The planned one per cent hike in employers' national insurance has been abolished in a new policy shift.

People who have set up a recruitment company and are looking to expand in the business over the coming months are set to benefit from a new national insurance policy.

The new Liberal Democrat-Conservative coalition government's decision to do away with the planned one per cent hike in employers' national insurance has been welcomed by the Forum of Private Business.

According to the organisation, the abolition of the so-called 'tax on jobs', which was due to take effect in 2011, is better for small firms and jobs as it is unlikely to hamper their recruitment activities.

"Small businesses did not want this tax on jobs because clearly it would have been a major barrier to staff retention and job creation and would have hindered economic recovery," explained the forum's chief executive Phil Orford.

"For the majority of employers it would have proved to be an unpopular and unworkable tax rise."

Recruiters expanding their businesses can outsource back office services, such as invoices and payroll management, to an agency in order to focus on their company's growth.