SIR Tom Hunter said he made a huge mistake investing in housebuilders at the tail end of the last boom but remains keen on property amid tough times for many in the sector.

The serial entrepreneur also renewed criticism of George Osborne's austerity policies, which he claimed were stifling growth in the UK.

Sir Tom gave a candid assessment of the mistakes made by his West Coast Capital private equity business. This suffered big losses on its investments in some house builders after the market crashed in 2008.

Formed to help Sir Tom invest some of the £290 million proceeds of the sale of Sports Division to JJB in 1998, West Coast bought stakes in McCarthy & Stone and Crest Nicolson in buyouts that valued them at £1.8 billion in total. These were completed in 2006 and 2007 respectively.

Lenders took control of both firms in 2009.

Sir Tom said: "We made huge mistakes. Our mistake was we lost our focus and we began to get into things that we were not focused on, sectors that we did not quite understand and that was totally my mistake."

He added: "When we got into the housebuilding sector the strategy was correct but the timing was completely wrong – we actually could not have picked the top of the market better."

Sir Tom leapt to the defence of Peter Cummings, the former head of corporate banking at HBOS, which provided debt for deals struck by West Coast.

Mr Cummings, from Dumbarton, West Dunbartonshire, is the only top UK banker to be sanctioned following the bank's downfall during the financial crisis of 2008.

Asked if he thought Mr Cummings was unfairly treated, Sir Tom said: "Absolutely. I'm not a fair weather friend and Peter after his troubles is a trustee of the (Hunter) Foundation and is a trustee of my kids' trust.

"He is one of life's great human beings and when he was solely carrying the burden of HBOS it was completely unfair."

Sir Tom said Mr Cummings was hardly mentioned in a Parliamentary report on HBOS last month.

This said primary responsibility for the downfall of HBOS should rest with former chairman Lord Stevenson and former chief executives James Crosby and Andy Hornby.

After dealing with the fall out from the credit crunch and the ensuing recession, West Coast Capital is in good shape.

The private equity operation has made big gains on the sale of investments in businesses like the PSN oil services group and the office shoe store chain in recent years.

"We have dealt with our distress and actually became quite good at it," said Sir Tom. "We are building a team and we are dealing in distress, other people's distress."

He said that property and e-commerce remain key areas of focus for West Coast.

Noting conditions are hard for many consumers, Sir Tom said the austerity policies pursued by George Osborne were hindering the recovery in the UK. Critics of the Coalition claim spending cuts are stifling demand.

"Of course we've got to cut the deficit but the only way we can get out of the mess we're in is by trading our way out of it. Cuts will take us a certain percentage of the way but it's minuscule compared to a growing economy, growing tax receipts and money flowing to the Exchequer."

Sir Tom told the EngageInvestExploit conference of investors and entrepreneurial companies in Edinburgh that there are great opportunities for people to grow successful firms in Scotland during a period of rapid change around the world.

Sir Tom said: "Scotland is on the cusp of getting the environment to be right for start ups, with a "fantastic support network".

He praised the Scottish Government for listening to the needs of business and responding with initiatives like the £2m Edge fund for entrepreneurial firms.

Asked how Scotland becoming independent might change things, he said: "We deserve a better debate than we've had."