Member Article

FSB calls on Government to re-focus its policy for the smallest firms

Small firms would employ new staff if the Government reduced National Insurance Contributions (NICs), new figures from the Federation of Small Businesses (FSB) confirm.

The FSB’s ‘Voice of Small Business’ survey, with more than 1,700 respondents, showed that insufficient work and uncertainty over contracts (37%), the state of the economy (33%), cash-flow (31%) and access to finance as well as the cost of credit (16%) are preventing them from employing.

With 2.46 million people out of work, the FSB believes that it is crucial that the Government provides incentives to help small businesses to take on staff and tackle unemployment.

According to the survey, ensuring invoices are paid within 20 days would encourage 17 per cent of small businesses to take on staff.

John Walker, National Chairman, Federation of Small Businesses, said: “We have been saying for some time that small businesses would be encouraged to take on staff if National Insurance Contributions were reduced. Small businesses want to employ but have told us that they need incentives to do so.

“The Government must extend the National Insurance Contributions holiday to existing businesses if small firms are to take on new staff and so help tackle high unemployment.”

Most significantly, nearly a third (31%) of respondents said that reducing NICs payments for the first six months of employment would encourage them to take on more staff, and 11 per cent said extending the NICs holiday scheme would be an incentive.

The Government introduced a NICs holiday for start-ups that take on up to 10 employees in 2010, but the FSB believes this does not go far enough.

The FSB is urging the Government to extend the NICs holiday to existing firms with up to four members of staff that take on up to three new employees.

The FSB is also calling on the Government to help small businesses employ more apprentices and interns: 29 per cent of respondents said increased support would encourage them to take these on.

He added: “It is not only imperative that the Government creates an environment for job creation, but that the banks lend to small firms and businesses are paid on time, to give small firms the confidence they need to grow their business and employ.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .