Official figures reveal that Chancellor George Osborne’s National Insurance exemption offer to small companies to boost job growth in Britain had a marginal effect since its launch last year.
Mr. Osborne had announced last year that the scheme, exemption of NI for the first 10 employees, would be taken up by 400,000 employers over a period of three years. It was expected to generate 800,000 new jobs and cost the government £940 million.
However, figures reveal that the cost of bureaucracy and administration of the scheme has been more expensive than the support it provided to new businesses.
So far 5,137 companies have benefitted and has possibly created a little over 10,000 jobs, figures revealed by labour showed.
Labour calculates that with a benefit of £2,000 per business, the total amount paid out so far stands at about £10.3 million; less than the £12 million it costs to administer the scheme.
“This has turned out to be a total flop with just 1 per cent of the 400,000 businesses George Osborne said would benefit taking advantage”, said shadow chancellor Ed Balls, adding that the numbers were an “embarrassing setback” coming in a week when the country’s GDP growth has been dismal.
“Families and businesses who are being hit hard by the Conservative-led government’s reckless economic policies will be shocked to find out that the administration costs of the scheme are bigger than the amount paid to businesses to help create jobs,” Mr. Balls added.
Prime Minister David Cameron had said in October that the scheme will be a key driver for job growth in a slowing economy.
“Add to these our cut in the small business profits rate and the fact we have waived national insurance contributions for new businesses in most areas of the country and you have the conditions to breed confidence and investment and boost productivity for the long-term,” Mr. Cameron had said.