HC Deb 06 December 1983 vol 50 cc150-2
9. Mr. Kenneth Carlisle

asked the Secretary of State for Employment how many people now qualify for the enterprise allowance.

20. Mr. Marlow

asked the Secretary of State for Employment if he will make a statement on the progress of the enterprise allowance scheme.

Mr. Alan Clark

On 15 November some 16,300 people were receiving the enterprise allowance. Of these, about 1,500 had joined the pilot scheme operating prior to the national extension on 1 August 1983. The response has been very encouraging and we have decided to extend the scheme beyond March 1984. Finance is being made available for a further 35,000 grants next year to add to the 25,000 in the current year.

Mr. Carlisle

I thank my hon. Friend for that interesting information. Does it not show that the enterprise allowance is fast becoming one of the Government's most effective schemes to combat unemployment? However, will my hon. Friend accept that the rule under which the participant has to put down £1,000 stops some useful ideas and businesses from being launched? Will he revise that rule—and certainly not increase the sum?

Mr. Clark

I thank my hon. Friend for what he says. He is, of course, right when he says that the enterprise allowance, alone of the special employment measures, generates new jobs as well as taking people off the unemployment register. In answer to what my hon. Friend says about the £1,000 commitment, we think that it is reasonable to ask people to make a certain personal financial commitment. When a realistic business enterprise is suggested, we find that there is no difficulty in getting the money from bankers.

Mr. Marlow

Is it not the case that not only does this excellent scheme give an opportunity to people who otherwise would not have it, giving them the dignity of self-employment, but it is also an exceptionally good investment for the taxpayer, because within a short period of time the person who goes on to the scheme becomes self-sufficient and starts paying taxes, rather than being dependent on the dole?

Mr. Clark

That is quite true. Recent surveys show that for every 100 new enterprises that are created about 40 additional jobs are created alongside them. Some of those are part-time, some are full-time. With a three-quarter survival rate of the enterprises taking part in the scheme, we hope effectively to double the number of applicants and thus increase the number of people taken off the unemployment register.

Ms. Clare Short

Is the Minister aware that when there is insufficient demand in the economy some new small businesses thrive and others die, and that many small enterprises are opposed to the scheme because they are threatened by it? Is he further aware that we cannot make more jobs in the economy without reflating and creating more demand?

Mr. Clark

I find that an extraordinary argument. We are talking about new businesses being generated by the individual enterprise of people who are prepared, in many cases, to stop taking unemployment benefit or who draw less than they are entitled to under unemployment benefit. Plainly, that must be to the general advantage of industrial activity in this country.

Mr. Favell

Does the Minister accept that an added benefit of the scheme is that it takes people out of the black economy?

Mr. Clark

Certainly I have heard rumours about that. However, it is perhaps best enlarged on by my right lion. Friends at the Treasury.

Mr. Meadowcroft

If the scheme is a success, will the Minister commend to his right hon. Friend the Secretary of State for Social Services similar schemes with a high disregard of income before social security benefits are lost, so as to take more people out of the black economy?

Mr. Clark

I do not see how that question arises.