If the Tories win the next general election, Osborne says the party will introduce the tax break for the first ten employees a new business hires during its first year, providing it launched in the first two years of a Conservative government.
Osborne says the scheme would encourage new entrepreneurs and generate around 60,000 new jobs by 2011.
He says: “This is just another example of the Conservatives being the party of jobs at a time when Labour are the party of mass unemployment.”
But Liberal Democrat Shadow Chancellor Vince Cable says: “The numbers Mr Osborne thinks this policy would help seem to have been plucked out of thin air.
“Many small businessmen will be shocked to learn that the Tories believe a start up business has a wage bill of a quarter of a million pounds.
“What is most worrying is that this tax break for new businesses would mean that they will be able to undercut existing small companies who are already struggling.”