According to analysis by business-advisory group BDO, more than 5,000 new jobs could be created in Scotland if manufacturers were given a temporary reduction in employers’ National Insurance (NI) contributions when they take on new workers.

This “policy recommendation” forms part of the BDO Mid-Market Manifesto, which lobbies for specific support for medium-size businesses that are “currently under-valued and overlooked by Government policy.”

Martin Gill, head of BDO in Scotland, said: “Manufacturing is a vital sector for Scotland and for the UK as a whole, and it is the medium-size businesses that provide the biggest untapped potential in both domestic and international markets.

The Chancellor of the Exchequer has already shown a willingness to use targeted NI reliefs as a way of stimulating employment. In his Autumn Statement, he announced NI relief for employers taking on apprentices under the age of 25. That was a step in the right direction, but it does not go far enough.”

Mr Gill added that the BDO’s proposal could “singlehandedly benefit manufacturing GDP, job creation, export levels and the Treasury’s coffers. By assisting local businesses that are most likely to be exporters or to supply exporters, introducing a temporary reduction in employers’ NI for the manufacturing sector over the next four years will support the UK Government’s target of doubling exports by 2020.

“In addition, the cost to the Exchequer — estimated at £2,600 per annum per worker — would result in a net benefit when offset by the increased income tax and employees’ National Insurance.”