HL Deb 18 May 1998 vol 589 cc1276-8

2.54 p.m.

Lord Randall of St. Budeaux

asked Her Majesty's Government:

What plans they have to encourage the development of mentoring services for new small businesses.

Lord Haskel

My Lords, the Government believe that mentoring can play a useful part in improving the competitiveness of UK business. Together with the DTI and private sector support, mentoring and small and medium enterprise group networking is being piloted through Business Links in the form of the Business Bridge programme. Mentoring also takes place in business clubs and other networks, and early indications are that the impact of Business Bridge on small and medium size enterprises is encouraging. Perhaps I may take this opportunity to thank those experienced businessmen who give their time so generously to these schemes.

Lord Randall of St. Budeaux

My Lords, I thank my noble friend for that Answer. Does he not agree that experience from the Prince's Trust and other organisations shows enormous benefits to small businesses in terms of both their productivity and their survival? Does he not agree that the Government should get moving and go beyond pilot schemes and encourage the establishment of universal mentoring services in the United Kingdom? In providing such services, should the Government not give serious consideration to exploiting the large pool of experience to he found in business people?

Lord Haskel

My Lords, my noble friend makes a very good point at the end of his question, and I think he makes it in an appropriate place. There is already a good deal of local mentoring activity within the business support community involving retired people working with fledgling businesses. Yes, the Prince's Youth Business Trust uses a wide range of local people to act as business advisers, or mentors, many of whom are retired. There are, as well, business angels, whom one could perhaps describe as mentors with money. They are often retired business people. I see the Government's role as helping to facilitate such good practice rather than setting up a new national scheme, which might adversely affect the flexibility or focus of existing local activity.

Lord Mason of Barnsley

My Lords, is my noble friend aware that a national mentoring service exists within the Prince's Youth Business Trust? That is why the PYBT is so successful. Mentors and advisers have been established for the past 11 years. Every time the Prince's Youth Business Trust launches a new business, that business has an adviser or a mentor attached to it. That is why 65 per cent. of the businesses that have beer, launched are still trading after more than three years. Soon the PYBT will be linked to the Government under the New Deal and all that experience will be available to the Government.

Lord Haskel

My Lords, I thank my noble friend for his comment. I agree with him entirely. A depressingly high percentage of small businesses fail to survive for more than three years, but, as my noble friend said, the percentage of businesses operating under the Prince's Youth Business Trust which survive for more than three years is considerably higher.

Baroness Miller of Hendon

My Lords, can the Minister tell us what advice the Government would give to these mentoring services, organisations or retired business people to help them to advise the many small family businesses in this country, particularly in the retail area, which have built their success on the help of the family and which now, because the Government are refusing to exempt spouses, families and so on, from the national minimum wage will face bankruptcy rather than having the support and success they have had in the past?

Lord Haskel

My Lords, I do not agree with the noble Baroness. I believe that the national minimum wage will help small businesses, including small family businesses. I believe they will find that the introduction of the national minimum wage will bring their operations on to a more businesslike basis.

Lord Weatherill

My Lords, as a trustee of the Prince's Youth Business Trust, I thank the noble Lords, Lord Randall, and Lord Mason, for mentioning the PYBT. It may be of interest to the House to know that these businesses are set up for an average of £2,500, which is infinitely less than the cost of keeping a person on the unemployment register.

Lord Haskel

My Lords, the Government are well aware of the success of the Prince's Youth Business Trust in establishing businesses on a very small amount of money. We congratulate the trust on its work.

Lord Peyton of Yeovil

My Lords, I thought I heard the noble Lord say that he thought the national minimum wage would help small businesses. Will he be kind enough to shed a little light on that and say how he thinks it will happen?

Lord Haskel

My Lords, I had in mind the fact that in many cases small businesses do not invest in new machinery and new technology because they can pay people much lower wages. If employers pay a better wage, investment in the company is often increased and the prosperity of the business increases.

Lord Marsh

My Lords, will the Minister elucidate on that response? Does he mean that the higher the level of the minimum wage, the more efficient small businesses will become?

Lord Haskel

My Lords, I mean that if the minimum wage is at a reasonable level, firms will be encouraged to invest.

Lord Waddington

My Lords, is the noble Lord saying that if an employer has to pay more in wages, he will shed labour and go for new technology, thus being able to operate with fewer employees?

Lord Haskel

My Lords, I am afraid that that is the way of business today. Increased productivity often means more investment and fewer people.

Lord Davies of Coity

My Lords, does my noble friend agree that, with the introduction of the national minimum wage, employers who at the moment provide no training for employees will in future do so? That will make the employees more effective and thereby improve the prosperity of the company.

Lord Haskel

My Lords, I thank my noble friend for making that point. I entirely agree with him. He is absolutely right.

Lord Campbell of Alloway

My Lords, can the Minister say, in plain English, what is the meaning of "mentoring services"? If he does not know, how can he answer any of these questions?

Lord Haskel

My Lords, the meaning of "mentoring services" is clear. The idea is that experienced men and women will help small or new businesses to overcome the errors that they themselves made in their earlier experience.