By Max Clarke

The Government’s plans to create 40,000 new businesses through an expanded New Enterprise Allowance scheme announced this week has been welcomed by Enterprise UK, the campaigning charity that champions enterprise.

The scheme, first announced in October 2010 and due to be trialled this month in Merseyside, will provide support including funding of £2,000 over six months for would-be entrepreneurs, and will now be expanded to include the whole of the UK. However, there are a number of measures that the organisation’s CEO suggests could increase the initiative’s chances of success.

Tom Bewick, Chief Executive of Enterprise UK said: “The expansion of the scheme comes as welcome news. It means that more people out of work can take steps to make a job, rather than just take a job, and this could make a real difference in helping to kick-start the UK’s enterprise-led recovery.

“However it is important that the new scheme comes alongside additional support to improve the survival rates of these start-ups. We need more productive entrepreneurship in the UK - not just more start-ups.

“It will also be important to ensure that the scheme is promoted to those groups who might not traditionally consider entrepreneurship as a career choice for them such as women, young people and some ethnic minority groups who have not yet unleashed their full enterprise potential.

“Entrepreneurs need connections into the real world of enterprise, for example through networks and access to finance, and the new scheme must provide this.”

The original Enterprise Allowance scheme, established in the 1980s, has produced entrepreneurial alumni such as Alan McGee, founder of Creation Records, and Julian Dunkerton of the Superdry fashion label.