Select Committee on Work and Pensions Appendices to the Minutes of Evidence


Memorandum submitted by Northern Pinetree Trust (OP 01)


  1.  Northern Pinetree Trust is a small North East based charity that has assisted over 130 disabled people to become self-employed over the past ten years.

  2.  A significant number of disabled people who are not employed would like to work. Individualised support programmes are most effective in assisting disabled people in to work.

  3.  For people who have been long term benefit dependent, loss of confidence and self esteem are an added barrier to finding work.

  4.  Self-employment provides opportunities for those who cannot cope with conventional working hours and shifts. However, moving from benefit dependence in to self-employment is more difficult than moving in to conventional employment.

  5.  Current incentives have only attracted a small number of disabled people to self-employment when Government statistics suggest a much greater potential.

  6.  Schemes to encourage self-employment need to recognise the greater needs of disabled people.

  7.  An enhanced 'Enterprise Rehearsal' scheme could provide an extra incentive significantly to increase the number disabled people finding work through self-employment.


  1.  Northern Pinetree Trust is a small North East based charity that provides a home-based one-to-one programme of counselling, training and support for people with any form of disability or long-term illness who want to explore the possibility of becoming self-employed. This is a service currently unique to the North East Region of England but is one that could be replicated elsewhere.

  2.  Throughout this submission reference to disabled people should also be taken to include people with a long-term illness.

  3.  The submission is underpinned by experience of assisting over 130 disabled people to start a business over the past ten years. Northern Pinetree Trust believes that an effective work support programme for disabled people needs to recognise that disabled people are as diverse in their characters, abilities and aptitudes as the population as a whole but that they have an added dimension of diversity, that of their disability, An individualised programme of support is the key to unlocking opportunities for disabled people.

  4.  Many surveys have identified that a significant number of disabled people who are not employed would like to work if given an appropriate opportunity. Most disabled people have become so later in life, in many cases losing employment that they have held successfully for several years. Northern Pinetree Trust finds that people who have been long-term benefit dependent have often lost confidence and self-esteem to the point where there state of mind becomes an additional barrier to becoming employed or self-employed.

  5.  The percentage of disabled people who are in work and who are self-employed (15 per cent) is higher by about 2 per cent than is the case for people without disability [1] Self-employment provides an opportunity for disabled people to fit their personal needs around the demands of work and is particularly suitable for those who would be unable to sustain conventional working hours and shifts. There are those whose personal needs are such that self-employment is not an employment option it is the only option. However, moving from benefit dependence to self-employment is far more difficult than is the case for moving in to employment with a guaranteed salary at the end of the month.

  6.  The Government has already done much to encourage disabled people in to work. The 52 week rule allowing for a return to benefits if work cannot be sustained and the Disabled Persons' Tax Credit both help significantly. 'Mere is a need to ensure that reinstatement of benefits under the 52-week rule is swift and uncomplicated; anecdotal evidence suggests otherwise in some cases.

  7.  There remain a number of issues that affect the ability of organisations such as Northern Pinetree Trust to persuade clients to take the step from benefits to work. The basis of most of these issues is the baffler created by an individual's reluctance to leave the certainty of hard fought for benefits entitlement for the uncertainty of work. This barrier is heightened by the greater uncertainty surrounding self-employment.

  8.  The Department for Work and Pensions regularly produces statistics showing that the number of unemployed people in the North East (5.8 per cent for May 2001) is significantly higher than the national average (3.3 per cent). In South Tyneside the percentage in May 2001 was 9.6 per cent. A disabled person is about twice as likely to be unemployed as is a person without disability. Added to the official unemployment figures are a largely unquantified (but undoubtedly very large) number of people who are receiving a disability based benefit who would like to work.

  9.  The regional statistics about numbers of disabled people and those who say they would like to work imply that, if 15 per cent of disabled people in employment are self-employed, probably as many as 2000 disabled people in the region who are currently not in work may be suited to self-employment. The huge discrepancy between the modest number of disabled people currently engaged in self-employment programmes and the 2000+ who may be suitable can only partly be explained by the difficulty in engaging with people who are isolated from the world of work and do not necessarily recognise their true potential. Northern Pinetree Trust finds that, in spite of the Government's incentives mentioned in paragraph six and the New Deal for Self-Employment scheme, a significant number of clients who have the potential to staff a business fear the consequences of doing so. They have a few of failing to make a success of the business and of being even worse off than they are already.

  10.  A person entering self-employment faces a number of issues that do not arise when working for someone else. A business may be profitable from day one but them is no guarantee that payment will be made for work done at the end of each week or month. It is possible, when working for someone else, to grow in to the job and even to undertake a work trial. If a self-employed business is to survive it has to be nut properly from day one unless some means of transitional financial support is available during the first few difficult months.

  11.  Schemes exist where people can move from unemployment in to self-employment and retain job seekers allowance for up to three months after the business has started. These 'Enterprise Rehearsal' schemes, including the one operated by Inbiz as a part of the New Deal for Self-Employment programme in the North East have attracted disabled people, but not in significant numbers. There is clearly a need for incentives that persuade disabled people that they will be not be penalised for having a shot at self-employment and that they will be given support over sufficient a period to give their business idea a chance.

  12.  Northern Pinetree Trust believes that incentives can be introduced that would prove to be cost effective because they are mote to do with the way in which benefits are administered than they are to do with injecting additional financial resources. A proposal (enclosed) is currently with the Northern Disability Service of the Employment Service for consideration as a part of the New Deal Job Brokers scheme. There are two incentives within the Trust's proposals; the first is continued entitlement to disability related benefit and the second is a recognition that a disabled person may need more time to build up a business than would a person without a disability.

  13.  Northern Pinetree Trust believes that many commercial organisations that provide self-employment support are inevitably driven towards those with the greatest chance of success because of the need to work within tight funding regimes that are driven by results in terms of business starts. As a registered charity, the Trust is able to engage with those for whom success is far from certain. The suggested scheme should be open to all providers of support for disabled entrepreneurs. Northern Pinetree Trust is not seeking a ring fenced privileged scheme to gain advantage over other organisations.


  This is a scheme whereby people receiving non means tested benefits can trial their business idea for up to six months whilst still receiving their disability related benefits. The purpose of this trial period is twofold. Firstly, many long-term benefit dependent people will not risk their hard fought for benefit for the uncertainty of self-employment unless there are significant safeguards. Secondly the scheme provides a support mechanism during the first few mouths of trading when:

    —    The client is acclimatising to work, either never having worked or not having worked for some time and probably not since becoming disabled.

    —  The initial problems of cashflow are overcome. The business may be profitable from an early stage, but payment for work may not be received until two months afterward completion. Benefit dependent clients are unlikely to have significant savings upon which to survive.

    —  It can be determined whether the client can cope with work over an extended period.

    —  The viability of the business idea is put to the test.

Initial Assessment

  The Trust's one to one support is delivered in client's own homes at a pace that meets the personal needs of each client and takes account of the complexity of the business idea and the readiness of the client to run a business.

  A typical client will be visited twice in order that their suitability to move on to the initial Enterprise Training stage can be assessed. Each visit lasts for around two hours.

Enterprise Training

  This is the phase during which the business idea is turned into a business plan and preparations are made to launch the new business. There are ten modules to Enterprise Training as follows.

  Session 1  Business Description, Survival Budget, Curriculum Vitae, Personal and Business Objectives.

  Sessions 2, 3 and 4  Market Research, Customers, Suppliers.

  Session 5  Marketing Plan, Pricing Strategy, Insurance.

  Session 6  Premises, Equipment (owned and required).

  Sessions 7 and 8    Cashfiow, Profit and Loss, Balance Sheet, Financial Evaluation of the Business.

  Session 9  Bookkeeping, Taxation.

  Session 10  Review, Viability, Consideration of Enterprise Rehearsal Programme.

  Some clients complete all ten modules having received ten two-hour visits. There are those clients, however, who need significantly more support, Northern Pinetree Trust relies upon charitable donations to provide support for those clients whose needs Cannot reasonably be fitted into a time bound and cash limited training programme.

  The duration of this phase depends very much upon the progress clients can make between visits by the Business Counsellor, Some businesses need more detailed and, therefore, time consuming market research than others.

Enterprise. Rehearsal

  Prior to commencing Enterprise Rehearsal a client would establish a business bank account to which there are two signatories. Money generated by the business during Enterprise Rehearsal can only be used to meet legitimate business costs and the client withdraws no income for personal expenditure. The Trust's Business Counsellor countersigns all payments from the business bank account and ensures that only legitimate business expenses are covered.

  A Business Counsellor visits clients at least once each fortnight during Enterprise Rehearsal so that business activity can be matched to the approved business plan and cashflow checked to ensure that the business is meeting agreed targets.

  Any clients whose businesses are showing clear signs of failure during Enterprise Rehearsal will not be allowed to continue unless corrective action is possible. It is expected that very few businesses will fail at this stage, given the rigour that is applied to producing the business plans in the Enterprise Training phase.

  At the end of the Enterprise Rehearsal phase clients will make a final decision about the viability of their businesses. It is anticipated that failure to break free of benefit dependence at this stage will be minimal.

  The full Enterprise Rehearsal phase is proposed to last six months (26 weeks). Some clients will find that their business is generating significant income earlier than anticipated and the scheme will allow for clients to move into independent trading at any time up to 26 weeks.

  Andrew K. Hodson

  General Manager

  25 July 2001

1   Annual HM Govt Labour Market and Skills Trand Report. Back

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