Image caption Lord Young is also advising the government on reforms to health and safety legislation

David Cameron has appointed former Cabinet minister Lord Young as his enterprise tsar with a remit to cut red tape for small business.

Downing Street says the Conservative peer will carry out a "brutally honest" review of strategies designed to encourage new start-ups.

Mr Cameron said he wanted "nothing less than a wholesale change in attitude" from government towards small business.

Lord Young replaces Lord Sugar, who was named enterprise tsar by Gordon Brown.

The Apprentice star was fired by Mr Cameron when the coalition government took office in May.

'Make life easier'

Lord Young, who served as trade secretary under Margaret Thatcher, will juggle the unpaid enterprise post with his other role as the PM's adviser on health and safety.

His review of enterprise policy will aim to:

Minimise the "bureaucratic burdens" which increase costs and hassle

Identify ways that government departments can help ensure firms have access to sufficient finance

Encourage people to start businesses rather than seek jobs as employees

Improve the way government listens to the views of small and medium-sized enterprises when designing policy

One of the areas Lord Young will be looking at is the case for extending the period of time an employee must have worked for a small company before they can bring a claim for unfair dismissal - currently a year.

"Back in the 1980s when we did that, the result was that employment started shooting up again," he told BBC Radio 4's Today.

"I want to find out what small business people themselves think about this and then we'll think about it."

But he said he was sceptical about calls to scrap the five-day target for government departments to settle bills with small suppliers.

In a recent review of waste in government, top businessman Sir Philip Green questioned the need for such a target - introduced by the last Labour administration - saying it added hugely to the costs of government transactions.

'Passion for business'

Lord Young said he would need to consult on the issue but his initial thinking was that such a step would be counter-productive.

"The government could use its power and could squeeze small businesses and get some cash in and we would end up with no businesses," Lord Young said. "That's not what government's about."

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He said there was "no confusion" between him and Sir Philip over the issue.

"What Philip Green has said is that if you are running a business, for heaven's sake make use of all the capital that you have. Now we are not running a business, we are running a country and it is in the government's interest to see prosperous small firms."

Mr Cameron said Lord Young would bring "his own passion for business and a wealth of experience to the role".

As small and medium-sized businesses provided 60% of the UK's jobs, and accounted for half the country's economic output, encouraging their growth was crucial to sustaining the economic recovery, he added.

With significant cuts planned for the public sector and up to 500,000 jobs set to be lost, the government is hoping the private sector will expand and create new employment.

But Labour says the government has "no plan for growth" and is cutting support for regional economic development and allowances for manufacturing firms investing in machinery.