UK Politics

Tory conference: Start-up scheme 'ridiculously generous'

Lord Young
Image caption Lord Young is an economic adviser to David Cameron

A senior adviser to the prime minister has criticised a government scheme aimed at encouraging investment in small start-up businesses.

Lord Young described the Seed Enterprise Investment scheme as "ridiculously generous".

Downing Street said he was promoting the scheme to investors by describing it in this way and not criticising it.

The peer said it was possible for some venture capitalists to get 78% tax relief on their investment.

Lord Young was speaking at a Conservative Policy Forum fringe meeting at the Tory conference in Birmingham.

Seed Enterprise Investment Schemes were announced in Chancellor George Osborne's 2011 budget and came into law earlier this year as part of the 2012 Finance Bill.

The scheme is designed to encourage investment in small, high risk start-up companies.

Lord Young, who was a cabinet minister under Margaret Thatcher and who now acts as an economic adviser to David Cameron, also said the future UK economy would require "very many more small businesses".

Large scale manufacturing did have a future in the UK, he told the meeting, but it would "do little" to employ people.

It was government's job to "stand back" and "let people get on with it," he added.

Lord Young was forced to quit as Mr Cameron's "enterprise czar" in 2010 after suggesting people had "never had it so good". He was later re-appointed by the prime minister.

In his conference fringe speech on Sunday evening, the Tory grandee denied believing the recession was exaggerated but confessed that he did not understand what was happening to the British economy.

"I've just never known these circumstances before. We will just have to see. I'm looking for the explanation.

"At the beginning economists said it was because firms were getting less efficient, they are employing more people to produce less, but I don't go for that one.

"I would just like to know what the explanation is."

He also said the number of hours worked by Britons had halved during his lifetime.

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