The Federation of Small Businesses (FSB) is calling for the government (again) to review its National Insurance Contributions (NIC) holiday to allow more operators to take on staff.

Under the NIC scheme, new business set up outside London, the South East and East of England are 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 national insurance payments of up to £50,000. However, the current NIC holiday is only available to start-up businesses outside London, East and South East of England.

The FSB wants it to be extended so that all small firms that have less than four members of staff that take on up to an additional three to benefit from the scheme for new employees.  

The organisation believes that by allowing more small businesses to take advantage of the scheme, more jobs could be created. It says these could be full-time jobs at a time when many people are taking on part-time work.  

It remains the case, however, that the NIC holiday incentive asks way too much of embattled businesses, and is likely to be just as effective as the government's bribe of £1,500 to get them to take on apprentices. Just how many businesses starting up today can expect to embark on a hiring spree in their first year of operation? It's good news for a company if they want to take on maybe one or two staff initially, but can a relatively small NI discount really be relied upon to persuade them to take on more in this cost-conscious era?

Stats from July last year, at least, emphatically suggest not. The scheme was supposed to help 400,000 new businesses and create 800,000 new jobs in worse-off regions, while the results last year were that 5,137 firms had been helped to create just over 10,000 jobs in the first year.

The FSB chairman John Walker rightly says that small firms are responsible for creating the majority of jobs in the economy, but that clearly doesn't mean such companies, individually, are the the best position to do so.

See also: Holiday changes to hit SMEs hard