The government needs to “get out of the way” and let entrepreneurs create the jobs the UK needs, according to serial entrepreneur and non-executive director of InterQuest Group, Luke Johnson.

Speaking at the launch of The Entrepreneurship Report to highlight the vital role of entrepreneurs in the UK economy, Johnson, best known for his involvement in Pizza Express in the 1990s, said that government “is not the solution”. “What the government needs to do is to get out of the way and allow individuals to innovate and create new companies.

“Jobs are the collateral damage of building a business - this is what people forget. And if government regulates so that employing people is an onerous burden, entrepreneurs will find ways around it, for example by outsourcing or using machines,” he warned.

Johnson said that all the research showed that it is new businesses and those in their early stages rather than mature companies that create jobs.

The single most important measure the government could introduce was deregulation of the labour market and employment laws, he said. He suggested that deregulation for businesses employing fewer than 100 staff would have a dramatic impact on job creation.

“We must make the jobs market a hell of a lot more flexible because that is the only way to create jobs,” he added.

Don Leslie, a director of indirect tax, management consultancy and company secretarial recruiter Beament Leslie Thomas, who attended the launch of the report, told <I>Recruiter</I> that the government needed to make it easier for small businesses to hire staff.

“The best thing would be to create some sort of concesion for small companies not to have to pay employers’ National Insurance,” he suggested. Employers’ NI was one of the “hidden costs” of employing staff, and its removal would help create new jobs, he said.

Johnson suggested that the government should make it easier for new commercial banks to be created. Many of the UK’s existing banks weren’t serving entrepreneurs’ needs, he said.

This is borne out by findings in The Entrepreneurship Report, co-produced by the London Chamber of Commerce and Industry and law firm Mishcon de Reya. Based on a survey of 170 London entrepreneurs, it found that accessing finance was entrepreneurs’ biggest anxiety.