London is the most unequal city in the developed world, with 1 million people currently workless amid areas of extreme wealth. We are staring a chronic, ugly problem in the face, which is destroying people’s aspirations and putting both young and old unnecessarily close to the bread-line. And this was before the seismic uncertainty created by Brexit.
It’s no secret this is a complex problem, and there is no easy fix. But as we feel the anger of those left behind by globalisation it’s the right time to ask what we can do to improve their world. We see that a huge number of them want to start their own businesses but who are frustrated and scared by the bureaucracy of the benefit system and the red tape of government. Many worry about getting into trouble and falling into unseen regulatory potholes. We’ve seen many threatened with eviction because of abrupt changes to housing benefit when they registered as self-employed.
Anyone dipping their toe in the water of new business will tell you it’s a daunting process. And that’s before you navigate housing benefit, organise child care or jump the hurdles of HMRC and Companies House.
‘Isn’t it time for an entrepreneur ‘L’ plate;
a window of tolerance for first time start-ups?’
The irony is, in no other walk of life would you be expected to get it right first time. Can you imagine gleefully driving off in your new Ford Fiesta having never had a lesson?
Isn’t it time then, for an entrepreneur ‘L’ plate; a window of tolerance for first time start-ups, that would be designed to support their journey into the world of business? With the new business ‘L’ plate on, if you stalled at a compliance junction you’d get patience and support rather than hostile demands to get off the road.
A new business ‘L’ plate would do the following:
- Companies House and HMRC could allow an extra three months’ grace on production of first accounts and provide tele-mentoring to ‘L’ platers on completing the documentation and their first tax return.
- New businesses would be able to access specific guidance and advice on tax and benefit issues with a dedicated adviser. It would be recognised by the housing benefit system and a bespoke system of assessment and support could be introduced for them.
- The treasury should offer tax relief for new business ventures ‘L’ platers, for their first year’s income.
- Local business rates, local authority market fees and a wide range of licences and permissions could be offered at a discount to help people starting out.
- Established businesses could offer discounts on a whole range of services such as bookkeeping, banking, insurance, premises, IT and IT support, stationery, utilities to new start-ups.
And what’s more, it doesn’t have to cost the government.
This scheme would likely attract sponsors such as banks and insurance houses, who may well see the tremendous brand benefits of supporting people to build their own business. The government could even auction the scheme to business and offer exclusive rights for a set period. Successful bidders would bring all their marketing talents to encourage more people to look at enterprise for the first time.
Let’s bring entrepreneurship in from the cold and stop expecting new entrepreneurs to work it all out for themselves. Introduce the ‘L’ plate for entrepreneurs and help fresh businesses get started.
You might want to check out the following resources
https://www.gov.uk/government/news/webinars-and-videos-about-self-assessment
thanks Anthony
I’m think the gov.uk website has been vastly improved and these videos are very useful resources. However, there is so much more the government could do to support self-employment in regards the transition from benefits (especially housing benefit), entering the tax and company reporting system generally and absorbing the sheer mass of new information that a start-up confronts.
We need a joined up campaign around this & the ongoing issues of increasing numbers of poor self employed, lots of schemes out there but most not providing what these ‘fragile’ entrepreneurs need. Too many stare homelessness, hunger, etc in the face every day in our rich world. A framework like yours providing a safety net combined with the right support, education,etc could achieve a sea change. People need to be empowered to be able to take charge of their lives not be at the mercy of zero hours contract, low pay. There has to be the possibility of something better. Great that Lambeth has a social entrepreneur in residence. How does it work? Maybe a model to roll out?
Hi Rhiannon, I agree we need to distinguish between genuine self-employment where people are creating services or products for a variety of clients and a route by which unscrupulous employers circumvent employment law. The system needs to be able to tell the difference easily enough! And it should be more empathetic to those who are really running their own business and support them.
I agree that every area needs a Social entrepreneur in residence. I write about it in my book “How to make a million jobs”. In a nutshell we support entrepreneurial activity in Lambeth that enables resources to be distributed more evenly and engages the community – from supporting community groups to generate revenue and take on responsibilities for services or supporting people on benefits to start their own business. It’s a very wide portfolio and would be slightly different in every area. We’re working to take it beyond Lambeth and would welcome any introductions you can make?