FSB calls for extension to NICs holiday

SMEs are being held back from employing new staff by National Insurance Contributions (NICs), according to the Federation of Small Businesses (FSB).

The FSB has called on the government to extend the NICs holiday for start-ups that take on 10 employees, which was launched in 2010, to include existing firms with up to four members of staff that take on up to three new employees.

John Walker, national chairman of the FSB, said: "We have been saying for some time that small businesses would be encouraged to take on staff if NICs were reduced.

"The Government must extend the NICs holiday to existing businesses if small firms are to take on new staff and so help tackle high unemployment."

The move came in response to the FSBs 'Voice of Small Business' survey, which attracted more than 1,700 respondents, nearly a third (31%) of which said that reducing NICs for the first six months of employment would encourage them to take on more staff.

A further 11% said that extending the NICs holiday scheme would be an incentive. The FSB has also called for increased government support for apprenticeships and interns after 29% of respondents said it would encourage them to take these on.

Concerns over contracts (37%), the state of the economy (33%), cash flow (31%) and access to finance as well as the cost of credit (16%) all remained high on the agenda.

"Throughout the recession, we all heard the struggles small firms faced as many had to shut up shop because they were being paid late, and couldn't access finance from the banks, leaving their cash-flow in a volatile position," said Walker.

"While our members have told us the situation has improved slightly, these same issues are now preventing small firms from taking on staff – crucial if the country's small firms are going to help to secure and promote recovery.

"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."