Skilled PAYE umbrella contractors may find themselves being mopped up by the UK’s small start-up businesses, more than a quarter of which are struggling to recruit suitably skilled employees.

New figures from the Federation of Small Businesses (FSB) suggest that despite a pool of 2.62 million unemployed people, small firms at start up can’t find enough appropriately skilled staff to fulfil vital roles. An immediate solution, of course, is to recruit professional contractors working through umbrella companies to plug the skills gaps, but the FSB believes that, in the longer term, the government needs to do more to address the problem.

Launching an investigation into the issue with the All Party Parliamentary Small Businesses Group (APPSBG), the FSB is calling on the coalition to prioritise ‘enterprise education’ and reinstate the graduate internship scheme as matter of urgency. Moreover, with 95% of small businesses employing less that 20 people, cutting back on administrative and financial barriers to employment is a key priority, the FSB believes.

FSB Chairman John Walker said “With the private sector being relied on to drive economic recovery… budding entrepreneurs should be supported in setting-up in business, and existing businesses should be encouraged to innovate, take on staff and grow.”

The Chair of the APPSBG said that the skills minister, John Hayes, was already working diligently to close the skills gap, but his work was “being hampered by the poor performance in our primary and secondary schools, especially with regard to literacy and numeracy, and whilst Michael Gove, the education secretary, is pulling out all the stops, there is still a lot to do.”

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