Business

Small firms need incentives to take on new staff

July 13, 2011

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

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

Nicky Goringe Larkin, FSB Reading & West Berks chairwoman, said: “We have said 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 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.”

According to the FSB, small firms continue to be stifled by late payments from other firms and a lack of finance from the banks, which forced many to close. Despite tentative economic growth, many small firms say these issues prevent them from taking on staff.

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There are other arguments for reducing employers national insurance contributions not just for new and under age 24 employees. This should be done in preference to any reduction in VAT as it increases the advantage that home produced goods and services over imports and increases the competitive advantage of our exports. It should feed through into lower prices and so have the same effect as a VAT reduction as well.