Press release

Government focused on growth and job creation

The Government is to strengthen its plans to push the growth of small business with a big expansion in the scope of its planned New Enterprise Allowance (NEA) helping to create up to 40,000 new businesses by 2013.

The Government is to strengthen its plans to push the growth of small business with a big expansion in the scope of its planned New Enterprise Allowance (NEA) helping to create up to 40,000 new businesses by 2013.

The Allowance, which will help unemployed people set up their own businesses, will be launched later this month in Merseyside and will now be rolled out nationwide from Autumn.

The NEA will be available to twice as many people as was originally planned. It will give people who have been unemployed financial support for their early months of self-employment, access to a start-up loan, and an expert business mentor to help guide them through the early months of their business.

In order to claim the allowance they will need to develop a business plan, and secure the agreement of their proposed mentor that it is viable.

The Government has today also announced significant changes to the way information, guidance and advice to business is provided with more focus on improving small business performance and growth and a greater emphasis on further and better private sector provision.

Businesses will benefit from:

  • an overhaul of www.businesslink.gov.uk providing online business information and tools tailored to the needs of business. This will include a number of key features:
    • A Business Startup Hub, including access to online company registration
    • Notification of public procurement opportunities through a “Contracts Finder”
    • A business tax ‘dashboard’ enabling businesses to get set up for tax and keep up with their tax position
    • Better, clearer information on Government regulation
    • New training services and online tools for business to use on the move from their own computer or handheld
  • A national contact centre to help businesses who cannot find the information they need on the web or who are not connected to the internet
  • A network of at least 40,000 experienced business mentors offering practical advice to existing businesses and people who want to start a business
  • Business Coaching for Growth, backing high growth SMEs to enable them to realise their potential

Prime Minister David Cameron said:

Throughout this year and beyond we will be focused relentlessly on supporting growth and driving job creation across our economy. Backing new enterprises to start up and small businesses to grow will be what transforms our economy and will deliver the many thousands of new jobs we will see created this year.

It is vital that we ensure businesses, and those people who find themselves out of work but have the drive and desire to set up their own business, have all the advice, support and mentoring they need. Together we can make the years ahead some of the most dynamic and entrepreneurial in our history.

Employment Minister Chris Grayling said:

We will only get our economy back on track when we create a climate in which the private sector can grow and develop, creating jobs and opportunities for people across the country.

By expanding the New Enterprise Allowance we can ensure that those who find themselves out of work but with a good idea get the right advice to turn that idea into a successful business venture.

Business and Enterprise Minister Mark Prisk said:

In the current economic climate, it has never been more important to promote an enterprise culture in the UK. It is vital that businesses have the information, advice, and mentoring they need to grow and expand.

The best people to advise small businesses are those who have already started and run successful companies, so it is particularly important that this new framework for helping businesses to improve focuses on providing access to business mentors.

The Government is committed to creating the right long term environment to help many more people start and grow their business. That’s why we have already introduced a package of reform to reduce rates of corporation tax, including cutting the small profits rate from 21 per cent to 20 per cent from 1 April 2011.

We have also introduced a regional National Insurance holiday worth up to £50,000 for new businesses and extended Entrepreneurs’ Relief from Capital Gains Tax from the first £2 million to the first £5 million of gains made over a lifetime.

These measures, and the new business improvement delivery package announced today, are part of a broader programme to free enterprise and help small firms grow and prosper.

Notes for editors

  1. The aim of the New Enterprise Allowance is to focus on business ideas with the potential for expansion, and, as such, will contribute more widely to private sector growth as well as to reducing unemployment. 
  2. Recruiting quality mentors will be key to the success of NEA.  The Government is in discussions with a wide range of business groups to build a network of mentors who can help both new and existing small business to grow. Further details of the network will be announced shortly.
  3.  The New Enterprise Allowance will help unemployed people who want to start their own business. It will be available to people who have been claiming Jobseeker’s Allowance for more than six months. It will provide access to business mentoring and offer financial support of up to around £2,000, including a weekly allowance for up to 26 weeks and access to a start up loan. In order to become eligible to receive the financial support, the applicant will have to demonstrate that their business idea is viable.
  4. The initial proposals for NEA covered around 40% of the country and provide up to 10,000 places per year.  
  5. The Government will be working with mentoring providers to encourage better co-ordination of and improved access to mentoring across England and to understand and address the barriers to enterprise for all groups, including women, service personnel and Black, Asian and other Minority Ethnic communities. We are already working with the Royal British Legion (RBL) to provide loans, grants and advice to UK Service Leavers to help them fund, plan and grow their own businesses. We want to encourage anyone who has the aspiration and skills to take the initiative and start a business to do so.
  6. Evidence shows that 67 per cent of SME employers have an aspiration to grow over the next two to three years, but only about 20 per cent will grow each year. The Government wants to work with businesses that have potential to grow and enable these firms to overcome the barriers to growth.
  7. By April 2011, Businesslink.gov will have completed the migration of content from over 170 publicly funded business facing websites making Businesslink.gov.uk the single government website for business. 
  8. By June 2011 there will be new on-line training capabilities that will allow the Department for Business (BIS) to host externally developed training modules. The Mentoring Gateway will go live.
  9. By September 2011 BIS will begin to host content developed by private sector suppliers making better use of the support they offer and lowering the cost to government of developing new services.  BIS will also launch the National Call Centre. 

Read more: Helping small firms start, grow, prosper (BIS website, pdf 113kb)