Mention the Enterprise Investment Scheme (EIS) to an entrepreneur and they are likely to walk in the opposite direction. The scheme does, however, have merits. It was set up by the government to encourage high-net worth individuals to put money into fast-growth businesses by offering tax breaks.

Back in March this year, a consultation document was published by HM Treasury and HM Revenue and Customs to find out if more could be done to increase the scheme’s accessibility to both investors and companies.

The Enterprise Investment Scheme Association, the official lobbying body for EIS, had two principal recommendations: a national campaign to promote the scheme and a radical reduction in the red tape that has increasingly stifled it. The Association drew attention to the £2 million cap in investment, imposed in April 2007 courtesy of the European Union.

Such restrictions to EIS, alongside the changes to venture capital trusts give you a definite sense that for all the talk in higher circles about the government encouraging an enterprise economy, the weight of legislation is serving to restrict rather than drive growth.

Research by the British Venture Capital Association shows that UK private equity (excluding VCTs) delivered an average of 18.7 per cent per annum internal rate of return over the past ten years. Analysis by accountancy firm UHY Hacker Young reveals that the IRR for VCTs has been running at around 2.1 per cent for a similar period.

A study by the HMRC in 2003 discovered that 22 per cent of EIS investors in its sample had lost all or most of their money, ten per cent lost part, 20 per cent made a modest profit and 18 per cent a substantial profit. Now for EIS, given that investors are opting for high-risk bets, that isn’t too bad.

However, that research was done five years ago and there seems to be an air of genuine frustration among entrepreneurs about how the UK currently shackles ambition. It may be time for a rethink about the merits of the government-backed schemes now in place and how we are encouraging individuals at the coal-face of commerce to continue taking risks.