The Conservative peer likened George Osborne to Mr Micawber in the Dickens novel David Copperfield, saying: "He's hoping something will turn up."

Lord Forsyth, who six years ago chaired Mr Osborne's Tax Reform Commission, also said: "We need to be rather more radical and that means tax reductions and finding ways to finance them."

The former Secretary of State said the UK Government should possibly look at deferring increases in overseas aid rather than cutting state benefits.

Commenting on the Chancellor's conference speech, he said: "What was lacking ... was any indication – other than the scheme for equity in small businesses – of how he's going to get small and medium-sized businesses roaring ahead again."

Lord Forsyth also questioned whether Mr Osborne's idea of giving workers shares in their company in return for giving up some employment rights would work.

He added: "I couldn't work out what problem he was trying to solve."