George Osborne’s flagship policy to promote growth and job creation in the private sector is set to cost more in administration and red tape than it has given in support for new businesses, according to new figures uncovered by Labour.
In his first Budget last June, George Osborne announced that a £1 billion 'national insurance holiday' to help new business starts-ups would help 400,000 new firms outside London, the South East and the East of England and could create 800,000 new private sector jobs.
But since the scheme was launched last September just 5,137 firms have benefitted, helping to create just over 10,000 jobs.
With an average benefit per business of £2,000, that means around £10.3 million has been paid to businesses – less than the £12 million the Treasury says the scheme will cost to administer.
Ed Balls MP, Labour's Shadow Chancellor, said:
“After a week when we learned the economy has flatlined over the last nine months, these figures are another embarrassing setback for the Chancellor.
“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.
“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.
“Having choked off last year’s recovery with a VAT rise and cuts which go too far and too fast it’s now clear that George Osborne needs to get his head out of the sand and change course. He urgently needs a plan for jobs and growth to get the economy moving again and get the deficit down for the long term.
“Temporarily reversing the VAT rise, which is costing families with children £450 per year, would give our stalled economy the jump start it urgently needs. The government also needs to get the banks lending to small businesses and use the funds raised from repeating the bank bonus tax to get young people off the dole and into work."