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New Enterprise Allowance

Published Thursday, July 4, 2019

The New Enterprise Allowance is a government scheme designed to help unemployed people who want to start their own business.

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The New Enterprise Allowance (NEA) provides support to unemployed people who want to start their own business in Great Britain. It also supports people who are currently self-employed, and getting Universal Credit, to develop their business. Participants receive support from a business mentor and can access financial support.

To receive this support a claimant with a new business idea needs to contact their Jobcentre Plus (JCP) Work Coach. The Work Coach will refer eligible claimants to a contracted provider organisation who will undertake an initial assessment of the business proposal. If this is accepted, then the provider organisation will provide a business mentor who will work with the claimant to put together a business plan. If the plan is approved at the end of the mentoring phase then the individual can access financial support once they stop claiming benefit:

  • a weekly allowance of £65 a week for 13 weeks and then £33 for the following 13 weeks (a total of £1,274 over 26 weeks).
  • If participants need help with start-up costs, they may be able to access a loan of up to £25,000.

They will also be able to continue to get advice and assistance from their business mentor for a further 12 month period.

Take-up

Between April 2011 and December 2018, there were 230,000 starts to NEA by 204,000 individuals. Over the same period, 126,000 businesses have been set up through the scheme by 123,000 individuals.

The number of starts has been decreasing since 2013, although this will be at least partly due to the fall in the number of eligible claimants during this period.

Commons Briefing papers SN05878

Author: Andy Powell

Topics: Employment, Employment schemes, Small businesses, Unemployment

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