BENEFIT SYSTEM MAJOR BARRIER FOR WOMEN STARTING BUSINESS

NEW nef REPORT SHOWS ASPIRING WOMEN ENTREPRENEURS HELD BACK BY GENDER BIASED BENEFITS

Government urgently needs to review the benefits system if it wants to achieve its stated goal of getting women into business and reducing poverty and exclusion, says a new research report released today, Thursday November 6th 2003.

 The report, Who Benefits, released by leading regeneration think tank nef (the new economics foundation) and Prowess, the UK-wide trade association for the promotion of women's enterprise support, surveyed women trying to set up their own businesses from benefits, and workers and experts in enterprise support.

 The report exposes the way the current benefit system is only really working for the standard “male” model of full time employment or unemployment. Self-employment is a highly attractive option for women who want to work but have to factor in care commitments. But, since women’s self-employment often involves variable hours as well as the uncertainties of future income, the report shows how the rigidities of the benefit system can discourage them from making the transition to self-employment.

-         Loss of benefits when moving into work and delays in assessments and payments when moving from unemployment to in work benefits means the risk and uncertainty are often too great for people with no savings and dependents.

-         Allowable earnings on benefits are so low they act as a major disincentive to starting a business and this, combined with the limit on working hours, prevents a gradual supported move into self- employment.        

 -         Self-employment is generally presumed to be full-time which may not be true for women. This, and the potential need to move in and out of different benefits according to changing circumstances, affects eligibility and access to in-work benefits.  

-         Childcare is virtually unavailable whilst on benefits and only 70% of costs are covered through in-work benefits. 

The government’s efforts to formalise the informal economy may also destroy some of the non-economic benefits that women in particular get from informal transactions. These play an important role creating support networks in disadvantaged areas, and aiding people back into work.  

Women also fail to use the New Deal and Work Based Learning for Adults schemes because they offer too little, too late: on New Deal 25+ you must have been unemployed for 18 months and then only receive support for six months (less on WBLA) which is too short a time, particularly for women, to support the creation of a viable business. Childcare costs are generally not covered on programmes of this kind and many Job Centre staff are poorly informed about the self-employment programmes and support options.

If government is serious about its stated aims of reducing poverty and social exclusion, it needs to conduct a radical review of current policy. The report calls for a wide-ranging review of the benefits system and some immediate changes to properly support women and men who need to work in a flexible way:

-         Increase the earnings disregard in line with inflation – maximum level of earnings on benefit has not increased for 25 years for individuals and only marginally for lone parents

-         ‘Join up’ and simplify the benefits system to enable the transition from unemployment to self-employment: with longer income bridges (which could combine grants with loans depending on need), and find a way to more seamlessly merge in and out-of-work benefits.

-         Lower the eligibility period for New Deal 25+ self-employment option to 6 months.

-         Develop asset-based strategies that allow start-ups to test trade while    retaining income as savings to reinvest in the business

Andrea Westall, co-author of the report and Deputy Director of nef, said:  “The benefit system cannot currently support the flexibility of temporary employment or self-employment. This particularly affects women and their employment, creating unnecessary difficulties and potential hardship. There has been no proper evaluation of self-employment support programmes and how they meet different needs – it’s time for a wholesale review.”

Erika Watson, Executive Director of Prowess, said: “Almost half of the women in business in the UK chose to start part-time and a large number do so to fit work around their families. Enterprise can be a very attractive option for those women who need to balance work with other priorities. But it is an option increasingly restricted to women who are comfortably off. Too many women are stranded in poverty when they could be developing the types of valuable skills and experience which our economy really needs.”

Susan Marlow of De Montfort University, co-author of the report, said: “If the government is serious about encouraging enterprise and particularly, to get more women off benefit and into self employment they must act quickly and decisively to implement changes which address the barriers these women face.”

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	Publications Who benefits? The difficulties for women in making the transition from unemployment to self-employment