Official figures revealed recently show that the number of start up businesses signing up to the National Insurance Contributions holiday have continued to tumble. The Government introduced the scheme in September 2010 and predicted that over 400,000 companies would sign up, and as a result over 800,000 jobs would be created as a result. However, recent data* has shown that during the last quarter of 2011 4,300 start ups joined the scheme, which fell to 2,605 in the first quarter of 2012 and an overall total of only 13,769 companies have used the scheme since the launch.
Under the terms of the scheme, new business start ups in the UK (outside London, the South East and East of England) will be eligible for a holiday worth up to £5,000 for up to the first ten employees they hire, in their first year of business. This means a maximum saving on their NIC payments of up to £50,000. The scheme is due to come to an end in 2013, giving a finite window of opportunity to any company interested in using the benefits that the scheme provides.
The main purpose of the scheme is to encourage the creation of private sector jobs in regions reliant on public sector employment, buy reducing the cost to new business of employing staff. Carol Flockhart, Business Support Partner at Chiene + Tait comments, “Either the government has hugely overestimated how many businesses would apply to take part on the scheme, or they simply aren’t communicating the message well enough to businesses that they can benefit.”
A report** published by the Federation of Small Businesses this month has called for a widening of the scheme so that existing businesses, which have up to four employees, could take on up to three additional staff and can still qualify. Additionally, the FSB asserted that an improved government marketing campaign would be of benefit, to raise awareness of the scheme and it’s unique benefits to new business start ups.
*Report released by National Audit Office on 11th May 2012
**Report released by the Federation of Small Businesses on 3rd June 2012