Modifying the existing Working Tax Credits scheme to support reduced working hours would help small firms.

Modifying the existing Working Tax Credits scheme to support reduced working hours would help small firms.

The Forum of Private Business (FPB) claims that the retention of employed workers should be the focus of government activity, following the recent announcement that firms can receive subsidies of up to £2,500 for taking on the long-term unemployed.

According to the organisation, the scheme could be amended to subsidise short-time working by compensating workers’ lost earnings, which would allow companies to avoid laying off their skilled employees.

Phil Orford, chief executive of the FPB, explains: ‘A modified Working Tax Credit scheme to subsidise short-time working and protect both businesses and their staff would directly address increasing business closures and rising unemployment.’

He also claims the introduction of short-time working would be cost effective if 20 per cent of the employees taking part in the tax scheme retained their jobs.

Last week, the Trades Union Congress, manufacturers’ organisation EEF, the British Chambers of Commerce, consultancy the Work Foundation and the Federation of Small Businesses joined forces to recommend chancellor Alistair Darling introduces temporary short-time working measures in tomorrow’s Budget.