Skills secretary John Denham has pledged 350 million of government funds to help small businesses train their staff.

This will finance training in business improvement techniques, leadership and management, which are proven to increase the productivity of individuals.

The new package will allow SMEs to have bite-sized chunks of training on team working, customer service and risk management.

Denham also proposes to extend the Department for Innovation, Universities and Skills' leadership and management programme to firms with as few as five members of staff.

He said: "Small businesses are an important engine of our economy and we must make sure we support them during tough economic times. We know firms that invest in skills do better than those that don't, which is why we will be urging small businesses to take up this offer from government."

The scheme will be accompanied by a communications campaign next month to underline the benefits to employers of upskilling and reskilling and demonstrate the breadth of support on offer from the Government.