EMCC European Monitoring Centre on Change

UK: ERM comparative analytical report on Public support instruments to support self-employment and job creation in one-person and micro enterprises

  • Observatory: EMCC
  • Topic:
  • Published on: 12 January 2012



About
Country:
United Kingdom
Author:
Helen Newell
Institution:

Disclaimer: This information is made available as a service to the public but has not been edited by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.

The UK government’s stated ambition is to make the UK the best place in the world to start and grow a business. Already the government has taken a number of actions to simplify and reduce taxes, reduce regulation, encourage enterprise and improve access to government contracts for SMEs (there is no particular emphasis given to micro enterprises). Rather than marking a stepped change in policy this is to a large extent the expansion of an approach developed by the previous government. However, these initiatives are being introduced at a time of substantial spending cuts and a new agenda for localism in enterprise policy.

QUESTIONNAIRE

Part 1: Overall policy context

This section aims at giving a brief overview of the general development and status quo of the policy discussion and thereof resulting instruments, measures or initiatives in the field of fostering self-employment and job creation in one-person and micro enterprises (less than 10 employees). Focus is mainly on the developments during the last decade, that is before the global recession. In addition we are asking for your indication of change of policy focus since the recession.

1. General policy approach in the area of self-employment, one-person and micro enterprises at the national level


1.1. Has there been a policy focus/debate on the specific challenges facing entrepreneurship as tool for job creation before the global recession? If so, since when and for how long?

Table 1: Presence of policy focus/debate on entrepreneurship as facilitation for job creation before the crisis
 

Yes, continuously since xx? (Please indicate year)

Yes, on and off in the last 10 years

(Please indicate ‘X’ where it applies)

Yes, has been in focus, but since xx it is no longer part of the policy focus (Please indicate year)

No, it has never had policy focus before the recession

(Please indicate ‘X’ where it applies)

Self-employment  

X

   
Hiring the first employee  

X

   
Hiring additional employees/creating additional jobs in micro enterprises  

X

   


1.2. What is the main focus in policy documents or strategies in relation to public or social partner based support instruments for fostering self-employment or job creation in one-person and micro enterprises? (Please indicate ‘X’, multiple answers possible)

Table 2: Main focus in the policy documents or strategies
 

Entrepreneurship (Business development in general)

Job creation (Employment)

Growth (Competitiveness)

Others (please specify)

Self-employment  

X

   
Hiring the first employee  

X

   
Hiring additional employees/creating additional jobs in micro enterprises

X

X

 

1.3. Please elaborate on the answer given above (with a focus on those developments aimed at employment creation and growth) and indicate if the financial recession has caused a change of focus:

Table 3: The policy content and significance of the financial recession
Self-employment
Elaboration of content (please describe and also indicate whether it is treated explicitly/implicitly)

In the UK, the general approach to self-employment has been encouragement through creating a climate whereby start-up is relatively easy, with the minimum of costs and bureaucracy.

Prior to the election of the labour government in 1997, the most significant single programme for job creation was the Enterprise Allowance Scheme (EAS) offering financial inducement for unemployed people by allowing them to draw benefits of GBP40 (€46 as at 18th July 2011) per week whilst working to establish a business, providing they could contribute GBP 1000 (€1,140) of their own capital. This came to an end in 1991. The current government has introduced a New Enterprise Allowance scheme (details of which are given below) which provides support for those who have been unemployed for more than six months to become self-employed.

There has also been an effort to encourage more young people leaving school to consider starting up their business and becoming self employed. In 2005, it was announced that all school pupils would receive at least 5 days of enterprise activity and in the 2007 Budget GBP 60 million (€ 68 million) was set aside to introduce entrepreneurship into the school curriculum. Despite the fact that Ofsted, the school inspectors, found that about one third of schools did not have a clear understanding, or indeed a definition, of what enterprise education was meant to involve, developing enterprise education is still seen to be vital for the economy. Indeed, there have been some calls for enterprise education to start as early as primary school. For now, though, the government funding for enterprise education in England extends only to secondary schools.


Office For Standards In Education (OFSTED) ‘Developing Enterprising Young People’ HMI 2460 November 2005.

Change due to the financial recession

Please tick:

Yes: x

No: □


If ‘Yes’, please elaborate: The re-introduction of the EAS was triggered by the need to create more jobs, particularly in a climate of high youth unemployment. However, it is also part of a more general review of the UK benefits system.

There has been no change to the enterprise education scheme as a result of the recession.

Hiring the first employee Elaboration of content (please describe and also indicate whether it is treated explicitly/implicitly)  

Change due to the financial recession

Please tick:

Yes: □

No: x

If ‘Yes’, please elaborate:

Hiring additional employees/creating additional jobs in micro enterprises Elaboration of content (please describe and also indicate whether it is treated explicitly/implicitly)

The ‘Way Forward’ plan identified 7 key themes: encouraging a more dynamic start-up market; building the capability for small business growth; improving access to finance for small business; encouraging more enterprises in disadvantaged communities and under-represented groups; improving small businesses’ experience of government services; and developing better regulation and policy. This led to policies which sought to: reduce the regulatory burden for small business; facilitate access to finance through the Small Firms Guarantee Scheme; support and promote R&D through the Science and Innovation Investment Framework and Science City agenda and the development of Enterprise Centres; and to develop entrepreneurship among university scientists and engineers with the Small Firms Merit Award for Research and Technology and the University Challenge Fund. Steps were also taken to develop the UK’s enterprise culture. For example, the Enterprise Act of 2002 reformed competition and insolvency law and attempted to remove some of the stigma attached to business failure. The ‘Enterprising Britain Competition’ highlighted enterprise achievement by recognising towns, cities and places which are successfully driving forward their enterprise performance. The other main way in which SMEs (including micro enterprises) were supported was through a system of grant giving. It has been estimated that around 1,300 different grants were available to business. Since the recession the present government has continued to pursue policies designed to reduce tax; reduce the regulatory burden; facilitate access to finance through; support and promote R&D; and to develop entrepreneurship among university scientists and engineers. Huggins R, Williams N, 2009, ‘Enterprise and public policy: a review of Labour government intervention in the United Kingdom’ Environment and Planning C: Government and Policy 27 (1) 19 – 41.In 2002, the government Small Business Service published ‘Small Business and Government: The Way Forward’ which aimed to provide a strategic framework to help develop the small business sector in the UK. No differentiation was made, however, between small businesses and micro enterprises. There were no provisions specific to first hires.

The Regional Development Agencies (RDAs) which under the last government played a major role in delivering public business support to small businesses are to be abolished as part of a more general move to localism in enterprise policy. This presents a major withdrawal of funding for business support activities.

Change due to the financial recession

Please tick:

Yes: □

No: x

If ‘Yes’, please elaborate:

2. Disincentives for self-employment and job creation

The following two questions will investigate whether there has been a change in the political agenda which has forced new political initiatives that may result in disincentives for job creation and business development (e.g. considerations regarding public budget).


2.1 Have public measures (e.g. with the aim to increase public revenue or cut public spending) led to disincentives for self-employment or job creation in one-person or micro enterprises before the financial recession? (Please briefly describe the major developments/initiatives (max. 300 words)

In the years leading up to the recession, the CBI identified the British tax system as one of the key factors in preventing SME growth, saying that tax was cited as an obstacle to business success by 39% of SME employers in BERR’s 2005 Annual Small Business Survey, rising to 60% in the 2006/7 survey and 62% in the 2007/8 survey. In particular, concerns related to changes to capital gains tax and the continuing increase in the complexity and administrative burden of the tax system. Other key disincentives for small businesses to grow prior to the recession according to the FSB were regulation and lack of skills. According to the FSB’s fourth biennial survey lifting barriers to growth regulation, both in terms of volume and complexity; poorly skilled workforces; and crime were seen to be the three main obstacles to growth by their members. By counting the number of calls that members made to the FDB’s own free legal helpline on employment issues during 2005 it found an increase of almost 30% on 2004, with disciplinary matters the main bone of contention. The FSB National Policy Chairman commented that ‘there are at least 26 Acts of Parliament on employment issues and it is tough for small firms to deal with all their requirements. We do not want to repeal or reduce all legal safeguards for employees. But without simplification of employment law small firms’ growth will continue to be stifled.’


2.2 Have public measures (e.g. with the aim to increase public revenue or cut public spending) led to disincentives for self-employment or job creation in one-person or micro enterprises as a result of the financial recession? (Please describe – max. 300 words)

1. According to the Federation of Small Businesses (FSB) rises in fuel duty will negatively impact 79% of small businesses in the UK. This will have a particular impact in the manufacturing, construction and transport sectors. Research by the FSB suggests that the rise in fuel duty will cost small firms up to GBP 2000 (€ 2,280) over the next six months, on top of regular outgoings. They are calling for the government to introduce a fuel duty stabiliser.

2. The FSB argues that one third of small businesses still see state regulation as the greatest barrier that their businesses face. They warn that micro enterprises will still be hit hard by the large number of regulations coming from Europe, even though a moratorium on regulation has been introduced by the government for micro firms on all new domestic regulations for the next three years, including the agency workers directive; the regulation of working time for self-employed lorry and coach drivers; the parental leave directive; the pregnant workers directive and the capital rights directive 4. The FSB is also disappointed that government has decided to remove some large regulatory changes from the moratorium, including the extension to paternal leave and pay and the removal of the default retirement age, both of which they claim impose a big burden on small business.

3. The government has decided to focus on poor record keeping in SMEs. Small businesses are bracing themselves for a spate of fines relating to unpaid tax. HMRC believes at least 40 % of the country’s five million SMEs keep poor records and has set a target of investigating 50,000 potential offenders in 2011. The ‘Business Records Checks’ consultation will target records going back six years, including till rolls, cheque stubs, paying-in slips and bank statements and could see fines of up to GBP 3,000 (€3,420) imposed for unpaid tax. Each visit is expected to take up to half a day.

4. According to the World Bank, Britain’s tax system has slipped from 11th to 16th place over five years in an international ranking of tax effectiveness. This fall down the table has resulted from increased tax bills on small and medium sized businesses and an extra administration burden resulting from changes to value added tax rates. This situation however, is likely to improve following the reduction in small companies corporate rate tax to 20% which was took effect in April 2011.

3. Representation of/lobbying for self-employed and micro enterprises

Are self-employed and micro enterprises in your national context explicitly or implicitly (e.g. entrepreneurs or SMEs in general) represented by the following types of organisations (e.g. for lobbying, defending their interest etc.)?

Table 4: Representation of self-employed and micro enterprises
 

Self-employed

Micro enterprises

Employers’ organisations

Yes, explicitly: Small Business Federation

Yes, implicitly ‘SMEs and Small Start-ups’: CBINo

Yes, explicitly: Small Business Federation

Yes, explicitly: CBI

Employees’ organisation

No

No

Not-for-profit organisations No

No

Others

No

No

Part 2: Identification and description of relevant recent support instruments

The following section asks for the identification of public or social partner based support instruments initiated during or after the recent economic crisis (that is, 2008 onwards). These measures might have, but must not necessarily have been triggered by the recession. Measures may also have been initiated earlier, but changed in order to adapt to the recession or other recent developments. Rather than a comprehensive list of all instruments available at national, regional or local level, the most important, most innovative, most interesting and most effective tools are to be described. Thereof, a selection of up to three ‘Good Practices’ to be described in more detail is to be made.

1. Selection of region(s) when total coverage of the entire regional and local level is too comprehensive

When providing the brief overview and the three ‘Good Practices’ in this section of the questionnaire, measures and instruments at national level have to be included. We would in addition ask you to include regional and local level initiatives where relevant. Nonetheless, a complete coverage of regional and local levels may not be possible for all countries (e.g. because of a high degree of decentralisation resulting in a wide range of respective measures characterised by considerably heterogeneity). At the same time, it can be assumed that for instruments targeting at supporting self-employment and the creation of employment in one-person and micro enterprises the local administrative level is of considerable importance. If so, such measures will be designed to fit to the local characteristics and needs, resulting in a wide variety of different approaches. In this case, one or few local areas or regions may be selected to be covered in this report. Details on the selection are given in table 5.

Table 5: Administrative level/region(s) covered for the following research (max. 50 words per region)

Administrative level relevant for the rest of the questionnaire

National level

If a specific regional/local are is selected, please provide the following information

Name of region

n/a

Motivation for selecting this region

n/a

Facts about the region e.g.

- Geographic location

- No. of inhabitants

- Business structure (sector, size)

- Labour market

- Specific characteristics if applicable

n/a

2. Brief overview of recent instruments to foster self-employment or job creation in one-person and micro enterprises


2.1. Please provide a brief description (max. 800 words) of public or social partner based instruments recently initiated (2008 onwards) to support self-employment and job creation in one-person or micro enterprises.

Measures covered by the European Employment Observatory Review on self-employment 2010, European Commission, Directorate-General for Employment, Social Affairs and Equal Opportunities are to be omitted to avoid duplication (see Part 3 of this questionnaire).

Table 6: List of recent instruments

Title

New Enterprise Allowance (NEA)

Aim/objective

Help to create up to 40,000 new businesses by 2013

Description of support

A financial allowance

Target group

Unemployed

Initiator and other actors involved

Government and a network of business mentors

Duration (please also indicate whether the measures has been initiated due to the recession)

Launched in February 2011. Recession led re-organisation of the whole UK benefits system. This is intended to be permanent, however it is always subject to review by future parliaments.

Title

New Business Improvement Delivery Package

Aim/objective

Significantly change the way information, guidance and advice to business is provided, with more focus on improving small business performance and growth and greater emphasis on better private sector provision.

Description of support

Overhaul of www.business link.gov.uk

Target group

All small businesses

Initiator and other actors involved

Government

Duration (please also indicate whether the measures has been initiated due to the recession)

Launched in April 2011. Part of a set of policies designed to help small businesses through the recession. Some have argued that this actually results in a reduction of business support as all support is now being moved to web-based as the Business Link support services available locally are closed in an attempt to reduce costs.

Title

Entrepreneur’s Relief From Capital Gains Tax

Aim/objective

Reduce tax burden on entrepreneurs

Description of support

Relief from capital gains tax for the first GBP 2 million € 2,280,000 to the first GBP 5 million (€ 5,698) of gains made over a lifetime

Target group

Entrepreneurs

Initiator and other actors involved

Government

Duration (please also indicate whether the measures has been initiated due to the recession)

April 2011 to April 2012. Part of a set of policies designed to help small businesses through the recession.

Title

Reduced National Insurance Contributions

Aim/objective

To raisethe threshold at which employers begin paying National Insurance Contributions.

Description of support

The threshold was raised from GBP 110 to GBP 136 (€125 to €155) from April 2011 to April 2012.

Target group

All businesses

Initiator and other actors involved

Government

Duration (please also indicate whether the measures has been initiated due to the recession)

From Aril 2011 to 2012. Yes.

Title

Extra Small Business Relief Rate

Aim/objective

To double the rate of tax relief available to small firms

Description of support

Doubling of the rate of tax relief available to small firms

Target group

SMEs

Initiator and other actors involved

Government

Duration (please also indicate whether the measures has been initiated due to the recession)

From April 2011 to October 2012. Yes.

Title

Small Business Tax Simplification Review

Aim/objective

To review small business taxation with the intent to create a stable and supportive tax system for small firms.

Description of support

None

Target group

SMEs

Initiator and other actors involved

Government

Duration (please also indicate whether the measures has been initiated due to the recession)

Launched 2011. Attempt to stimulate growth in the small firm sector, yes.

Title

Telephone Contact Centre

Aim/objective

A telephone contact centre to support the redesigned online services

Description of support

Telephone helpline to provide a link between the information on the web and small businesses.

Target group

SMEs

Initiator and other actors involved

Government.

Duration (please also indicate whether the measures has been initiated due to the recession)

Will be launched in 2011.

Title

Business Coaching For Growth

Aim/objective

To provide high growth coaching to address barriers to growth.

Description of support

Specialist advice, coaching and mentoring, tailored to specific needs and aimed at helping businesses to develop and implement strategic business plans.

Target group

Established SMEs and new start ups with the potential to become ‘gazelles’.

Initiator and other actors involved

Government and a group of external coaches with specialist knowledge in investor networks, UK trade and Investment and Leadership and Management Training.

Duration (please also indicate whether the measures has been initiated due to the recession)

Will be launched in 2011.

Title

Business Mentors

Aim/objective

Provide practical advice from experienced business people. To provide a new national mentoring ‘gateway’.

Description of support

Access to a network of 40,000 experienced business mentors. The gateway will embrace all forms of mentoring under a shared code of practice and will link directly to other sources of help and guidance, including the new web-based business support service.

Target group

All businesses

Initiator and other actors involved

Government and 40,000 business mentors (a list will be published in June).

Duration (please also indicate whether the measures has been initiated due to the recession)

Will be launched in 2011. Yes.


2.2. In-depth description of ‘Good Practices’

The current Conservative Government has made large scale changes to existing governance structures at local, regional and national level. As mentioned elsewhere in the report, the regional structure – Regional Development Agencies and regional strategies – have been abolished and replaced with more ‘locally accountable’ Local Enterprise Partnerships (LEPS). It is at this regional level that examples of best practice might have come in the past. The changes introduced by the Conservative government have resulted in a widespread dismantling of existing structures and systems and it is not yet clear what will take their place. There is no further data available.

Please choose up to three examples from the above list that can be considered as ‘Good Practice’ (e.g. because of their effectiveness, innovative character or beneficial cooperation among different stakeholders) and describe them in detail.

Table 7: Description of ‘Good Practice’ examples of recent support instruments

Name of the programme/instrument

New Enterprise Allowance Scheme

Is the instrument explicitly addressing any of the following:

Self-employment

Hiring the first employee

Hiring additional employees/creating additional jobs in micro enterprises

Please ‘X’ and/or describe if relevant

X

   

Operational level

Local

Regional

National

Please ‘X’ and/or describe if relevant

   

X

Rationale/motivation for the instrument

(please describe)

Improve growth of small businesses.

Purpose and aims for the instrument (please describe)

Allowance will help unemployed people to set up their own businesses by providing access to advice and support.

Initiator
Please ‘X’  

X

   
Other stakeholders actively involved in implementation (please name them and describe their roles)  
Target groups        
Please describe the target groups (sector, age, level of education, gender)

Available to all unemployed people claiming Job Seekers Allowance (government benefit) for more than six months.

Funding        
Please describe the funding of the instrument/programme (national and European sources, budget available)

National.

Activities    
Please describe the activities of the programme or institutional initiative as detailed as possible

Will provide access to a business mentor who provides guidance and support as the person develops their business idea and then through the early stages of trading; and a weekly allowance and support to access small loans (of up to GBP 1000 (€ 1,140) to help with start-up costs once the person has demonstrated that he/she has a viable business idea and is ready to register as self-employed – a package of support worth up to around GBP 2000 (€ 2,280) per business.

Results (Effectiveness)      
Please describe the results e.g. number of beneficiaries, advised enterprises

The policy is chosen as an example of innovative practice. Unfortunately, there will be no data available with regard to its success for some time. Nevertheless, the scheme has been widely welcomed. It is similar to a successful scheme introduced by a previous Conservative government in 1983, when unemployment was escalating, which was seen as a great welfare innovation. That scheme which ran until the 1990s, allowed those claiming unemployment benefit for three months, to sign off and start a business. Then followed a brief and basic training session, typically organised by recently unemployed managers who taught basic skills in sales, marketing and accounts. The scheme was seen to be especially effective in stimulating new businesses and business growth in culture, art and design.

Not yet known. Scheme about to be launched.

Challenges in order to reach the objectives e.g. for the organisation offering the instrument, the entrepreneurs (Please describe); and if available how these have been overcome

There are some concerns with the NEA, however. Some fear that the figures (GBP 1,000 or €1,145 benefits replacement and a GBP 1,000 or €1,145 loan) are simply not enough to launch a business; and that the 6 month period of mentoring and funding is not long enough to launch a company past its initial fledgling stages. With approximately GBP 50,500 (€ 57,254,000) earmarked for the scheme, and David Cameron announcing it is to help 40,000 people- firstly this figure amounts to just GBP 1,000 or €1,431 per head; and secondly, if a full 40,000 new enterprises are launched under the scheme, this is an increase of just 0.83% from Britain’s existing 4.8 million SMEs- an almost insignificant rise.

Not yet known. Scheme about to be launched.

Assessments of the effectiveness e.g. investments made in order to reach the objectives of the programme (outcome vs. investment) (Please base this assessment on evaluations when possible)

Not yet known. Scheme about to be launched.

Outcomes (Efficiency)  
Increasing self-employment, growth and employment e.g. number of start-up and/or jobs created etc. (please describe, preferably based on evaluations, otherwise on experts’ assessment)

Not yet known. Scheme about to be launched.

Please provide link to evaluation documents if possible

None yet available.

Example 2:

Name of the programme/instrument

Telephone Contact Centre

Is the instrument explicitly addressing any of the following:

Self-employment

Hiring the first employee

Hiring additional employees/creating additional jobs in micro enterprises

Please ‘X’ and/or describe if relevant

 

X

x

Operational level

Local

Regional

National

Please ‘X’ and/or describe if relevant

   

x

Rationale/motivation for the instrument

(please describe)

24% of SMEs in the UK are currently not online. So whilst the UK government encourages all businesses to log on to its business link website, it is also offering a new contact centre, alongside its other business information. This is partly in response to the closure of the Business Link local advice service which will end in November 2011.

Purpose and aims for the instrument (please describe)

To provide a telephone contact centre to support the online business information service.

Initiator
Please ‘X’  

x

   
Other stakeholders actively involved in implementation (please name them and describe their roles)  
Target groups        
Please describe the target groups (sector, age, level of education, gender)

SMEs.

Funding        
Please describe the funding of the instrument/programme (national and European sources, budget available)

National

Activities    
Please describe the activities of the programme or institutional initiative as detailed as possible

Trained staff will act as ‘super users’ for the information on the web. Providing a link between the information on the web and business, as well as signposting them to other sources of support in the private sector. This will not replace existing expert services, but will provide an initial point of contact. In addition, for businesses in crisis and facing possible closure, a small unit of highly experience business advisors will be on hand providing immediate help aimed at stabilising the business and getting it into recovery where reasonably possible.

Results (Effectiveness)      
Please describe the results e.g. number of beneficiaries, advised enterprises

This policy is selected for its innovative approach. It has been chosen, because it reflects the fact that many small businesses in the UK are not high tech and need sources of advice and help which do not rely on computer technology. Nearly one fifth of SMEs in the UK are currently not online.

Not yet known. Scheme about to be launched.

Challenges in order to reach the objectives e.g. for the organisation offering the instrument, the entrepreneurs (Please describe); and if available how these have been overcome

Not yet known. Scheme about to be launched.

Assessments of the effectiveness e.g. investments made in order to reach the objectives of the programme (outcome vs. investment) (Please base this assessment on evaluations when possible)

Not yet known. Scheme about to be launched.

Outcomes (Efficiency)  
Increasing self-employment, growth and employment e.g. number of start-up and/or jobs created etc. (please describe, preferably based on evaluations, otherwise on experts’ assessment)

Not yet known. Scheme about to be launched.

Please provide link to evaluation documents if possible

None yet available.

Example 3:

Name of the programme/instrument

Business Coaching For Growth

Is the instrument explicitly addressing any of the following:

Self-employment

Hiring the first employee

Hiring additional employees/creating additional jobs in micro enterprises

Please ‘X’ and/or describe if relevant

 

X

X

Operational level

Local

Regional

National

Please ‘X’ and/or describe if relevant

   

X

Rationale/motivation for the instrument

(please describe)

Helping business to improve and grow.

Purpose and aims for the instrument (please describe)

Provide high growth coaching to enable businesses to address barriers to growth and to grow more rapidly.

Initiator
Please ‘X’  

X

   
Other stakeholders actively involved in implementation (please name them and describe their roles)

A network of external providers of specialist knowledge and investor networks, UK Trade and Investment (UKTI) and investment in leadership and management training. The programme will work closely with Local Enterprise Partnerships (LEPs), Technology and Innovation Centres (TICs) and other business incubators and Science Parks.

Target groups        
Please describe the target groups (sector, age, level of education, gender)

Established SMEs with the potential to increase employment or turnover by 20% or more each year for three years and new start-ups with the potential to become ‘gazelles’.

Funding        
Please describe the funding of the instrument/programme (national and European sources, budget available)

National

Activities    
Please describe the activities of the programme or institutional initiative as detailed as possible

Businesses will benefit from a structured programme of specialist advice, coaching and mentoring, tailored to their specific needs and aimed at helping them to develop and implement strategic business plans, to identify and protect Intellectual Property and to exploit innovative ideas, unlock new markets, and access external investment. It will also act as a hub for opportunities for peer to peer networking, helping to unlock new business opportunities by providing faster access to local networks, clusters and supply chains.

Results (Effectiveness)      
Please describe the results e.g. number of beneficiaries, advised enterprises

The Business Coaching for Growth programme has been chosen, because of its innovative approach. It will target only a small, but very important group of small businesses, those with the potential to achieve rapid and significant growth. It is one of the few policies aimed specifically at this group.

Not yet known. Scheme about to be launched.

Challenges in order to reach the objectives e.g. for the organisation offering the instrument, the entrepreneurs (Please describe); and if available how these have been overcome

Not yet known. Scheme about to be launched.

One of the major challenges for the government will be how this operates in practice. Previously this would have been operated through the regional development agencies. For example, a high-growth coaching programme was offered by the East of England Development Agency. It offered local companies exclusive access to a host of experienced business coaches with industry expertise for one-to-one support and advice on preparing a business for rapid growth. Open Frontiers, was one of the first businesses to enrol on the programme. In just 18 months, Open Frontiers had grown from three members of staff to ten, completed three successful funding rounds and anticipated a threefold increase in turnover in the coming year. How this will be organised now that the RDAs have been abolished remains to be seen.

Not yet known. Scheme about to be launched.

Assessments of the effectiveness e.g. investments made in order to reach the objectives of the programme (outcome vs. investment) (Please base this assessment on evaluations when possible)

Not yet known. Scheme about to be launched.

Outcomes (Efficiency)  
Increasing self-employment, growth and employment e.g. number of start-up and/or jobs created etc. (please describe, preferably based on evaluations, otherwise on experts’ assessment)

Not yet known. Scheme about to be launched.

Please provide link to evaluation documents if possible

None available.

Part 3: Annex: Update on recent self-employment study

The recent European Employment Observatory Review on self-employment 2010, European Commission, Directorate-General for Employment, Social Affairs and Equal Opportunities provides insight into support instruments for self-employment. To avoid duplication of this information, we ask you as National Correspondent to omit these measures already covered in your research (Part 2 of this questionnaire), and only update or add any additional details or measures that exceed the information already provided in this report.

Table 8: Additional information on specific instruments to the EEO national report on self-employment:

Title of the instrument

Enterprise Finance Guarantee

Additional information

The Enterprise Finance Guarantee (EFG) is a loan guarantee scheme intended to facilitate additional bank lending to viable SMEs with an annual turnover of up to GBP 25 million (€28,500,000)with insufficient or no security with which to secure a normal commercial loan of between GBP 1,000 (€ 1,150)and GBP 1million (€1,150,000). It was launched in 2009 and in 2011 it has been extended with up to GBP 2 million (€2,280,000)for a further four years.

Title of the instrument

Additional information

Relieve tax burden for small businesses

 

This scheme has been extended for a further three years, until 2013. The FSB has called for this to be extended to existing businesses with less than four employees that take on up to three additional employees, but the government has not responded.

Table 9: Please add any other comments to the EEO national report on self-employment:

New Deal Plus and Flexible New Deal have been replaced in a major overhaul of the UK benefits system. They have been replaced by the New Enterprise Allowance Scheme described above.

Table 10: Please indicate ‘X’ if you have no additional information to the EEO national report on self-employment:

Please indicate ‘X’ if you have no additional information to provide

See section 8 above.

Commentary

Whilst the coalition government has expressed its commitment to creating the right long term environment to help people to start and grow their own businesses, the FSB has called for further action especially in relation to self-employment. They argue that there needs to be a right to decide to be self-employed and that a special register should be created to define self-employed status. They would also like to see the new Enterprise Allowance Scheme available to people who have not spent six months on Job Seekers Allowance, provided they already have a good business plan.

One of the main challenges to the system of business support to SMEs and micro enterprises lies in the implications of the government’s localism agenda for enterprise policy. Large scale changes to current government structures are planned. The regional structure, the Regional Development Agencies (RDAs), and regional strategies, have been abolished and replaced with more Local Enterprise Partnerships (LEPs). As at Spring 2011, 31 have been agreed covering around 88% of the population. They are expected to have responsibility over employment and enterprise, amongst other things. Over the next three years the LEPs will be able to bid for theGBP 1.4million (€ 1,595,000 ) Regional Growth Fund. The RDAs have played a major role in delivering public business support. The budget for the LEPs is significantly smaller than that of the RDAs. It is likely that without finance to address the difficult challenges related to management and leadership faced by small firms and micro enterprises, failure to grow will continue to be a major problem.

Helen Newell, IRRU, Warwick Business School, University of Warwick



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