It’s been a day to forget for the ConDem government after David Cameron’s enterprise adviser Lord Young resigned after his outlandish claim that the British public “had never had it so good”.

The Tory peer said many people had benefited from low interest rates during the “so-called recession”. The Prime Minister refuted the claims, brandishing them “unacceptable”.

Labour leader, Ed Miliband, has welcomed the resignation, describing Lord Young’s comments as “disgraceful” and that his appointment as an adviser reflected badly on the Prime Minister.

Lord Young, an ex-cabinet minister, decided to step down following intense media scrutiny after he made remarks about the impact of the recession and future spending cuts.

Public comments on Sky News included: ”Lord Young is right in a way; after all, millions of council staff have not known that a recession had taken place.” On the flipside, one said: “A hefty public rebuke followed by his sacking is appropriate – not for saying it, as he believes it to be, but for being stupid and arrogant in the face of the disappointment of the majority in this nation.”

Shadow business secretary John Denham said Lord Young was completely “out of touch” with the day-to-day problems facing families and businesses, stressing his comments were “deeply insensitive”.

He told the BBC the affair “raises real questions about David Cameron’s judgement” in appointing someone with Lord Young’s views.

Before his resignation had been announced, David Cameron said his adviser would be doing “a bit less speaking” in the future.

“Obviously he is extremely embarrassed,” Mr Cameron said of the remarks during a visit to Cornwall. “He was very quick to retract completely what he said. It was unacceptable.”

Lord Young caused this controversy by telling a newspaper that the government’s spending cuts, totalling more than £80bn over four years, would just take state spending levels back to what they were in 2007 – a time, he said, when people were “not short of money”.

“Now, I don’t remember in ’07 being short of money or the government being short of money,” he said.

“So, you know, I have a feeling and a hope that when this goes through, people will wonder what all the fuss was about.

“Of course, there will be people who complain, but these are people who think they have a right for the state to support them.”