APPENDIX 1
Memorandum submitted by Northern Pinetree
Trust (OP 01)
SUMMARY
1. Northern Pinetree Trust is a small North
East based charity that has assisted over 130 disabled people
to become self-employed over the past ten years.
2. A significant number of disabled people
who are not employed would like to work. Individualised support
programmes are most effective in assisting disabled people in
to work.
3. For people who have been long term benefit
dependent, loss of confidence and self esteem are an added barrier
to finding work.
4. Self-employment provides opportunities
for those who cannot cope with conventional working hours and
shifts. However, moving from benefit dependence in to self-employment
is more difficult than moving in to conventional employment.
5. Current incentives have only attracted
a small number of disabled people to self-employment when Government
statistics suggest a much greater potential.
6. Schemes to encourage self-employment
need to recognise the greater needs of disabled people.
7. An enhanced 'Enterprise Rehearsal' scheme
could provide an extra incentive significantly to increase the
number disabled people finding work through self-employment.
SUBMISSION
1. Northern Pinetree Trust is a small North
East based charity that provides a home-based one-to-one programme
of counselling, training and support for people with any form
of disability or long-term illness who want to explore the possibility
of becoming self-employed. This is a service currently unique
to the North East Region of England but is one that could be replicated
elsewhere.
2. Throughout this submission reference
to disabled people should also be taken to include people with
a long-term illness.
3. The submission is underpinned by experience
of assisting over 130 disabled people to start a business over
the past ten years. Northern Pinetree Trust believes that an effective
work support programme for disabled people needs to recognise
that disabled people are as diverse in their characters, abilities
and aptitudes as the population as a whole but that they have
an added dimension of diversity, that of their disability, An
individualised programme of support is the key to unlocking opportunities
for disabled people.
4. Many surveys have identified that a significant
number of disabled people who are not employed would like to work
if given an appropriate opportunity. Most disabled people have
become so later in life, in many cases losing employment that
they have held successfully for several years. Northern Pinetree
Trust finds that people who have been long-term benefit dependent
have often lost confidence and self-esteem to the point where
there state of mind becomes an additional barrier to becoming
employed or self-employed.
5. The percentage of disabled people who
are in work and who are self-employed (15 per cent) is higher
by about 2 per cent than is the case for people without disability
[1]
Self-employment provides an opportunity for disabled people to
fit their personal needs around the demands of work and is particularly
suitable for those who would be unable to sustain conventional
working hours and shifts. There are those whose personal needs
are such that self-employment is not an employment option it is
the only option. However, moving from benefit dependence to self-employment
is far more difficult than is the case for moving in to employment
with a guaranteed salary at the end of the month.
6. The Government has already done much
to encourage disabled people in to work. The 52 week rule allowing
for a return to benefits if work cannot be sustained and the Disabled
Persons' Tax Credit both help significantly. 'Mere is a need to
ensure that reinstatement of benefits under the 52-week rule is
swift and uncomplicated; anecdotal evidence suggests otherwise
in some cases.
7. There remain a number of issues that
affect the ability of organisations such as Northern Pinetree
Trust to persuade clients to take the step from benefits to work.
The basis of most of these issues is the baffler created by an
individual's reluctance to leave the certainty of hard fought
for benefits entitlement for the uncertainty of work. This barrier
is heightened by the greater uncertainty surrounding self-employment.
8. The Department for Work and Pensions
regularly produces statistics showing that the number of unemployed
people in the North East (5.8 per cent for May 2001) is significantly
higher than the national average (3.3 per cent). In South Tyneside
the percentage in May 2001 was 9.6 per cent. A disabled person
is about twice as likely to be unemployed as is a person without
disability. Added to the official unemployment figures are a largely
unquantified (but undoubtedly very large) number of people who
are receiving a disability based benefit who would like to work.
9. The regional statistics about numbers
of disabled people and those who say they would like to work imply
that, if 15 per cent of disabled people in employment are self-employed,
probably as many as 2000 disabled people in the region who are
currently not in work may be suited to self-employment. The huge
discrepancy between the modest number of disabled people currently
engaged in self-employment programmes and the 2000+ who may be
suitable can only partly be explained by the difficulty in engaging
with people who are isolated from the world of work and do not
necessarily recognise their true potential. Northern Pinetree
Trust finds that, in spite of the Government's incentives mentioned
in paragraph six and the New Deal for Self-Employment scheme,
a significant number of clients who have the potential to staff
a business fear the consequences of doing so. They have a few
of failing to make a success of the business and of being even
worse off than they are already.
10. A person entering self-employment faces
a number of issues that do not arise when working for someone
else. A business may be profitable from day one but them is no
guarantee that payment will be made for work done at the end of
each week or month. It is possible, when working for someone else,
to grow in to the job and even to undertake a work trial. If a
self-employed business is to survive it has to be nut properly
from day one unless some means of transitional financial support
is available during the first few difficult months.
11. Schemes exist where people can move
from unemployment in to self-employment and retain job seekers
allowance for up to three months after the business has started.
These 'Enterprise Rehearsal' schemes, including the one operated
by Inbiz as a part of the New Deal for Self-Employment programme
in the North East have attracted disabled people, but not in significant
numbers. There is clearly a need for incentives that persuade
disabled people that they will be not be penalised for having
a shot at self-employment and that they will be given support
over sufficient a period to give their business idea a chance.
12. Northern Pinetree Trust believes that
incentives can be introduced that would prove to be cost effective
because they are mote to do with the way in which benefits are
administered than they are to do with injecting additional financial
resources. A proposal (enclosed) is currently with the Northern
Disability Service of the Employment Service for consideration
as a part of the New Deal Job Brokers scheme. There are two incentives
within the Trust's proposals; the first is continued entitlement
to disability related benefit and the second is a recognition
that a disabled person may need more time to build up a business
than would a person without a disability.
13. Northern Pinetree Trust believes that
many commercial organisations that provide self-employment support
are inevitably driven towards those with the greatest chance of
success because of the need to work within tight funding regimes
that are driven by results in terms of business starts. As a registered
charity, the Trust is able to engage with those for whom success
is far from certain. The suggested scheme should be open to all
providers of support for disabled entrepreneurs. Northern Pinetree
Trust is not seeking a ring fenced privileged scheme to gain advantage
over other organisations.
NEW DEAL
FOR DISABLED
PEOPLE-ENTERPRISE
REHEARSAL FOR
PEOPLE IN
RECEIPT OF
BENEFITS RELATED
TO DISABILITY
OR LONG-TERM
ILLNESS.
This is a scheme whereby people receiving non
means tested benefits can trial their business idea for up to
six months whilst still receiving their disability related benefits.
The purpose of this trial period is twofold. Firstly, many long-term
benefit dependent people will not risk their hard fought for benefit
for the uncertainty of self-employment unless there are significant
safeguards. Secondly the scheme provides a support mechanism during
the first few mouths of trading when:
— The client is acclimatising
to work, either never having worked or not having worked for some
time and probably not since becoming disabled.
— The initial problems of cashflow
are overcome. The business may be profitable from an early stage,
but payment for work may not be received until two months afterward
completion. Benefit dependent clients are unlikely to have significant
savings upon which to survive.
— It can be determined whether the
client can cope with work over an extended period.
— The viability of the business idea
is put to the test.
Initial Assessment
The Trust's one to one support is delivered
in client's own homes at a pace that meets the personal needs
of each client and takes account of the complexity of the business
idea and the readiness of the client to run a business.
A typical client will be visited twice in order
that their suitability to move on to the initial Enterprise Training
stage can be assessed. Each visit lasts for around two hours.
Enterprise Training
This is the phase during which the business
idea is turned into a business plan and preparations are made
to launch the new business. There are ten modules to Enterprise
Training as follows.
Session 1 Business Description, Survival
Budget, Curriculum Vitae, Personal and Business Objectives.
Sessions 2, 3 and 4 Market Research, Customers,
Suppliers.
Session 5 Marketing Plan, Pricing Strategy,
Insurance.
Session 6 Premises, Equipment (owned and
required).
Sessions 7 and 8 Cashfiow, Profit and
Loss, Balance Sheet, Financial Evaluation of the Business.
Session 9 Bookkeeping, Taxation.
Session 10 Review, Viability, Consideration
of Enterprise Rehearsal Programme.
Some clients complete all ten modules having
received ten two-hour visits. There are those clients, however,
who need significantly more support, Northern Pinetree Trust relies
upon charitable donations to provide support for those clients
whose needs Cannot reasonably be fitted into a time bound and
cash limited training programme.
The duration of this phase depends very much
upon the progress clients can make between visits by the Business
Counsellor, Some businesses need more detailed and, therefore,
time consuming market research than others.
Enterprise. Rehearsal
Prior to commencing Enterprise Rehearsal a client
would establish a business bank account to which there are two
signatories. Money generated by the business during Enterprise
Rehearsal can only be used to meet legitimate business costs and
the client withdraws no income for personal expenditure. The Trust's
Business Counsellor countersigns all payments from the business
bank account and ensures that only legitimate business expenses
are covered.
A Business Counsellor visits clients at least
once each fortnight during Enterprise Rehearsal so that business
activity can be matched to the approved business plan and cashflow
checked to ensure that the business is meeting agreed targets.
Any clients whose businesses are showing clear
signs of failure during Enterprise Rehearsal will not be allowed
to continue unless corrective action is possible. It is expected
that very few businesses will fail at this stage, given the rigour
that is applied to producing the business plans in the Enterprise
Training phase.
At the end of the Enterprise Rehearsal phase
clients will make a final decision about the viability of their
businesses. It is anticipated that failure to break free of benefit
dependence at this stage will be minimal.
The full Enterprise Rehearsal phase is proposed
to last six months (26 weeks). Some clients will find that their
business is generating significant income earlier than anticipated
and the scheme will allow for clients to move into independent
trading at any time up to 26 weeks.
Andrew K. Hodson
General Manager
25 July 2001
1 Annual HM Govt Labour Market and Skills Trand Report. Back
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