New national insurance policy better for small firms and jobs, says Forum of Private Business

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The Forum of Private Business is welcoming the new Liberal Democrat and Conservative coalition government’s decision to scrap the planned 1% hike in employers’ national insurance (NI) for many staff members, a policy that had been met with strong opposition from business groups.

Small businesses did not want this tax on jobs because clearly it would have been a major barrier to staff retention and job creation and would have hindered economic recovery.

The Forum of Private Business is welcoming the new Liberal Democrat and Conservative coalition government’s decision to scrap the planned 1% hike in employers’ national insurance (NI) for many staff members, a policy that had been met with strong opposition from business groups.

The ‘tax on jobs’ had been scheduled to take place in 2011 – when many analysts anticipate small businesses will be seeking to recruit in earnest in order to meet renewed demand.

Although the 1% employers’ NI rise remains for staff earning more than £20,800, the threshold at which they begin paying NI on employees earning up to that figure will increase by £21 per week - meaning most will be spared a major tax increase in return for retaining staff and taking on new employees.

“Small businesses did not want this tax on jobs because clearly it would have been a major barrier to staff retention and job creation and would have hindered economic recovery,” said the Forum’s Chief Executive Phil Orford. “For the majority of employers it would have proved to be an unpopular and unworkable tax rise. Although not perfect, the new coalition government’s policy on NI is far better and provides a degree of certainty for business growth now and in the future.”

According to the latest Economy Watch member panel survey carried out by the Forum 43% of small businesses selected the cost of employment as the joint biggest barrier to recruitment along with economic conditions and the ‘local business climate’.

The interim results of the Forum’s quarterly Referendum survey, which is published on Thursday 19 May, show that 60.8% of respondents believe the new government should prioritise ‘tax simplification’ while 45.9% selected ‘reducing barriers to employment’ and 38.5% ‘a fairer distribution of the tax burden’.

In a statement released today coinciding with the new administration’s first ever joint press conference, in which the Conservative Party’s David Cameron promised a “new politics” of “reassurance and stability”, the Government confirmed its plans to increase employers’ NI threshold.

The move was originally drawn up by the Conservative’s following the backlash over the previous administration’s plan to increase NI for both employees and employers by 1%.

In addition, the party planned to increase the threshold for employees’ NI contributions. However, following today’s announcement employees will continue to pay 1% more in NI.

Instead, the money that would have been used to fund the Conservative’s proposed employee NI threshold increases will be used to help lower and middle income earners in the form of a rise in income tax personal allowances from April 2011.

Formed in 1977, the Forum of Private Business is evolving following a year of intensive research about the real needs of small businesses.

As an invaluable extension to its members’ teams the not-for-profit organisation has developed a range of tailored business solutions to support, protect and reassure small firms throughout the lifecycle of their businesses.

These are: ‘Finance Director’, ‘Legal Director’, ‘HR Director’, ‘Health and Safety Director’, ‘Development Director’, ‘Purchasing Director’, ‘Communications Director’ and ‘Managing Director’.

For full list of services under each solution and/or membership package, visit http://www.fpb.org/membership or call 0845 612 6266.

Broadcast media – the Forum has ISDN capability and can provide comment, in quality audio, at short notice.

The FPB can also provide journalists with localised and sector-specific case studies.

About the Forum of Private Business

A not-for-profit organisation, the Forum of Private Business provides a personal, friendly and highly tailored service to its members – with the primary purpose of helping them run their businesses more profitably.

Representing thousands of small businesses across the UK – including retail, service providers and manufacturing companies – the Forum is recognised by the Government as one of the six main business support and lobby groups. It uses this position to influence decision-makers in the UK and Brussels on the issues that matter to small businesses. Visit http://www.fpb.org.

The Forum helps owners and managers of small and medium-sized businesses to comply with regulations via its dedicated member helpline, 24-hour legal advice line, and Health and Safety Guide, Employment Guide and Credit Control Guide.

In addition, the Forum’s http://www.smallbusinesschannel.co.uk was launched in June 2009, providing a wealth of free video advice and information on a range of topics to business owners and managers.

The Forum is a proud supporter of the Children’s Cancer and Leukaemia Group (CCLG): http://www.fpb.org/charity

Media contacts

Phil McCabe
Media and PR Manager
Tel:    01565 626019
ISDN:     01565 654673
Mobile:    07775 756312
Email:    phil(dot)mccabe(at)fpb(dot)org

Chris Gorman
Media and PR Assistant
Tel:    01565 626016
ISDN:    01565 654673
Mobile/out of hours:    07775 756300
Email:    chris(dot)gorman(at)fpb(dot)org

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