THOUSANDS of workers laid off during the economic downturn are leading a boom in small businesses set up from home, often backed by cash from their redundancy settlements.

The prospect of employees starting out again as their own bosses is thought to be partly responsible for an 11,295 rise in small, one-person firms, often people armed only with the internet, in the past year.

Many of those who have been laid off have used their pay-offs to set up new careers on their own using their home addresses as their business premises.

The Scottish Government’s corporate sector statistics revealed yesterday the number of small firms, with an annual turnover below the VAT threshold and no employees, is up 7.8%. The Office for National Statistics (ONS) recently found London and Scotland are the only parts of the UK not to see a decline in the number of small firms.

It came as official statistics revealed yesterday that unemployment in Scotland rose by 7000 to 212,000 and employment numbers fell by 24,000 between June and August.

While the figures for Jobseeker’s Allowance claimants dropped across the board for men, women and young people in Scotland, they were still well up on a year ago. Scotland continues to outperform the rest of the UK with an unemployment rate of 7.9% compared to the UK average of 8.1%.

But David Cameron accepted that the UK Government had “to do more” to revive Britain’s ailing economy as unemployment shot up by 114,000 to 2.57 million in the quarter to August -- the worst level for 17 years.

However, as the jobless rate for young people reached perilously close to the one million mark at 991,000 and breached that figure for women, the Prime Minister insisted that to abandon the Coalition’s austerity programme now would send the economy “into a tailspin”.

Other UK figures from the ONS showed Jobseeker’s Allowance claimants rose for the seventh month in a row to 1.6 million, while the number of those in work slumped by 178,000, the biggest fall in more than two years.

A spokesman for the Federation of Small Businesses in Scotland (FSB) said of the rise in one-person start-ups: “People go into business for a myriad of reasons but they are most likely to go into business in an industry that they have worked in previously.

“They’ve maybe worked in the same field for a number of years, they’ve got the contacts, they know the industry and they have the experience and they start to think ‘why am I doing this for somebody else?’

“But the reality is that we all need a bit of encouragement to take that plunge and often it can be when people are made redundant they think ‘right, I’m going to try to do this on my own’.

“However, it can be a bit simplistic to say that that’s the only reason for the increase. People still need the right skills and experience, as well as support, to get there.”

It said the big challenge now is to get more of these small businesses employing people.

On unemployment, First Minister Alex Salmond claimed the statistics reinforced the Scottish Government’s demand that the UK Government implement a “Plan MacB” to ensure any recovery was “not derailed by Westminster’s wrong-headed economic policy”.

Michael Moore, the Scottish Secretary, described the figures as a “cause for concern”. He insisted the cuts programme was “the right one, particularly when we see the way difficult economic circumstances are affecting other countries”.

Unison urged the Scottish Government to use its powers to boost the economy, saying the Nationalist administration was too focused on cutting taxes to create more jobs while what was needed was a “fairer” property-based tax to fund local services.

At Westminster, there was a robust clash between Mr Cameron and Ed Miliband. After the Labour leader insisted the Coalition’s austerity drive was “not working”, the Prime Minister told MPs: “I accept we have got to do more to get our economy moving, to get jobs for our people, but we mustn’t abandon the plan that has given us record low interest rates.”

FSB Scottish policy convener Andy Willox said: “Today’s statistics underline that Scottish small businesses are more important to our economy and sustained recovery than ever before.

“However, we must not rest on our laurels. With unemployment remaining a major threat to our communities and economy, we need to help as many of these single-member enterprises as possible to move to the next level and take on their first member of staff.”