John Cridland
John Cridland, the director general of the CBI, said living standards will gradually improve as the economy doesReuters

The UK government should slash National Insurance Contributions and extend free childcare to boost living standards, according to the Confederation of British Industry.

The organisation, which represents 190,000 businesses across Britain, called on the government to offer immediate help to boost living standards for low income and working families.

The group's report, A better off Britain, outlined a package of longer-term measures designed to raise pay sustainably.

"The financial crisis and the slow recovery have hit people's finances hard. Living standards will gradually improve as the economy does," said John Cridland, the director general of the CBI.

"But growth on its own will not be the miracle cure. Even before the recession, the income of a child's parents determined too many of their own life chances.

"The UK needs to face up to some real long-term challenges.

"Changing skills needs, greater global competition and low social mobility mean for many the pathway to a better life is tough and far from clear."

The CBI argued for an immediate reduction in employee NICs by raising the threshold at which it is paid by staff to £10,500 ($16,615, €13,399), up from £7,956 a year, in a series of steps until 2020/21.

The business body claimed that this will be worth £363 to a dual-income household and is more effective than raising income tax allowances.

In addition, the group wants the government to extend free childcare provision of 15 hours to all children aged one and two, with the longer-term aim of increasing the number of hours provided.

The CBI also recommended extending maternity pay (of at least £138.18 per week) from 39 to 52 weeks to "close the gap" between maternity leave and when free childcare becomes available.

The organisation also offered recommendations to the UK government to tackle the so called "skills shortage".

It wants, among other things, for businesses to make board-level commitments to help employees develop their careers and incentivising line managers to make this a priority.

The report launch coincides with the business body's annual convention, where the Labour Party leader Ed Miliband is expected to speak.