Exclusive: Scheme to create thousands of mentors to help businesses

Starting next month, the initiative is a key element of the coalition’s drive to support private sector growth as the state sheds hundreds of thousands of jobs over the coming years.

Ministers believe that businesses that use external advisers are much more likely to grow than those that do not and are betting that the scheme will produce better results than Business Link Yorkshire, the soon to be scrapped, taxpayer-funded service which cost £35m a year.

Mr Prisk told the Yorkshire Post that the Government has backing from mentoring groups, business groups and businesses, including large corporates, “who are offering what we think is up to 40,000 potential business mentors and these are real business people, currently in business, willing to give of their time”.

He said: “What most people are looking for in business advice is someone who’s been there and done it, who’s able to take them over that next hurdle.”

He would not commit to numbers, but said: “The overall number is up to 40,000 within 12 months. You will have a significant proportion of that.”

A spokesman for the Department for Business, Innovation and Skills added some would come from an existing scheme run by the British Bankers’ Association, while others would be supplied by the voluntary mentoring organisation, Horsesmouth.co.uk.

The spokesman said the rest would come “from all over the place”. He added: “The idea is once they are up and running we will be encouraging anyone who feels they are suitable to do this if they want to get involved.”

The mentoring scheme is being established alongside a new national website providing advice to new and growing businesses, which will use the best parts from the nine regional Business Link sites.

Mr Prisk said the first phase of the new website will be online from autumn. The Government will also be providing a national call centre for the 24 per cent of businesses that do not have internet access, he added. Access to finance remains a critical issue for many Yorkshire owner managers who feel that despite protestations, banks are still behaving unreasonably. Recent Bank of England figures confirmed that lending to SMEs contracted in the first quarter.

Mr Prisk said his Government has pushed banks to increase lending, but the key will be to ensure more competition in the banking sector.

He said: “The problem now is most businesses have four banks to choose from. That’s not a functional market. What we are focused on, through the Independent Commission on Banking, is saying let’s see how we can bring in new entrants, shake out the market, so people actually have a choice. In any marketplace, the key is choice. If suppliers dominate, you go on having the dysfunctional problems we have at the moment.”

The ICB recommended in its interim report that Lloyds Banking Group dispose of between 600-1,000 branches to improve competition.

Mr Prisk said: “What they are looking at doing will be quicker than some people thought of initially, which is instead of simply going down the road of trying to license new entrants into the market, is actually looking at how you strip down some of the existing players who have very large, some might say cumbersome, networks, so that you have different entities and then you get much more competition.”

Mr Prisk added: “I would like to feel that small businesses have six, seven, eight, nine people to choose from, including online banking, because then suddenly what you will get are people seeking their business – that’s what will help.”

In defence of regional strategy

The minister for business and enterprise has admitted Government failings in the way it has communicated its economic strategy for the regions.

But Mark Prisk has defended the coalition’s overall approach, which he says trusts local business and civic leaders to set their own priorities.

One of the year-old Government’s first acts was to announce the abolition of Yorkshire Forward, the £330m-a-year regional development agency, and the creation of local enterprise partnerships, which have little or no direct funding or legal power.

He told the Yorkshire Post: “I fully accept what you are saying that there have been a string of bright ideas and no-one has actually put a thread through them to say this is how they all work together, but essentially what we would argue is on a national level, [we have] proper leadership in things like sector leadership, trade and investment and at a sub-national, regional level, substantial city partnerships.”

Mr Prisk said the 10 new UK enterprise zones, which will offer tax breaks and reduced planning restrictions in cities like Leeds and Sheffield, would