Small businesses in Wales could see their productivity boosted, thanks to a new fund aimed at developing better leadership and entrepreneurial skills.

The scheme, part of the UK Futures Programme and run by the UK Commission for Employment and Skills (UKCES), seeks to address the “productivity gap” between Wales, the UK and other developed nations.

UK productivity levels are nearly 20 per cent lower than the average for other advanced economies, according to the latest figures.

In Wales, the average yearly output for each worker is an additional 29 per cent lower than the UK average.

The gap leaves Wales lagging badly behind other economies in terms of competitiveness, earnings and the potential to generate higher economic growth.

UKCES is looking for bids from “anchor” institutions, such as universities, colleges, chambers of commerce, banks and major employers, with a strong local presence which can make “a strategic contribution” to the Welsh economy by supporting small firms develop.

The UK Futures Programme is trialling new techniques and projects to address long-standing skills issues, with each project funded to run for a maximum of 12 months, starting in August 2015.

Proposals must be joint investments, with organisations investing in cash, in-kind, or both, alongside a maximum government contribution of £200,000 per project. The total fund available is £1.5 million.

Julie Kenny CBE DL, founder of Pyronix Ltd and a UKCES commissioner, said: “Britain is falling behind the rest of the world in terms of productivity, meaning we are working more but producing less.

“Small businesses are the backbone of our economy, but current figures indicate that only a third of small firms provide any management training, compared to nearly three-quarters of larger firms.”