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George Osborne has received criticism for the deemed failure of the National Insurance holiday initiative. The scheme was introduced by the chancellor in his 2010 Budget. According to the Treasury, more businesses could be benefiting from the scheme which provides tax breaks to companies who hire new employees.

George Osborne announced the initiative in 2010, intending to provide relief from National Insurance payments for the first year, to the first ten employees that were hired by the company. The scheme would offer tax breaks which could be worth up to £5000 for every employee that was hired. According to shadow Treasury minister, Owen Smith, the scheme has only benefited 10,000 businesses up to date, with a mere 12,400 jobs created during the period September 2010 to November 2011. Figures released by the Treasury suggest that the benefit to businesses so far amounted to £6m, while administration costs of the scheme add up to a huge £12m.

The plan was launched with the intention of only being available to new businesses outside the South-East, the East of England and London. However, the shadow Treasury minister has called for the scheme to be made available to businesses from all areas of the UK, not just specified areas. In September 2011, Ed Balls, shadow chancellor made the same request. Owen Smith pointed out that a policy which could have been instrumental in economic growth, has failed. The Treasury has said:

“Over 10,000 businesses have already been helped by the scheme, with these employers benefiting by an estimated £6m. But more businesses could benefit and HMRC has been working to increase this number.”

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Gary Fields

Content Writer working alongside our expert accountants to bring you the latest Tax and Accounting news.

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