New Enterprise Allowance: qualitative evaluation

DWP Research Report RR836 : A report of research carried out by Ecorys on behalf of the Department for Work and Pensions published April 2013

Summary

This report presents the findings from a qualitative evaluation of the New Enterprise Allowance (NEA), undertaken by Ecorys between October 2012 and February 2013. Rolled out nationally in stages from April 2011, the NEA was developed to support unemployed people to establish sustainable businesses through offering a combination of financial and mentoring support. The evaluation focused on exploring the extent to which the NEA was meeting this objective along with offering insights into which elements of the programme are perceived as being particularly effective, or otherwise.

Overall, the evaluation found that the programme was offering effective support for those interested in self-employment as a route to (re-) entering the labour market and playing a useful role in supporting the development of new enterprises. However, these enterprises were typically of a smaller scale and with less growth potential than initially anticipated in terms of the NEA policy intent. Despite this, for those assisted by the programme, the opportunity to support themselves and their families through starting a business was clearly welcomed in many cases. In particular, the combination of mentoring support with financial assistance appeared central to the programme’s strength and effectiveness.

Although the implementation of the NEA has been broadly effective, the evaluation indicated a number of areas where improvements could be made. In particular, raising awareness of the programme amongst frontline Jobcentre Plus staff along with improving their knowledge and understanding would be beneficial. Equally, the nature and consistency of the support offered once participants have commenced trading could be improved, and the weekly financial allowance offered to programme participants could be more gradually tapered in the early stages of trading.

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