National Insurance holiday scheme still a flop, says Balls. Time to cut it, Osborne

August 01, 2011 1:40 PM

The Government’s National Insurance holiday scheme is a "total flop", according to Shadow Chancellor of the Exchequer Ed Balls. The scheme, which exempts small firms (those with 10 or fewer staff) from having to pay National Insurance for a 12 month period, has attracted just 5,000 registrations out of a total of 400,000 expected to benefit from the scheme.

"George Osborne hailed this flagship policy last year saying it could create 800,000 private sector jobs. But it's turned out to be a total flop with just 1 per cent of the 400,000 businesses George Osborne said would benefit taking advantage".


This should come as no surprise. The scheme only applies for 12 months and doesn't apply in the areas most likely to generate new business; London, the South East and Eastern regions of England. As I wrote back in February, the Chancellor should learn from the mistakes of his predecessors and abandon the doomed-to-failure micro-managing from his Whitehall citadel.

[caption id="attachment_39513" align="alignright" width="240" caption="Scheme "a total flop" says Balls"][/caption]Back in February, the Treasury said it was "too early to tell" if the scheme was working. Now they say they are taking steps to "improve" the scheme and encourage more participation. It's not too early to tell, now. The scheme has failed. But as the Treasury are in the mood for taking steps to improve the scheme, here's a suggestion: reverse the rise you implemented in April.

National Insurance is among the worst forms of taxation in the current tax code. Outmoded, complex and arcane, National Insurance is a tax on jobs that mimics and duplicates Income Tax but manages to be even more damaging. Instead of fiddling about with pointless schemes such as this payment holiday, George Osborne should cut the rate for all businesses. Better still, he should abolish it altogether.The Government’s National Insurance holiday scheme is a "total flop", according to Shadow Chancellor of the Exchequer Ed Balls. The scheme, which exempts small firms (those with 10 or fewer staff) from having to pay National Insurance for a 12 month period, has attracted just 5,000 registrations out of a total of 400,000 expected to benefit from the scheme.

"George Osborne hailed this flagship policy last year saying it could create 800,000 private sector jobs. But it's turned out to be a total flop with just 1 per cent of the 400,000 businesses George Osborne said would benefit taking advantage".


This should come as no surprise. The scheme only applies for 12 months and doesn't apply in the areas most likely to generate new business; London, the South East and Eastern regions of England. As I wrote back in February, the Chancellor should learn from the mistakes of his predecessors and abandon the doomed-to-failure micro-managing from his Whitehall citadel.

[caption id="attachment_39513" align="alignright" width="240" caption="Scheme "a total flop" says Balls"][/caption]Back in February, the Treasury said it was "too early to tell" if the scheme was working. Now they say they are taking steps to "improve" the scheme and encourage more participation. It's not too early to tell, now. The scheme has failed. But as the Treasury are in the mood for taking steps to improve the scheme, here's a suggestion: reverse the rise you implemented in April.

National Insurance is among the worst forms of taxation in the current tax code. Outmoded, complex and arcane, National Insurance is a tax on jobs that mimics and duplicates Income Tax but manages to be even more damaging. Instead of fiddling about with pointless schemes such as this payment holiday, George Osborne should cut the rate for all businesses. Better still, he should abolish it altogether.

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