The government has been called on to extend the National Insurance Contributions (NIC) holiday to help businesses take on more staff.

According to a survey by the Federation of Small Businesses (FSB), 31% of respondents said that reducing NIC payments for the first six months of employment would encourage them to take on more staff. Uncertainty over contracts, cash-flow issues and restricted access to finance were also cited as reasons for not taking on more staff.

FSB national chairman John Walker said that the NIC holiday for start-ups, introduced last year by the government, should be extended to existing firms with up to four members of staff to allow them to take on up to three new employees.

"Small businesses want to employ, but need incentives to do so," he said. "The government must extend the NIC holiday to existing businesses if small firms are to help employment."

The FSB also urged government to support small businesses in employing apprentices.