The North East has had historically low levels of business creation compared to other regions.  There are a number of barriers responsible for the low figures including a lack of knowledge, where people do not know where to find the necessary information on how to start a business; they might not have access to the right networks which could provide advice or funding, or they may lack the required skills, expertise or enterprise to start a business which will be able to compete and survive.  These barriers can be especially prevalent within deprived communities or amongst under-represented groups.

Bearing in mind the differing barriers to business creation, efforts must be made to address each one specifically, focussing resources on areas most in need. One NorthEast aims to create an additional 22,000 VAT registered businesses in the North East in the next 10 years. Indeed towards the end of his tenure as Chancellor of the Exchequer, Gordon Brown said "Britain has to take tough decisions to achieve American levels of business creation"

Promoting a culture of enterprise will be key to achieving these ambitious goals.  Enterprising activity is being promoted in primary and secondary schools, where different schemes are being implemented in order to encourage entrepreneurial thinking at a young age.  Connections between business and education are also vital, in the form of graduate programmes or through representatives doing activities in schools.  Through initiatives like these, enterprise can be encouraged, students can learn about industries they may wish to enter and bring new ideas to, and inevitably more businesses will be created.

The Government’s enterprise objective is based an equality. Levels of enterprise in the most deprived places are significantly and persistently lower than in more affluent areas, with self-employment half the rate of England as a whole.  The Department for Business, Enterprise & Regulatory Reform (formerly the DTI) is looking to address issues like these through a scheme of local community based business coaches, offering support before, during and after the start-up process, making self-employment an attractive option and encouraging talented innovative individuals to remain in the region.

Fact File

• 32,000 additional businesses would be required for the North East to reach the current national rate of businesses per 10,000 population.

 • 12.6% of people employed in the UK are self-employed, but in the North East the figure is only 8.3%.

 • England and Wales has an average start-up rate of around 12 per 100,000 residents, whereas the North East has only 7 per 100,000

 • Certain groups suffer from under-representation amongst business start-ups – only 17% of businesses are run predominantly by women and only 7% by people from ethnic backgrounds.

 • 26% of new businesses had not sought advice from anybody before starting up, and a further 22% had consulted only their friends, family or informal contacts.