The government has announced that the New Enterprise Allowance scheme is to be expanded with the aim of creating up to 40,000 new businesses over the next two years.

Under the scheme, unemployed people who have been claiming Jobseeker’s Allowance (JSA) for more than six months and want to start their own business could receive a support package worth up to £2,000.

Entrepreneur James Caan of TV show Dragons’ Den has welcomed the move, commenting, ‘The decision is great news for budding entrepreneurs and an increase in start-up businesses will be good for jobs.’

But he adds, ‘In some ways it is a shame that this scheme is only available to people who have been unemployed for six months. There are many school and college leavers who would have benefited.’

The scheme provides people with access to a business mentor. If they can demonstrate that they have a viable business proposition they will be able to claim financial support.

The mentoring and loan elements of the Allowance will start this month in Merseyside, before roll-out of the full offer across the country from April.

Ceri Jones, head of policy at Social Enterprise Coalition, says the scheme is an opportunity for the Government to back the social enterprise sector and facilitate entrepreneurs to get together to form co-operatives.