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Pressure grows on Osborne's NIC plan

THE Chancellor has come under increased pressure to reform a measure the Coalition Government intended to provide a big boost to job creation but which has had minimal impact.

The Forum of Private Business has added its voice to calls for the National Insurance Contribution holiday for start-ups to be extended to a wider range of businesses following a much lower than expected take-up of the scheme.

Highlighting the need to encourage more sole traders to become employers, the forum said George Osborne should extend the scheme to provide relief for all microbusinesses that create jobs rather than just start-ups.

"More small businesses need to be incentivised to employ," said Alex Jackman, head of policy at the forum. "The current offering is too complicated, and the take-up has been far less than predicted."

Last month The Herald revealed just 2871 businesses in Scotland had benefited from the National Insurance holiday scheme for start-ups by 30 September, following two years of operations. Only 19,705 firms across the UK had benefited from a programme the Chancellor claimed would help 400,000 firms in the UK over three years.

With 8% of the UK population, Scotland could expect 32,000 to benefit on a per capita basis over the thee years of the scheme.

The Federation of Small Businesses and Scottish Chambers of Commerce have said the Government needs to take a bolder approach to helping firms create jobs by relieving the NIC burden for a much wider range of businesses. Research for FSB has indicated extending the holiday to all microbusinesses, with fewer than 10 employees, would create 45,000 jobs across the UK.

Publishing its wish list ahead of the Chancellor's autumn statement on December 5, the Forum of Private Business also called for fuel duty to be frozen for at least six months.

It wants the Chancellor to abandon plans to mandate flexible working on all employers. The forum said the Chancellor could promote the emergence of alternative sources of finance for SMEs by reducing the tax payable by private lenders on the interest they receive on loans.

The current NIC holiday scheme exempts anyone who starts up a business outside London or the south-east and eastern regions of England, from up to £5000 of NIC payments, for each of their first 10 employees.

A centrepiece of Mr Osborne's emergency Budget of June 2010, the NIC holiday scheme was introduced to rebalance the economy by supporting regions more dependent on the public sector.

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Local government

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