months.
Claimants will get access to a business mentor who will provide guidance and support to develop their business idea, and through the early stages of trading, and that once they can demonstrate a 'viable business proposition' they will be able to claim financial support consisting of a weekly allowance at the same level as their jobseeker's allowance payments for 3 months, and then at half that rate for a further 3 months.
In addition, claimants may be able to access a loan of up to £1,000 to help with their start-up costs.
Some of you may remember Test Trading – that offered virtually the same deal except that full benefit payment was retained for six months instead of three.  Although the addition of possible access to a loan may prove beneficial to some, the key problem here is that unless you’re Richard Branson (and maybe not even then) it takes a lot longer to know whether you have a viable business in practice, than three months.  There is nothing new here and nothing to stimulate private enterprise at a time when other employment options are shrinking fast. 
The DWP intends to phase in elements of the allowance from January 2011 before rolling out the full offer from April 2011.

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