270 jobs to go as business support agency faces axe

The redundancies will come on top of the 125 already lost at the service, which was launched in 2008 at a cost of 35m a year.

Business Link Yorkshire employed a network of advisers, staged events across the region and ran a website offering advice to start-up businesses and small companies looking to expand.

The Government is scrapping all eight regional services in the UK after carrying out extensive research with users. A common complaint concerned the lack of real-life business experience by advisers who were actually civil servants.

Business Link Yorkshire has had other problems, as revealed by the Yorkshire Post last year, including concerns over its procurement process, a misfiring 1.4m computer system, fluctuating customer satisfaction levels, recruitment problems and changes to its senior management team.

Chairman Tony Pedder accepted that organisations like Business Link had critics but insisted the Yorkshire organisation "provided a lot of benefit to a lot of people".

He added: "It's important there is some support service which is accessible and available to people who want to develop their business or start up a new one. The most important thing is what follows on behind."

The Government plans to overhaul the Business Link website, which will be operated nationally and supported by a call centre.

A spokesman for the Department for Business, Innovation and Skills said: "The hope is the new website will have most of what people need, but if they cannot find what they need they can call the contract centre and get specialised advice."

In addition, the department is launching another website this summer, which is being paid for the British Bankers' Association and which will provide details of mentors in different regions and industries.

The BIS spokesman acknowledged it was essentially a volunteering scheme but said that

Ministers had been "encouraged because quite a lot of businesses have already shown an interest and are quite keen to provide mentors".

He added: "If you are a business in Rotherham, you can go online and find a mentor in your area or sector who can then give you advice. That's based on a lot of feedback that businesses and entrepreneurs value advice from other business people more than paid civil servants. Everyone who is a mentor will be working in business.

"Some of the criticism before was that some of the people who worked in Business Link before were not actually business people – they were public servants. We want to move to a new approach where people giving advice are business people themselves."

Some have questioned whether the new system will work, however. One senior local government figure, who did not wish to be named, said: "I'm quite worried that a lot of the future landscape seems to be based on the assumption that you can provide business mentoring through a volunteer scheme.

"There's not going to be any paid-for or subsidised mentoring advice.

"It's a gamble whether they can get enough business people to give up the time at this stage in the economic cycle when they are focusing on their own businesses as we come out of recession. It's quite an ambitious ask."

Yorkshire Forward, the regional development agency, is providing 5.5m in funding to keep Business Link Yorkshire running until November 25.

Simon Hill, executive director of business, said: "We have a clear task ahead of us, which is to continue to deliver excellent service until November and then pass as many customers and clients as we can on to the new organisation so they can get seamless support, whether that is private sector provision or from the centralised call centre operation."

Yorkshire Forward is itself facing the axe and will be wound down next year.

The organisation was set up by New Labour in 1999 and spent more than 2bn in the name of economic development over the course of its lifespan, yet was blamed by the Conservatives for failing to bridge the North-South divide.

It is expected to announce another round of redundancies later this month.

Chairman fought to win extension

BUsiness Link Yorkshire was originally to have closed this March but its chairman successfully lobbied the Government to extend its life.

Y&H IDB, the company that runs the service, won a three-year contract in 2008, with an option to extend by two years.

But last March, Yorkshire Forward, its parent organisation, decided to extend the contract by just one year following criticism of the service.

This left Business Link Yorkshire facing a short-term threat to its existence after the coalition Government decided to axe the service.

Chairman Tony Pedder said: "We were bashing pretty hard to make sure Yorkshire was not disadvantaged, with a lot of support from Yorkshire Forward."