Official Statistics

New Enterprise Allowance statistics: April 2011 to December 2020

Published 13 May 2021

Applies to England, Scotland and Wales

The latest release of these statistics can be found in the collection of New Enterprise Allowance statistics.

This is a summary of the Official Statistics on the outcomes and operations of the New Enterprise Allowance Statistics (NEA).

Coverage: Great Britain

Next release: October 2021

1. Main Stories

Here are the main headlines about NEA:

• there were 268,000 starts on the NEA programme by 249,000 individuals as of December 2020

• 146,000 business were set up through the NEA programme by 142,000 individuals as of December 2020

• in November 2020, around 83% of those starting NEA were claiming Universal Credit (UC)

• the number of starts on NEA in early 2020 were significantly impacted by the Coronavirus (COVID-19) pandemic, with starts dropping in line with the introduction of restrictions in March 2020 before increasing to higher than pre-pandemic levels as restrictions eased in the summer

2. An introduction to New Enterprise Allowance

The New Enterprise Allowance (NEA) was introduced in 2011. NEA supports people on eligible benefits who want to move into self-employment. It is available to people aged 18 and over in receipt of Universal Credit and in eligible regimes and, people who are over 18 and claiming Jobseeker’s Allowance (JSA), Employment and Support Allowance (ESA), the dependent partners of JSA and ESA claimants, Income Support claimants who are sick or who are lone parents.

During the mentoring phase, NEA participants work with a business mentor who provides them with guidance and support as they develop a robust business plan. This is referred to as a start to NEA.

Once a new business starter has demonstrated that their business idea is viable and have had their business plan approved by one of our providers, they can apply for the allowance element of the NEA. The NEA allowance is worth £1,274 over 26 weeks, paid at £65 a week for the first 13 weeks and £33 a week for a further 13 weeks. The allowance element of the NEA is not available to claimants with existing businesses. Those claimants who need start-up capital may also apply for an unsecured loan through the Department for Business, Energy & Industrial Strategy (BEIS) Start-Up Loan scheme.

Since the launch of NEA2 in April 2017, the NEA2 also supports those UC claimants who are already self-employed. Claimants in this group can receive mentoring support to draft a Business Development and Growth Plan. The aim is to support these claimants to increase their earnings from their business and make their business more sustainable.

Once they have started trading, all NEA participants may continue to receive mentoring support for up to 52 weeks.

NEA is available across Great Britain.

3. Eligibility for New Enterprise Allowance

Initially, NEA was introduced for JSA Claimants after 26 weeks of claiming. From October 2012, eligible claimants were able to participate from day one of their claim.

As of January 2015, eligibility was expanded to cover all claimants in receipt of Jobseeker’s Allowance and Income Support, Employment and Support Allowance in the Work Related Activity Group, and UC claimants in eligible regimes who are not in employment, education or training.

NEA Phase 2, launched in April 2017, included an additional category of eligible claimants, namely, UC recipients with existing businesses.

From January 2015 new starts to NEA have been delivered by contracted providers. The way data is collected for these Official Statistics has changed to reflect this; data for starts prior to January 2015 are taken from the Labour Market System and data for starts since January 2015 taken from the Provider Referral and Payment (PRaP) system.

For starts prior to January 2015 a start to NEA is defined as the date the claimant first met with their business mentor. For starts since January 2015, a start to NEA is defined as the date the provider accepted the claimant on the programme. These starts have previously been recorded in the Official Statistics as “mentor starts”.

For starts prior to January 2015, a business start is recorded when the claimant begins claiming the weekly allowance. For starts since January 2015, a business start is recorded when the claimant starts trading. This statistical release includes starts on both phase 1 and 2 of the programme.

4. All starts to New Enterprise Allowance

NEA and business starts peaked in 2013 and declined to a steady state of around 1,500 and 1,000 starts respectively until April 2020. Due to the impact of COVID-19, starts dropped in line with the introduction of restrictions in March 2020 before increasing to higher than pre-pandemic levels as restrictions eased in the summer.

• there have been 268,000 starts to NEA and 146,000 businesses set up through the programme since April 2011

• in 2020, there were around 20,000 starts to NEA; this is a slight increase from 18,500 starts in 2019

The fall in starts to NEA and business starts in April 2017 was a result of an introduction of the Link Up: Start Up (LUSU) workshop process.

It is possible that people will participate more than once on NEA.

Since April 2011, a total of 249,000 individuals have started on the programme and up to June 2020 142,000 individuals (57%), have progressed to set up a business.

The proportion of business starts over NEA starts had been steadily increasing since November 2014 to almost 65%, before seeing a significant drop to a low of 45% in March 2020 due to the impact of COVID-19 restrictions.

5. Main benefit of individuals starting New Enterprise Allowance

The proportion of participants have gradually shifted from Jobseekers Allowance to Universal Credit over the years.

Of those starting on NEA in November 2020 around 83% were on UC, 15% were on JSA, 1% were on ESA or IB and 0% were on IS.

Initially, New Enterprise Allowance was only available to JSA claimants. It has since been gradually rolled out to Employment Support Allowance/Incapacity Benefit, Income Support and Universal Credit claimants.

Universal Credit will eventually replace all non-contributory out of work benefits, including Jobseeker’s Allowance, Employment and Support Allowance and Income Support.

Now that all new income-related benefit claims are made to Universal Credit, the majority of people claim UC before they take part in New Enterprise Allowance. While some UC claimants are in-work, but require in-work financial aid, the NEA programme is only available to those UC claimants who are not in employment, education or training.

Phase 2 of the programme has been made available to a wider range of claimants, including UC recipients with existing businesses. NEA Starts for this group of claimants are reported separately within this publication.

6. Characteristics of those on New Enterprise Allowance

Out of the people who started on NEA, around 99,000 (41%) are women and 144,000 (59%) are men, of which around 59,000 and 81,000 have progressed to set up a business respectively.

Around 59% of women move on to set up a business when starting NEA compared with 56% of men.

Most people are aged 25 to 49, with around 170,000 individuals starting NEA in this age group.

Of individuals whose ethnicity is known, around 190,000 (79%) of those who started the programme have identified as white, with a further 17% from ethnic minorities and 4% where ethnicity was not disclosed.

Of those starting on NEA around 59,000 had a self-declared disability, with around 32,000 of these individuals progressing to set up a business.

7. Proportion of individuals off benefits continuously, for 26 weeks following the business start

When tracking participants for 26 weeks (6 months) after a business start, we looked at those who were off benefit continuously (all 26 weeks, without a break).

Overall, since the start of the programme, the average proportion of NEA participants who were off benefit for 26 weeks continuously following their business start was around 70%.

In the last year the decreasing trend in the proportion of individuals who remained off-benefit for 26 weeks following a business start continued overall, with a slight increase at the start of 2020 likely due to the impact of the COVID-19 pandemic.

The overall downwards trend is mainly driven by an increasing number of starts to NEA coming from Universal Credit claimants, who remain on Universal Credit after they start trading.

The decline in the proportion of individuals who were on JSA who remain off-benefit for 26 weeks following a business start is likely due to these claimants moving onto Universal Credit once they begin trading.

Before the introduction of Universal Credit, claimants who had been on JSA were required to cease claiming DWP benefits in order to be entitled to payment of the trading allowance.

With the introduction of Universal Credit, low-earning self-employed people may be entitled to claim Universal Credit as an in-work benefit. These in-work Universal Credit claimants are captured in this data, and result in a reduction in the proportion of individuals off-benefit.

8. New Enterprise Allowance: Contractual performance

The contractual performance data is for the NEA Phase 2 programme over the period January 2020 to December 2020.

The programme is delivered by 7 providers operating in 14 contract package areas (CPAs). For each CPA there is an expected performance level of the numbers of business starts and also of the number reaching 26 weeks trading. The actual performance as a percentage of the expected performance is reported.

For business starts, performance ranges from 62% to 112%.

For 26 weeks trading, performance ranges from 66% to 102%.

9. NEA Phase 2: Starts from April 2017 to June 2020

Phase 2 of the programme, introduced in April 2017, involves claimants attending a Link Up: Start Up (LUSU) Workshop before moving on to start to NEA. Previously, starts on a LUSU Workshop and starts to NEA were recorded as separately. From 6 July 2020, the LUSU start is no longer recorded and so the charts below only reflect the period April 2017 to June 2020. Figures for LUSU starts up to 6 July 2020 can be found in the accompanying tables.

Over the period, April 2017 to June 2020, 85,000 Link Up: Start Up (LUSU) starts were reported and lead to 55,000 NEA Starts.

Over the period, April 2017 to June 2020, 65% of LUSU workshop attendances have resulted in a start to NEA. This compares all starts to NEA, rather than tracking individuals.

10. NEA delivery

New Enterprise Allowance is delivered by private providers on behalf of the Secretary of State for Work and Pensions. Providers compete via competitive tender, and contracts are awarded regionally. DWP assesses these contracts in order to ensure value for public funds is met.

Role of the Provider

Jobcentre Plus (JCP) will inform those eligible about the NEA Mentoring Programme.

New Business Starts

For new business starts, the process is as follows:

• the JCP Advisor will make a referral to the core NEA programme. The provider then can accept or reject the referral

• the participant first takes part in a LUSU workshop. Before the COVID-19 pandemic, these were delivered face-to-face but some have since been delivered virtually in line with restrictions

• after the workshop has completed, providers conduct an initial assessment within 10 working days in order to assess if participant has a viable business plan with a reasonable chance of success.

• providers then notify Jobcentre Plus via the PRaP system within 15 working days. The outcome of the initial assessment is also notified to the Jobcentre Plus Work Coach on a NEA1/UCNEA1 form within 2 working days of the initial assessment. This part of the provision is not ESF match funded so there is no ESF paperwork to complete

• the provider also completes an ESF1420 form with the participant as part of the assessment process and this must be sent electronically to DWP within 10 working days of the participant signing it

Existing Self-Employed

For Universal Credit Existing Self-Employed:

• the JCP Adviser will make a referral for an initial assessment, which the provider then can accept or reject

• providers conduct an initial assessment within 10 working days of referral date in order to assess if participant will benefit from the support of the NEA Phase 2, where the business has potential to grow, become more efficient and more profitable

The aim is to improve the business earnings to reach a level up to or above their Minimum Income Floor (MIF) over the 12 month/52 week mentoring period.

The remaining process for new business starts and existing self-employed is as follows:

• providers assign a business mentor who assists the participant to develop a business plan (or a Business Development and Growth Plan, for Universal Credit full service (UCFS) existing self-employed participants). For the participant with actively seeking work in their conditionality, this is replaced with participants must make full commitment to the NEA mentoring programme

• participants then submit business plans for consideration

• if approved, participants proceed to trading (or for those existing self-employed participants, receive help to grow their business). At this stage, participants who are not claiming UC are no longer eligible for out of work benefits.

• in order to support the participants, the business mentor continues to support the participant for the first 12 months.

New business start participants are also eligible for the NEA financial support which is administered by Jobcentre Plus. The allowance element of NEA is paid weekly at £65 for the first 13 weeks of trading followed by £33 for the remaining 13 weeks.

Providers must also ensure participants are informed of start-up loans provided by the Government-backed Start-Up Loans Company in order to access additional start-up capital (this is for new business cases only).

DWP have made some interim arrangements to mitigate the impact of the COVID-19 restrictions on the delivery and performance of some employment programmes. Where applicable, contracts delivering NEA have been temporarily moved to a ‘cost’ payment model to allow for continued support for those customers most in need. Under this system the providers’ costs for delivering the contracted service were met, rather than paying a service fee and outcome-related payments.

11. About these statistics

These Official Statistics have been compiled using data from:

• Labour Market System (LMS) Opportunities Dataset.

• Provider Referral and Payment System (PRaP), March 2021

• National Benefits Database, November 2020

• Universal Credit (UC) Official Statistics Dataset, December 2020

• Client Extract Data, December 2020

Status of the statistics

This document includes figures from April 2011 to December 2020 for the New Enterprise Allowance programme. Prior to 2015, data was taken from the Labour Market System (LMS). Since January 2015, data has been taken from the Provider Referrals and Payments (PRaP) dataset. The March 2021 PRaP dataset has been used, with data taken up to the end of December 2020. The November 2020 National Benefit Database and the December 2020 UC Official Statistics Dataset have also been used.

Where to find out more

Statistician: Anisha Roberts, anisha.roberts@dwp.gov.uk

Lead Statistician: Joanna Edgell, joanna.edgell@dwp.gov.uk

Release page for this document and the summary tables.

Read older releases. Please note that figures are subject to change.

A more detailed background note provides information on the New Enterprise Allowance programme and the statistics we publish on it.