On 5 October the Secretary of State (Iain Duncan Smith's) announced that the Government will give extra help to unemployed people who want to start their own business through the New Enterprise Allowance. Initially the Allowance will be available in those areas likely to particularly benefit from an increase in the share of private sector employment.

The Allowance will be available to Jobseekers Allowance (JSA) customers who have been claiming JSA for more than 6 months.

Customers will get access to a business mentor who will provide guidance and support as they develop their business idea and through the early stages of trading. Once a customer can demonstrate they have a viable business proposition with growth potential they will be able to claim financial support which will consist of a weekly allowance payable at a level broadly equivalent to their JSA payments for 3 months, and then at half that rate for a further 3 months. And if they need start-up capital, they may also be able to access a loan up to £1,000 to help with their start-up costs.

The total package of support could be worth around £2,000 to each unemployed person who wants to start their own business.

We intend to trailblaze elements of the new offer starting in Merseyside from January, before rolling out the full New Enterprise Allowance into the remaining target areas from April and then nationally from autumn this year.

In order to claim the allowance they will need to develop a business plan, and secure the agreement of their proposed mentor that it is viable.

The Government has today also announced significant changes to the way information, guidance and advice to business is provided with more focus on improving small business performance and growth and a greater emphasis on further and better private sector provision.

The prime minister (David Cameron) said New Enterprise Allowance projects, offering start-up loans and weekly allowances, could create 40,000 businesses by 2013.

This scheme will be available in England, Wales and Scotland in 2011.

For more information on New Enterprise Allowance scheme visit www.businesslink.gov.uk.

For detailed information and advice on starting a business, see our section on starting up.