Treasury concedes NI holiday take-up estimate 'too high'
Department's estimate of initial numbers of people taking up NI holiday excessive
THE TREASURY HAS said that it overestimated the number of businesses that would take up the National Insurance holiday scheme.
Accountancy Age revealed last week that fewer than 3,000 businesses had taken up the scheme, which allows new businesses to get reliefs on NICs for new employees in its first six months. The Treasury originally estimated that 132,000 businesses would be eligible every year.
A Treasury spokesperson said: “The initial estimates were scrutinised and certified by the independent Office for Budget Responsibility. We said at the time that they were not certain and indications now are that they were too high. However, we will use the lessons we can take from early operation of the scheme to help us to increase the level of take-up.
“Early evidence indicates that a substantial proportion of those who are already benefiting from the policy are reporting that it has had a positive effect on the number of staff recruited, the prospects for taking on more and the future growth of the business.”
Willie Bain, the MP who asked for the figures in a parliamentary question, said: “It is extraordinary that the National Insurance holiday – the flagship policy on jobs of George Osborne’s first Budget – has had such little impact on job creation, affecting as few as 6,000 new employment starts.
“The government ought to be helping to boost demand in the economy, particularly in the construction sector, which is suffering badly at the moment as home and school building grinds to a halt.”