“I can tell the House, we are also exploring the idea of enterprise loans.”
14 words that are light on detail but heavy on potential.
These were the words that the Rt Hon George Osborne, Chancellor of the Exchequerused during his Budget address to the House of Commons on 21 March. He continued with“Young people get a loan to go to university or college. We now want to help them get a loan to start their own business.”
And the Young Enterprise Loan Scheme is born, with a government commitment to run a pilot this year. The aim of the scheme will be to support entrepreneurship amongst young people through small, low interest, loans and integrating this with wider non-financial support.
This is no small task, but with youth unemployment currently running at over 1million, access to finance is tough for established businesses, let alone start ups, and the current high failure rate of businesses within their first 18 months, I would say now is the time for not only bold statements but strong coordinated action that is both practical and tangible. We need to provide the joined up support, we must enable access to finance and we have to ensure all young people trying to set up their own company have the basic business knowledge that can mean the difference between success and failure.
The opportunity the scheme presents us with is huge and as Sir Richard Branson, founder of the Virgin Group, said: “This has the potential to transform the prospects of thousands of young people. The entrepreneurs of today will be the job creators of tomorrow so I’m delighted that the Government has listened to those at the very start of their careers. The country is full of gifted and enterprising people so this pilot, which crucially has business mentoring and support at its heart, will help prevent a lost generation of talent.”
But how did this scheme come about and what are the next steps.
I sit on the National Youth Enterprise Working Group (NYEWG) on behalf of the IoD, this is a central strategic group with national reach and scale across the youth enterprise sector, a bit of a think and do tank I guess you could say. It was formed in 2011, after young entrepreneurs across the country recommended a coordinated approach to support. We first met in December 2011 and have continued to do so monthly. Details on the groups’ membership can be found at the end of this post.
In November last year Virgin Media Pioneers launched their Control Shift report. One of its recommendations was the establishment of a Youth Investment Fund, through which small scale loans could be offered to early-stage companies on comparable terms to student financing, challenging the convention that a young person could easily get a loan to study business, but not on equal terms to start one. During the last few months the NYEWG has been working with the Department for Business Innovation and Skills as well as Number 10 to develop this concept into a workable idea that builds on the loan aspect to also incorporate a wider package of support.
Although details at the moment are light, we know that the next step with be the creation of a £10million nationwide pilot programme. The structure of this pilot is going to be developed over the next few months, with the pilot running later this year and in to 2013. We are hopeful that the NYEWG will be a part of the development process.
The collaborative work and effort of the NYEWG has got us to this point in a relatively short period of time and it shows the power a collective voice can have. But this is by no means the end. A huge amount of work needs to be done across organisations and government to ensure the pilot is not only a success, but one that can provide the learning’s to develop it into a full national scheme, that will provide the impact and support for young entrepreneurs for years to come, regardless of the region in which they live.
This scheme is something that myself and the IoD feel extremely passionately about, we want to help young people set up stable businesses which will grow to become the wealth and job creators of tomorrow.
Members of the National Youth Enterprise Working Group are:
Institute of Directors, Virgin Media Pioneers, Youth Business International, Peter Jones Enterprise Academy, Shell LiveWIRE, The National Association of College and University Entrepreneurs (NACUE), The Prince’s Trust, UnLtd, and Young Enterprise.