School-leaver entrepreneurs to be offered 'Dragon's Den loans'

By Robert Watts, Deputy Political Editor

 

 

Lord Young, Downing Street’s enterprise adviser, is consulting with business groups and entrepreneurs on creating a fund worth tens of millions of pounds, to allow young people to borrow thousands of pounds to get their ventures up and running.

 

Like the BBC television series, Dragons’ Den, participants will have to submit a cogent business model to win funding. The scheme will harness the expertise of successful entrepreneurs, rather than civil servants, to judge which candidates deserve the loans. A senior Cabinet source suggested that the policy will “probably” be ready in time for the Budget on March 21.

 

Those who win access to the funding under the scheme will pay back the money after their earnings reach a certain level. It is understood the funding will pay for both start-up expenses and a modest amount of living costs.

 

Ministers are known to feel it is “bizarre” that some 18 year-olds can borrow tens of thousands of pounds to study degrees that can be of dubious commercial value, while a young person with a brilliant business idea can fail to win a smaller amount of funding to launch their start-up.

 

Joblessness amongst 16 to 24 year-olds recently rose above one million for the first time in 20 years, while several of the Government’s schemes to get young people into work have been criticised.

 

John Longworth, the director general of the British Chamber of Commerce, said the scheme could make a “real difference”. “Access to start-up finance is one of the major obstacles young people face when starting a business,” he said.

 

The scheme comes after a recent study by Hiscox, the insurance company, found that half of new graduates were considering launching their own companies, but that many young people often lack the savings, experience or confidence to go it alone.

 

The policy will be similar to a scheme promoted by Start-Up Britain, a campaign backed by companies such as Axa, Dell, Intel and PayPal, which provides free help to people starting their own business.

 

Emma Jones, the chief executive of Start-Up Britain, said she was “closely involved” with Lord’s Young scheme, but declined to comment on the policy this weekend. A Whitehall source said that the scheme would be supervised by the Treasury, rather than the Student Loans Company.