A Government scheme designed to help new businesses by having a lower tax bill from employing new staff "hasn't been taken up as widely as we had expected", the Chief Secretary to the Treasury has admitted.

Labour attacked figures for the initiative, stating the Government proclaimed that around 400,000 businesses would benefit from the regional National Insurance Contributions (NICs) holiday for new businesses announced just after the Coalition came to power, but claimed only 16,000 applications had been received by May this year.

Shadow economic secretary Cathy Jamieson called on the Government to roll out the scheme across the country, but Danny Alexander branded her suggestion "yet another unfunded spending commitment from the party opposite".

Speaking during Commons Treasury questions, Ms Jamieson said: "When the Government introduced their flagship policy on a National Insurance Contributions (NICs) holiday scheme they proclaimed that around 400,000 businesses would benefit. In answer to a Parliamentary question in May of this year, ministers told me that around 16,000 applications had been received.

"Can the minister tell the House how many businesses have now applied and is it not time to listen to Labour and the Federation of Small Businesses, extend this scheme across the country and ensure that all small businesses can benefit from it?"

Mr Alexander replied: "Well I think we've heard yet another unfunded spending commitment from the party opposite in that question.

"She's right to say that the scheme hasn't been taken up as widely as we had expected. That's why we are putting in place other measures to support small and growing businesses.

"The Funding for Lending scheme will get finance to small firms, tax incentives...will help to get investment in SMEs and of course the Government set a target of 25% of procurement from small firms too, that's the right policy for small businesses in this country."

John Walker, national chairman of the Federation of Small Businesses, said: "We have long said that the NICs holiday should be extended to micro-businesses.

"Even using cautious assumptions, recent FSB economic research has shown that if micro-firms across the whole of the UK could access the scheme that 45,000 jobs would be created - far more than the current scheme has created."