Start-up businesses are not getting enough support from central government, according to the newly-launched Yorkshire Enterprise Club (YEC).
Current New Enterprise Allowance (NEA) rules allow people who are out of work to apply for £1,274 funding to set up a business, which is spread over 26 weeks. They can also take out a loan of up to £1,000, but only after they have been claiming Jobseekers Allowance for six months.
The YEC is calling for the allowance to be made available for a full year to provide £3,692, plus the guarantee of a loan up to £2,000 to encourage more budding entrepreneurs to set up in business and help to boost the economy.
The YEC said that it cost 14 per cent of small businesses £2,500 to £5,000 to set up.
Chairman of the Yorkshire Enterprise Club Gordon Millward said: “Breaking down the barriers to entrepreneurship is crucial if we are to turn the economy round.
“The UK economy depends on the success of small businesses of which they are 4.2 million. But since 2008 that number has fallen by an average of 20,000 per year.
“It is of crucial importance that the prospect of ‘going it alone’ is made more attractive.
“If the government extends the New Enterprise Allowance scheme to a more realistic level, more budding entrepreneurs will be encouraged to become self-employed.”
But the government says that the scheme is helping people into work.
Employment Minister Chris Grayling said: “Nearly 600 businesses have been set up across Yorkshire and Humber thanks to the New Enterprise Allowance, which shows it’s already proving a success. Another 1,000 people have started working with a mentor to draw up business plans.
“The promising start shows the funding we’re offering is enough to get people off the ground, but I’m keen to get even more businesses up and running. That’s why I’m already looking at how we can get jobseekers teamed up with a mentor sooner.”
He gave the example of Dewsbury lone parent-of-four Dominic Cox (40), who set up DC Electrical Services after receiving funding to update his training and taking a NEA £1,000 loan to fund start-up costs.
After being out of work for 18 months, Mr Cox wanted to be self-employed so he could juggle work around his children’s needs.
Mr Cox said: “My NEA mentor and the enterprise club were always available to help me and the support has been great.
“My eldest son has been accepted as an apprentice at Huddersfield College which means I can take him on as an apprentice. The NEA will have helped two people into work – myself and my son.”