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Cutting NICs ‘would boost small business employment’

Reducing national insurance contributions (NICs) would encourage small firms to take on more staff, a leading business group has said.

In a new study by the Federation of Small Businesses (FSB), nearly a third (31%) of respondents said that cutting NIC payments for the first six months of employment would provide the incentive they need to boost their employee intake.

11% said that extending the NICs holiday scheme would also increase the likelihood of them hiring new members of staff.

The NICs holiday was launched on 6 September 2010 and provides new businesses in certain areas of the country with a break from paying employer NICs in respect of the first 10 employees that they take on in the first year of business.

However, the FSB claims that this does not go far enough and is calling on 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.

Last month the Exchequer secretary revealed that fewer than 3,000 employers had taken up the scheme from 6 September 2010 to 28 March 2011.

Commenting, FSB National Chairman John Walker 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’.