Labour demands tax break extension

Under the scheme set up last year, new businesses outside of London, the South East and east of England were offered a tax holiday worth up to £5,000 for each of their first 10 employees.

Despite the Treasury setting aside £1bn to help an estimated 400,000 firms as part of its efforts to stimulate economic growth, just over 10,000 companies have taken advantage of the tax holiday at a cost of £6m and supporting only 12,400 jobs, Labour said.

According to Treasury figures, just £6m was paid out to small firms to support 12,400 jobs, while the administration costs of the scheme are around £12m, the party added.

Shadow Treasury minister Owen Smith said today that the scheme should be extended to all small businesses, including those within the regions initially excluded.

He said: “The one flagship policy that could have made a difference has been a total flop, supporting just one in 40 businesses who were promised help.

“And shockingly, the Government is set to spend twice as much on admin costs than it has so far paid out in support to businesses.

“At a time when small businesses and our flat-lining economy need all the help they can get, George Osborne should now extend the scheme so thousands more companies can benefit.

“As part of our five-point plan for jobs Labour is calling for this tax break to be extended to support all existing small firms who take on extra workers.

“This will help small businesses grow and create jobs and it can be paid for using the money left over from the Government’s failed scheme.

“Out of touch ministers need to wake up to the jobs and growth crisis facing our country in 2012 and start doing something about it.

“They also need to realise that more people out of work on benefits just makes it harder to get the deficit down, which is why the Government is now set to borrow a staggering £158bn more than they planned.”