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CBI: Cut employee’s National Insurance and up free childcare

Employee's National Insurance threshold should rise to £10,500, the CBI claims

A CUT to employee’s National Insurance contributions and an increase in free childcare provisions are necessary to boost living standards, the CBI has said ahead of its annual conference.

In its report A better off Britain, the business advocacy organisation made the case for increasing the threshold for NICs to £10,500 – in all, the organisation estimates the move will be worth £363 to dual-income households. It also argued an extension of free childcare could help increase productivity across the UK.

Childcare costs have risen by 27% since 2010, it said, adding “the current system of state support is complex, wasteful and needs changing”.

The measures include extending free childcare provision of 15 hours to all children aged one and two years, with the longer-term aim of increasing the number of hours provided; extending maternity pay from 39 to 52 weeks to close the gap between maternity leave and when free childcare becomes available and; businesses adopting a presumption in favour of flexibility from the job advert stage to help employees save on childcare costs.

CBI director-general John Cridland (pictured) said: “The financial crisis and the slow recovery have hit people’s finances hard. Living standards will gradually improve as the economy does. But growth on its own will not be the miracle cure. Even before the recession, the income of a child’s parents determined too many of their own life chances.

“The UK needs to face up to some real long-term challenges. Changing skills needs, greater global competition and low social mobility mean for many the pathway to a better life is tough and far from clear.

“But the answers do not lie in short-term sticking plaster fixes, like intervening in pay or attacking the UK’s flexible labour market, which will ultimately cost jobs. Instead, we need to invest in productivity, skills and education to make the best of Britain’s talents.”

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