FSB urges Government to help more people start new businesses

Nearly nine in 10 unemployed people that find work in the private sector start up their own small or medium-sized enterprise (SME) or are hired in jobs within a similar-sized firm, the Federation of Small Businesses (FSB) has revealed.

This revelation underlines how important small firms are in aiding the UK's economic recovery, the body suggested.

Analysing data since the start of the economic downturn in 2008, the FSB discovered that 88% of people employed in the private sector either started their own small business or found work at an SME.

More than a quarter (27%) of these people worked for a small firm, while 24% were involved with micro businesses and 17% started up their own firms.

With small companies seemingly a viable outlet within which to help reduce unemployment in the UK, the FSB has urged the Government to review its current national insurance contributions holiday, which could encourage smaller firms to expand their workforces.

The FSB believes that more jobs could be created if more employers qualified for the scheme. Furthermore, many part-time employees could find themselves in full-time employment if the scheme was expanded, it is believed.

Meanwhile, the FSB wants the New Enterprise Allowance to be accessible as soon as a person is out of work and claiming Jobseekers' Allowance. The FSB believes these funds should be equal to the national minimum wage.

By taking this step, the Government would help to encourage more people to start a business and more of their enterprises would survive in the long-term if the funding was available for an entire year, the FSB noted.

John Walker, the FSB's national chairman, said: "The numbers speak for themselves - small firms are responsible for creating the majority of jobs and are more likely to take on people out of work, including those that have been out of work for some time.

"In the current economic climate, with costs increasing and cash-flow tight, small firms need all the help they can get.

"Giving people the ability to start their own business and small firms the incentive to take on staff through extending the national insurance contributions holiday will help to boost economic confidence and growth, which is vital."

Copyright Press Association 2012