Rishi Sunak’s Kickstart scheme - the good, the bad, and the ugly

You’ve all likely read about the just-launched Kickstart scheme already. Starting November, the government will fund six-month work placements for out of work young people. 

But the scheme has met with widespread scepticism even in these early days it starts. The rules say that these jobs shouldn’t replace existing jobs or planned vacancies, but previous similar schemes for the unemployed don’t inspire confidence that this will actually be the case.

Is the Kickstart scheme different, or are we looking at yet another disaster - nothing more than a government-sponsored payday for large employers? Read on for my analysis.

How does the scheme work?

Jobcentre staff will be responsible for referring unemployed young people to the scheme, and Government will fund 100% of the minimum wage based on age, while employers will have the option to top up wages. Employers can also expect £1,500 payments to help train and equip employees.

The scheme is already open for applications from employers - with one hitch. Only employers who will offer 30+ roles can apply directly. Other employers will have to apply through a “representative organisation” or consortium.

Concerns remain

I’m not just here to give Kickstart a kicking, but here’s the thing: British governments don’t have a strong track record with this kind of project. The last big scheme of this type resulted in accusations of forced labour which were initially upheld by the courts before being overturned on appeal. 

Meanwhile, large employers - most notably Poundland - were accused of taking advantage of the unemployed to avoid taking on proper employees.

The Treasury has made it clear the scheme shouldn’t be used this way. But combined with the imminent end of government furlough support, it’s hard to imagine the government applying the level of oversight needed to prevent these kinds of abuses outright. It seems likely that the usual suspects are already coming up with inventive ways to take advantage and skip employing new staff on a permanent basis. 

I’ve also seen little discussion about the likely downstream effects on unemployment figures for over 25s. If you’re an employer right now, are you going to hire a 26 year old and pay them in full, or are you going to grab a youngster for free and put it off for 6 months? Are we just going to see a reshuffling of the jobless statistics?

There are further issues around which employers exactly the scheme is aimed at. The requirement that only employers who can offer 30 vacancies can apply to the scheme directly places a burdensome requirement on smaller employers. 

It’s likely that many smaller employers didn’t even hear about Rishi Sunak’s plans until the launch was announced this week. On the other hand, you can bet your bottom dollar that the likes of Tesco and Poundland will have been preparing for the launch since the idea was first floated back in June. 

The requirement for small employers to form consortiums may take weeks or months of prep for some, and while £2b sounds like a lot, I think we’ll see that pot of money gobbled up quickly. SMEs form 50% of the UK’s economy and 46% of its jobs market, and many have been hit disproportionately hard by the pandemic. So, it’s concerning that government would place such a major roadblock for small businesses to benefit from some much-needed support.

Kickstart vs. skills

We’re still suffering a serious skills gap in the UK, alongside a massive increase in young people claiming out of work benefits of 122% since the lockdown began. This scheme could work as a sticking plaster, and might see a good number of young people through the recession, but what then? 

Would their time be better spent doing accredited training leading to nationally-recognised qualifications? A quick beermat calculation tells me that 2 billion could fund hundreds of thousands of additional apprenticeships. Would that have been a better investment than funding large employers to take on free staff for six months? I’m no psychic, so I’ll leave it to history to be the judge.

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