Business support or self-employment for deprived areas?

What do you think:

  • Would more self-employment cut deprivation?
  • Would more accessible, inclusive self-employment support do better than “Business start-up” in deprived areas??
  • Would tailored self-employment + work support + improved health care reduce deprivation?

The Government has recently commissioned a review in to business start-ups in deprived areas – exactly what we have been delivering through our disability self-employment Work for Yourself programme for over seven years.  The vast majority of that time has been targeted on Bolsover District (54th most deprived area) and Chesterfield Borough (deprived but with slightly better ranking) in Derbyshire.

Some factors to bear in mind:

  • Deprived areas by their very nature tend to have communities with multiple disadvantages: poorer health, lower skills, more benefits dependency etc.  For example, Bolsover district has the fourth highest level of disabled people in the population of 326 English local authority areas (Census 2011), had in the order of about 3 Employment and Support/Incapacity Benefit claimants for each JobSeekers Allowance claimant, had nearly a third of the population with no qualifications.  Business start- up within such an environment would seem extremely difficult: many people with limited skills, no spare cash and health problems trying to sell goods and services to a market of fellow residents who also often lack any disposable income.
  • Difficult family circumstances was a frequent consequence of deprivation: family break-ups, caring responsibilities for children and/or disabled relatives, homes and households in flux rather than stable.
  • While self-employment is a recognisable concept for most, the terminology of “business” or “enterprise” is usually alien: “suits” with staff, premises and growth projection charts aren’t in keeping with their much more modest starting points.  Mainstream business start-up support (including New Enterprise Allowance) is already remote and hampered by just the language.
  • Start-up support has had a lamentable record of engaging disabled people with miniscule numbers amongst the former business Links’ clients and not enough has changed.    Advisers lack in-depth understanding of the issues of disadvantaged clients from deprived areas and delivery design doesn’t take account of their needs.  Support should be: non-judgemental of individual capability; not time-bound; offering one-to-one help rather than group events; tailoring information at the appropriate reading level: providing reasonable adjustments.
  • Business financial support has also been virtually unusable for many of our clients: even those with acceptable credit ratings were loathe to risk further debt; even the lowest level of loans were just too high; there was no possibility of the client being able to “match” the loan.  Most of our clients started their self-employment with just a few hundred pounds.  Small grants equating to perhaps a month’s benefits were taken up by some (but certainly not all) to cover basics such as insurance, equipment and leaflets.
  • Drop-out rates can be high amongst this client group.  Some will decide that self-employment isn’t for them – so it is essential that the service can effectively deliver them to other providers of employment support.  Others simply become uncontactable – either deliberately or from lives in transit.  But most drop-outs were due to recurring health issues: people feeling too unwell to continue, returning to hospital etc.  Hence close links with work-orientated health professionals and occupational health (such as the Fit for Work service) could improve success rates.

Increasing self-employment by the high proportions of disabled people within deprived areas would seem a pipe-dream in the face of all these negative factors.  But it can and does happen – and mainly driven by the motivation of the people themselves (plus good delivery):

  • Demand for self-employment support was high: over three years we received over 500 contacts from local disabled people and more from further afield responded when clients were featured by the BBC.  There is real motivation to work again but, often after repeated rebuffs from employers, people perceive that this will only be possible under their own steam.  Clients told us about their interest in self-employment: many talked about employer prejudice related to their health and/or age.  Feeling fed up with being stuck at home and reliant on benefits was a common theme.
  • The track record shows that working disabled people are more likely to be self-employed than their non-disabled peers (Census 2011).  Most will have worked before they acquired their impairment so have previous skills and experience to build on.  Helping them realise their dreams needn’t be difficult – just making the support readily available while abandoning preconceptions, jargon and regimented delivery.
  • Success rates were good (25% of those who took part in the first meeting) and probably rather better than the Work Programme although direct comparison is difficult.  Success needs to be judged on more than business start-ups but on their sustainability, the numbers who came off benefits (so including those who found jobs), the improvements to physical and mental health reported by those who took part, the improvements in family relationships.  Such positive outcomes demonstrate that work isn’t just good for the individual and the benefits system but also potentially for health and social care sectors and wider society.  Deprivation is assessed equally broadly.

You can read more about what we did and how plus what clients said at https://www.dropbox.com/sh/blkm6bubtniyqj1/AAD8uUX69RBsWeAwhrsyH1R-a?dl=0

Penny Melville-Brown

Disability Dynamics ltd www.disabilitydynamics.co.uk

Helping disabled people to work since 2000

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Self-employment test disadvantages disabled

Did you know? • Self-employed may need to show “commercial and profitable, genuine and effective” businesses to get Working Tax Credits. • Self-employed may need to pay themselves the minimum wage for 16-30 hours per week to get Working Tax Credits.

Following the Chancellor’s 2014 Autumn Statement, I raised the following query with HMRC:

From April 2015, self-employed WTC claimants will need to register with HMRC as self-employed.  Those declaring income less than the equivalent of working 24 hours per week at the national minimum wage will also be required to provide evidence to HMRC that the work they are undertaking is “genuine and effective”.  My concern is around disabled people who are working fewer hours – some will be doing so on “permitted work” and still receiving benefits while others may be getting their businesses started or may never work over 16 hours due to their health

The following response has been recently received:

“The Autumn Statement 2014 announced the introduction of a ‘genuine and effective work test’ to ensure that only people meeting the conditions of tax credit entitlement are able to benefit.  In the 2015 Budget the Government has announced that, after further consideration, a revised test will be applied so that in order to qualify for WTC a self-employed claimant will need to be carrying on an activity which is “commercial” and “profitable” or working towards profitability, and is organised and regular.

The test will be applied to the working hours requirement used to qualify for working tax credit as a self-employed claimant.  The working hours requirement will vary between 16 and 30 hours depending on a claimants circumstances in line with the current working tax credit rules. The hours requirement is 16 hours for those entitled to the disability element of working tax credit.

If earnings from self-employment fall below an amount equivalent to the working hours requirement x National Minimum Wage (NMW) per week, claimants may be asked to provide evidence to HMRC that their work is commercial and profitable, organised and regular.    HMRC may ask to see business records and, or further supporting documents such as a business plan, future cash flow and profit projections, trade specific documents or information on what work there is in the pipeline.”

Newly self- employed will need to demonstrate how they intend to carry on their self-employment on a commercial basis and how their self-employment will become profitable, organised and regular.

The revised test aligns more closely with principles already established in tax case law on whether a person is self-employed and also the self-employment test used for both Tax Free Childcare and Universal Credit.”

Over recent years there has been an exceptional increase in people becoming self-employed – and many may have been claiming WTC.  There is already concern in some areas that these micro-businesses may have limited sustainability due to individuals’ lack of preparedness (inadequate market research, marketing, business planning, ability to manage financial records and more).  This additional requirement for those claiming WTC may increase the pressure – and test how effective New Enterprise Allowance and other business support provision has been in creating sustainable businesses.

Penny Melville-Brown

Disability Dynamics ltd www.disabilitydynamics.co.uk

Helping disabled people to work since 2000

Self-Employment for disabled people

What do you think: • Is self-employment for disabled people just about new businesses or broader cost/benefit goals? • Generic business start-up advice isn’t difficult to tailor for disabled people with the right approach and advisers? • Is the bubble of self-employment sustainable or will it burst without support?

Not surprisingly, having run self-employment programmes for disabled people since 2008, I am rather more convinced  about the value of this work route than the academic paper provided to the OECD.    While new businesses are a great outcome, disability self-employment programmes have the potential to make much bigger social impact.

The paper draws on a range of research reports and found that, like the UK, working disabled people in Europe are more likely to be self-employed than others.  This should be reason enough for ensuring that business start-up support is inclusive and tailored for them.  But this certainly isn’t always the case so that disabled entrepreneurs may flourish despite, rather than because of, “mainstream” business support.  Just imagine how many more could succeed if their needs were met!

For example, our client-based Work for Yourself programme has been delivered over recent years to large numbers of clients with very different impairments and needs.  The trick is to make it relevant and appropriate:

  • The advice:  start-up advice is always likely to be fairly generic.  But it needs to be tailored:
    • for the client group –  concise,  jargon-free, written at the appropriate reading level,  bite-sized, available in alternative formats etc ;  one-to-one help delivered locally, not time-bound or following a prescribed format. Continuous satisfaction surveys check if we are meeting their needs.
    • For the likely businesses – proportionate to the size of the business (no/few employees, low turnover etc) but still covering the essentials (financial records and tax, marketing, insurance etc).
    • The advisers: ours have professional qualifications and many years experience working with this client group so have deep understanding of the benefits system, different impairment needs and the range of other personal circumstances  which all contribute to business success.
    • Inclusive approach: avoiding judgement of business viability or individual capacity but enabling clients to make their own decisions; including people with any form of impairment; enabling participation and progress at client’s pace etc.
  • Research and data: There is no doubt that there has been limited study of self-employment for disabled people.  Some of our work for EMDA is reflected in this recent academic paper.  We also have the information from 6 subsequent years of delivering the Work for Yourself programme plus contextual local population data for further research if helpful.

But we would also argue that self-employment programmes for disabled people have the potential for much broader social benefit.  The prospect of working for yourself can be a means of engaging people who are long-term unemployed, face employer prejudice and see little prospect of getting a job.  Self-employment offers control, flexibility plus the chance of getting off benefits and personal fulfilment.      Many of our clients are now running sustainable businesses.  But the outcomes for others are equally valuable:

  • Some clients step from self-employment in to jobs – often with their primary customers who have seen their enterprise and abilities.
  • Some use the personal development aspects of our programme to re-focus their ambitions and achieve jobs.
  • For others, the process helps them identify skills gaps so they take up vocational training.
  • For many, participation improves their health and well-being plus social integration.

I see self-employment support as opening a door to many possibilities and that starting a business is only one measure of success.  Consequently, policy makers need to consider enterprise for disabled people in a more realistic and much broader cost/benefit context.

On a broader topic, more people have moved in to self-employment than jobs in the UK in recent years.  There are those who have started new businesses, some chose this type of work rather than retiring   while others may have legally-fragile self-employment status.    Many will be the result of the Government’s New Enterprise Allowance scheme for unemployed people.

Now we need all that self-employment to be sustainable but there is a risk that the support that individuals received in the early stages was not adequate or long-term enough.    There are lots of schemes to upskill the workforce but support for businesses tends to be largely focussed on those considered to have “high growth” potential to contribute to GDP etc.

Most self-employed people need simpler help. HMRC has lots of sole trader tax and finance material (HMRC Key Messages February 2015)   but many may not be aware or able to use it.    However, the more pressing need is to make the new businesses sustainable: develop their goods and services, extend their customer base etc   – low growth that keeps people off benefits.  Stronger coordination between HMRC, DWP and BIS is probably the answer.

Disability Floristry Art

Disability Floristry Art

Bouquet of the week.

To mark Holocaust remembrance – for all those who were lost then and those facing similar fates now.

Following the pub lunch last week, the tenant landlord was proudly telling us about the squirarchy that still controls a local village: even the colour of the front doors is prescribed.  He was rather more sotto voce about the tenancy control that meant that there were no ethnic minority residents.  And then we spotted the youth in a jacket bedecked with Union and England flags.  We agreed that this is probably not a place for repeat custom.

Yours staggered-that-this-still-goes-on,

Penny Melville-Brown

Disability Dynamics ltd www.disabilitydynamics.co.uk

Helping disabled people to work since 2000