Government scheme sees one in five small businesses planning expansion

The government’s Employment Allowance scheme is set to boost recruitment amongst small firms, with one in five planning expansion as a direct result of the scheme, new research has found.

A study of 1,895 small business owners conducted by insurance firm Direct Line found that in addition to the firms planning expansion, a further third of small businesses were considering hiring extra staff due to the reduced cost of employment offered by the scheme.

The Employment Allowance, announced by the chancellor as part of the 2013 Budget, will offer all businesses an allowance of £2,000 a year towards employer National Insurance contributions.

From April 2014, all businesses across the UK will be able to access the scheme, which aims to boost jobs by making it cheaper for firms to hire staff.

Jazz Gahkal, head of Direct Line for Business, said: “It is encouraging to see that so many UK businesses are looking to expand.  The Government’s decision to reduce the financial burden for small companies is a welcome boost for owners and managers across the country.

“Given SMEs account for over 99% of all private sector businesses in the UK, the health of this sector is vitally important.”