A year-long national insurance holiday for start-up businesses is set to begin this week, however there are concerns that many of the most deprived areas will be excluded from the programme.

Only new firms set up between June 22 2010 and September 5 2013 outside Greater London, the South East and Eastern regions of the UK, will qualify for the scheme, whereby they will be exempt from having to pay employer national insurance contributions in their first year.

Accountancy group UHY Hacker Young has warned that with many of the most deprived areas being located within Greater London, the South East and the East, the scheme will fail to provide support to many of those areas that need it most.

Roy Maugham, partner at UHY Hacker Young, said: “By restricting the scheme to regions outside London and the South East, the government is denying invaluable NICs savings to many of the businesses that would need them the most.”

However, the scheme has been welcomed by the British Chambers of Commerce (BCC), who understands that targeting specific regions is the only feasible way to implement a national insurance holiday.

Director general at the BCC, David Frost, said: “There’s limited money and we need to stimulate growth and employment in the Midlands and the North. We can see the real benefit of targeting.”

Tim Hutchings, Hertfordshire Chamber of Commerce & Industry Chief Executive, said, “David is quite right to welcome this initiative but it should have been introduced across the board, starting a business in this part of the world is just as challenging as it is in other parts of the country, given the higher the costs of doing so here it is arguable that in fact it is even more challenging. We need to encourage new businesses wherever they are based”.

The scheme, which was announced in the Emergency Budget on June 22, will take effect from September 6.