Kickstart the economy: UK government boost for young people’s job prospects

The Kickstart Scheme is a new government initiative aimed at alleviating the levels of youth unemployment brought on by the Covid-19 crisis. It provides funding to employers to create job placements for 16–24-year-olds on Universal Credit who are at risk of long-term unemployment. Each placement lasts 6 months and the hope is that 350,000 people will take advantage of the scheme, which is scheduled to run until December 2021.

The first entrants began work in the autumn. The government is covering 100% of minimum wage for 25 hours a week, employee National Insurance contributions and any pension contributions. Employers also get £1500 to cover training, support and uniforms.  In return, employers are expected to offer career advice, CV building and interview skills, but also develop entrants’ basic employment skills such as good attendance, timekeeping, and teamwork.

What is the context?

Chancellor Rishi Sunak announced the £2 billion temporary jobs scheme in his July statement as part of a series of measures designed to stimulate the economy as we enter what is likely to be the biggest recession since records began. He had this to say:

“This isn’t just about kick-starting our economy… The scheme will open the door to a brighter future for a new generation and ensure the UK bounces back stronger as a country.”

The Chancellor hosts a virtual Kickstart 'Plan for Jobs' panel. Photo: Simon Walker HM Treasury/licensed under https://creativecommons.org/licenses/by-nc-nd/2.0/

The background to his statement and decision is UK GDP falling by an eyewatering 20.4% in the second quarter in the immediate aftermath of the crisis. This was the second worst of any G20 country, with the average being a contraction of 11.4%. After a small recovery, which is itself slowing, the projected UK fall for the year is still 14%.

Youth unemployment stands at 13.4% in the context of an overall figure of 4.8%, which the Organisation for Economic Cooperation and Development estimates could hit 15% over the coming period. The worst estimate for youth unemployment in the coming period is 27%. Over half a million 18-24 year olds are now unemployed.

It is a truism that young people are always the hardest hit after an economic crash or more generally in extreme downturns. This was the case in the early 1980s, which has no doubt been on the minds of Whitehall, and in 2008 after the global financial crisis brought on by the US housing bubble and the excessive risk-taking of the banks. Indeed, the Kickstart Scheme is similar to previous attempts by government to give young people a leg-up, such as Gordon Brown’s Future Jobs Fund, set up by the Labour government in 2009, though it is more ambitious, as stated below.

Cautious optimism for a bold and ambitious scheme

The scheme was met with cautious optimism from UK trade union body, the TUC, with Frances O’Grady, its general secretary, suggesting it was “a good first step”. Kathleen Henehan, an economist at the Resolution Foundation thinktank, stated:

“It is very welcome that the government has opted for a bold and ambitious scheme, with £2bn potentially meaning jobs for around 350,000 young people. This is exactly the kind of approach needed, learning the lessons of what worked in the financial crisis.

“History also shows that it is crucial that these jobs are created quickly, with local authorities crucial in making that happen at anything like the scale the government intends. Three hundred and fifty thousand new jobs would be three times as many as were created under the Future Jobs Fund following the financial crisis, so delivery on this scale will be a huge challenge.”

After initially only being for companies wanting to hire 30 or more employees, it was opened up in September 2020 in a bid to attract small businesses. There had been some criticism initially that the government’s initial advice to smaller companies to team up for funding bids wasn’t realistic.

In response, Federation of Small Businesses national chairman Mike Cherry had worked with government “to develop the new Kickstart scheme, and help small employers to be part of the solution”. The FSB is now functioning as an umbrella or intermediary for small business applications, and has opened up a portal with recruiter Adecco to facilitate this.

Robin Simmons, Professor of Education at Huddersfield University, and Stephen Lambert, Newcastle City Councillor and Director of Education4Democracy CIC, also welcomed the move:

“With the number of young unemployed likely to rise over 1.2 million by Christmas we must do all we can to give this group the best chance of success and stop the disadvantage gap widening.  Kickstart is to be welcomed. But it needs to be built upon, regulated and fully funded for potential new jobs in the 'green economy' both in our region and elsewhere”.

Green shoots

It is certainly the case that companies working in the built environment could attempt to use the scheme to get more young people into green projects, and in so doing, increase their resources and social impact in the area of sustainability. There are examples at present of attempts to use Kickstart to address environmental needs, and indeed Black, Asian and Minority Ethnic (BAME) under-representation in the sector. For example, there is a project called Race for Nature’s Recovery, which is led by Action for Conservation, Generation Success, Students Organising for Sustainability UK and Voyage Youth. It uses funding from the Kickstart Scheme to place young people from predominantly BAME backgrounds in work placements at environmental organisations.

If Kickstart peters out this year with no discernible effect on unemployment levels, on measurable social impact, or on the green economy that the UK so desperately needs, it may well be deemed as only a partial success. Let us hope that it can be the first flowers of the growth of a sustainable, green economy.