Is it time for a new Enterprise Allowance Scheme?

Young people are fizzing with entrepreneurial ideas. It’s time they were given a bit more encouragement

Has the work ethic of young people significantly changed? 

Many employers would say that yes it has – it’s hard to find young people willing to go in at the bottom level of a company and work their way up. 

But the picture is more complicated than “kids these days, eh?” If you look at the things that boomers and GenXers take for granted, such as home ownership, private pension, free-at-the-point-of-use healthcare and all, the maths doesn’t lie: it’s hard to achieve those with a regular job.

At the same time, messages on social media platforms are clear: there are hundreds of routes to additional income by various means and living, breathing, content-making examples of people who have turned their hobbies into viable businesses.

The next time someone says they want to be “an influencer”, don’t laugh (because every successful entrepreneur has gone through the “people laughing at them” stage). Instead ask: why not?

Entrepreneurialism has changed; while there are still plenty of businesses being set up in the traditional way, many more are flickering in and out of life in the more hidden world of social media, selling to networks of peers who have become accessible through digital platforms. 

At Swoop, we’d like to see more of these fledgeling businesses succeed and grow. We are fond of reminding people that SMEs are the backbone of the economy, and the nature of the economy is changing rapidly. As geography matters less, we have a choice: either give young entrepreneurs in the UK the best chance of making the most of it, or let overseas businesses win UK customers and pull money out of the British economy.

Looking forward, it sometimes helps to look back. We were reminded of the Enterprise Allowance Scheme (EAS), introduced by Thatcher’s government as a response to high levels of unemployment. 

What is the Enterprise Allowance Scheme?

The EAS was introduced in 1983 as a weekly allowance for unemployed people of working age who wanted to start their own businesses. 

At its peak the EAS supported over 100,000 would-be entrepreneurs and is credited with helping 325,000 people become self-employed.

How much could be claimed through EAS?

The EAS was £40 per week (nearly £170 in today’s money) for up to 12 months. Not a king’s ransom, but getting a business off the ground doesn’t always require one. 

This article in the Guardian suggests that the scheme kick-started a wave of creative entrepreneurialism.

Songwriter Luke Haines says that the EAS was “straight from heaven. You went to the bank, said you were doing it and you got a £1,000 loan, just like that!” So, encouraging entrepreneurialism is good news for the financial sector as well. 

£1,000 in 1983 is more like £4,160 today. Again, this isn’t a huge sum, but if you’re launching a nano business as an influencer on social media, it’ll get you what you really need: a phone with a great camera, a decent computer and editing software – with enough left over to run your first paid ads. Successful businesses have been built from less. 

In a world dominated by content creators, in which the UK leads the way in media production, CGI, music and theatre, isn’t this exactly the kind of future governments should be encouraging?

Should there be a new Enterprise Allowance Scheme?

At Swoop, we’d love to see something like the EAS brought back. The last few budgets have been lacklustre for the nation’s SMEs and politicians are desperately seeking ways to become relevant to an increasingly disengaged population of young people. Giving them a chance to achieve prosperity through following their passions is surely an opportunity they should be grasping with both hands.  

You’ll find some great examples of the businesses helped by the EAS in this article.

To get your own business the funding it needs to thrive, check out Swoop and get started today.