The heart of the British economy is seldom to be found in big corporate headquarters or big factories. It’s to be found in small industrial estates or under railway arches, up and down the country. It’s to be found at the desk in a spare room or around the kitchen table where the business of tomorrow is born. In the past 10 years that heart has all too often been forgotten.

From the prime minister downwards, our nation persuaded itself that an artificial boom was a real one. We dined out on cheap imports, rising house prices, low energy prices, and on a culture of debt and high public spending driven by Gordon Brown.

The government piled new taxes and regulations onto business, not understanding the damage this would do to competitiveness, and in bad times even to the survival of many firms. Jobs seemed plentiful, even though the influx of millions of migrant workers at a time when millions of Britons lived on benefits seemed inexplicable. But the world has now changed. The things that created that boom are gone. Businesses are now struggling. Britain is nowhere near the top of the international league table as a place to do business.

Manufacturing employment has fallen by a third since Labour came to power. By contrast public sector employment is up by a fifth. Big companies are moving headquarters overseas to avoid our tax regime. Our health and safety industry is now bigger than our nuclear industry.

If Britain is to have a prosperous future – if we are to create sustainable employment – then things have to change. The government has to stop making it more difficult to run a business and take on staff. That’s the only way to create wealth and jobs.

We have to become a more dynamic, business-friendly economy, with a greater focus on technology and innovation. We should champion our entrepreneurs and get rid of the mounds of red tape that make it so difficult to run a small business. We should invest in skills that can help people build lasting careers, and in the infrastructure that business needs, such as building a high-speed rail network. We have to reverse the decline in manufacturing employment; services alone can never be enough.

We need to become an entrepreneurial country again. There is no other way to create the jobs we need. There’s one way we can make an early start. Accelerating welfare reform is essential if we are to tackle rising unemployment, by improving back-to-work support for those who lose their jobs. But many of those who are made redundant can go on to build new businesses.

The government provides some limited support for people who are unemployed to start businesses; but that support does not go nearly far enough. Other countries, such as Canada, have had much more success in creating new businesses through welfare-to-work programmes.

What we want to see is self-employment set at the heart of the reforms to our welfare-to-work process, which both we and the government are now agreed on. We want a programme that empowers an army of “job makers” for the future, that helps create 20,000 new businesses a year and with them many thousands more new jobs.

The programme would help people who have been made redundant and have been out of work for six months and have a clear idea for a business. They would get Dragons’ Den-style support from private sector specialists, helping assess ideas, offering advice on market research, business planning and how to get things going. Those specialists would be paid for that support when the business was established and the claimant was no longer dependent on benefits.

The entrepreneurs would continue to receive jobseeker’s allowance for up to six months while getting their business off the ground. It takes that long to do your first deal and get the money paid.

Every business start-up has a cost, and if you’re on the dole you can’t easily afford to buy basic equipment. At the moment the only start-up cash available from the “new deal” for unemployed people trying to start a business is £400. We don’t think that’s nearly enough, so we’ll give the business start-up specialists the ability to fund costs of up to £2,500, and then reclaim the money from the benefits saved once the business is up and running.

We know many people are in danger of being made redundant in the months ahead, but we also know that many of those people are the ones who can help rebuild jobs for the future. We need to give them that opportunity.

It is not governments that create wealth and jobs; it is the army of entrepreneurs and innovators who turn good ideas into business success. It is they, not ministers, who will get our country on the road again. We need to do everything possible to start them off.

Chris Grayling is shadow work and pensions secretary