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'.