Young people need far more than this new StartUp scheme

Why the government's small loans are hardly the answer to mass youth unemployment.

On the face of it, today’s launch of the StartUp small business scheme for under-25s looks like a good news story in an otherwise depressing economic landscape. The aim is to increase entrepreneurialism and reduce unemployment among young people (currently standing at a disastrous 22 per cent) by offering £2,500 loans and business mentoring.

Whether you imagine a legion of sharp suited young people pitching in the Dragons Den and fighting it out for Lord Sugar’s approval, or the astronomical wealth of the flip flop wearing Zuckerberg, the Prime Minister's idea of "a whole new wave of entrepreneurs who start small but 'think big" is uplifting and exciting.

But there are a couple of problems with this picture. The first is that while entrepreneurs learn a lot from starting businesses, and that learning might well offer real benefits to young people (particularly when compared to stagnating on the dole), the failure rates for new businesses are very, very high. Take this observation from Carmen Noble, writing for Harvard Business School:

The statistics are disheartening no matter how an entrepreneur defines failure. If failure means liquidating all assets, with investors losing most or all the money they put into the company, then the failure rate for start-ups is 30 to 40 per cent . . . If failure refers to failing to see the projected return on investment, then the failure rate is 70 to 80 per cent. And if failure is defined as declaring a projection and then falling short of meeting it, then the failure rate is a whopping 90 to 95 per cent.

The second is that starting a business doesn’t necessarily mean living above the poverty line. Twenty-five per cent of families with one or more self employed member are living in poverty. And in areas of high unemployment, there is evidence that new startups may just displace existing businesses, rather than increasing the number of businesses and jobs.

So, is StartUp some good news in a bad news week? Yes. Is it the answer to massive youth unemployment and stagnant local economies? Not by a long chalk.

The Prime Minister talks to young entrepreneur Lenique Louis on Monday 28 May. Photo: Getty Images

Nancy Kelley is Deputy Director of Policy and Research for the Joseph Rowntree Foundation

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Commons confidential: The nuclear option

Hunt's six day week, Cameron's missing tweet and growing tensions within Labour.

It’s UN blue helmet time for the deputy leader Tom Watson as he struggles to keep the peace between Labour’s warring factions.

The burly veteran of the uprising that toppled Tony Blair is brokering an armed truce. His strategy, I’m told, is to persuade both sides to hold fire. Rebels remain in the bunker and Corbynistas are moving to change party rules. Either pulling a trigger would send the other nuclear.

Tensions between the Corbyn and McDonnell camps fuel rumours the veggie Jeremy may later step aside for carnivorous John. Watson, says my snout, believes Labour would be ungovernable if MPs locked the left out of any contest.

John Mann, caught glancing to check whether cameras were rolling ahead of his Brawl in the Hall with Red Ken, has posturing form. The Bassetlaw bruiser and his former colleague Denis MacShane earned blistering rebukes for “glib evidence” and “appearing supremely confident of the rightness of their positions” three years ago as witnesses at a failed employment tribunal that attempted to find “institutional anti-Semitism” in a University and College Union-backed Israel boycott.

The 45-page judgment noted: “When it came to anti-Semitism in the context of debate about the Middle East, [Mann] announced: ‘It’s clear to me where the line is . . .’ but unfortunately eschewed the opportunity to locate it for us. Both parliamentarians clearly enjoyed making speeches. Neither seemed at ease with the idea of being required to answer a question not to his liking.”

Gobby Mann and Shoot-From-the-Lip Livingstone were made for each other.

Many thanks to the reader with a long memory who reminded me this column noted in June 2009 how Jeremy Hunt was a six-day weeker, after his Surrey office informed Haslemere Rugby Club he didn’t work Sundays. Now he’s Health Secretary, screaming about a seven-day NHS in England, I’d be happy to update his availability should Hunt wish to get in touch. Emails and calls are answered all weekend.

Labour holds no monopoly on anti-Semitism. A former Labour MP recalled asking an esteemed Tory grandee, still an MP, over dinner whether Livingstone should have apologised for likening a Jewish reporter on the London Evening Standard to a concentration camp guard. “Oh no,” sneered the prominent Con, “the Hebs are getting above themselves.” The term “Hebs” is, apparently, posh for Hebrews. You learn something nasty every day.

Imagine the tweet the experts at No 10 could have prevented the football-crazy Cameron from sending: “As a keen Aston Ham fan I congratulate Leicester Town on winning the FA Cup.”

Kevin Maguire is the associate editor (politics) of the Daily Mirror

Kevin Maguire is Associate Editor (Politics) on the Daily Mirror and author of our Commons Confidential column on the high politics and low life in Westminster. An award-winning journalist, he is in frequent demand on television and radio and co-authored a book on great parliamentary scandals. He was formerly Chief Reporter on the Guardian and Labour Correspondent on the Daily Telegraph.

This article first appeared in the 06 April 2016 issue of the New Statesman, The longest hatred