A plan for a National Insurance (NI) tax holiday for new start-ups could create 60,000 jobs, it has been claimed by the Shadow Chancellor George Osborne at today’s Conservative Party conference in Manchester.
The tax break on employers’ NI contributions, which would apply to the first ten people recruited by a firm, was unveiled by the party as one of a series of measures it plans to introduce to ‘get Britain working’ should it win power in the next election.
The Forum of Private Business (FPB), which is campaigning against the 0.5% NI increase scheduled to take place in 2011 – when recession hit firms are likely to need to recruit again in order to meet demand and grow – is cautiously welcoming the latest proposal.
“For prospective employers, as one of a raft of measures aimed at getting Britain back to work and boosting the country’s skills base, abolishing National Insurance (NI) for new start ups stands out as today’s key announcement,” said Phil Orford, the FPB’s Chief Executive.
“At present, employers’ NI contributions are set to rise by 0.5% from 2011, just as small businesses are likely to be in a position to recruit staff in earnest. We will examine the savings that will need to be made to pay for this initiative, but welcome it in principle as a genuine stimulus to employment, small business growth and sustained economic recovery.”
According to the FPB’s recent quarterly Referendum survey of members, 37% of respondents said they would actively seek to recruit new employees in the coming year.
In its submission to the Government ahead of the Pre-Budget report, the FPB is calling for measures to support the smallest, most vulnerable employers at this critical time.
In addition to the delay, at least, in the 0.5% NI increase until the economy has recovered sufficiently to sustain it, the FPB wants a 12 month reduction in NI contributions for businesses with fewer than 10 employees.
The NI holiday would be available for the first two years of a new Conservative government. During his speech at the 2009 conference, Mr Osborne said that details of the savings that will be required to pay for it will be revealed shortly.