A flagship scheme to tackle surging youth unemployment could fail to take off as firms struggle to create jobs in the face of the coronavirus downturn, work and pensions select committee chairman Stephen Timms has warned.
The £2.1bn Kickstart programme is a cornerstone of Rishi Sunak, the Chancellor’s plan to prevent a joblessness crisis – but fears are growing it will be largely ignored by businesses focused solely on staying afloat.
Mr Timms, a former employment minister, said Kickstart risked falling into the same trap as the Future Jobs Fund (FJF) launched by Labour in 2009, on which it is closely modelled.
The FJF was used mainly by councils and charities rather than private firms because it was easier for them to create new roles and access the cash.
He said: “It is much harder for private companies to do that because they are not going to invent jobs for the sake of having young people in employment. What you don’t want to do – what no government could go along with – is sacking people and then taking government money to get someone else to do the same job. That is the nightmare scenario for this.”
The Kickstart scheme offers grants of £6,500 to employers to fund six-month work placements for up to 350,000 16 to 24-year-olds – an age group which has been particularly hard-hit by coronavirus. Ministers are concerned about a possible lost generation of school leavers and graduates who were locked out of the job market when Covid hit and recruitment collapsed. They are afraid thousands of people in this group could join the ranks of the long-term unemployed as a result.
Ministers want Kickstart to be specifically targeted at the private sector, but Mr Sunak has stressed funding will hinge on employers proving the new jobs created are “additional”, to prevent firms sacking existing workers and replacing them with state-funded candidates.
Mr Timms said: “The reason private sector firms didn’t make much use of the FJF was for that reason. It was quite difficult for them to come up with clearly additional roles.
“It was quite a lot harder, and I imagine it will be harder with the Kickstart programme, as well for all small businesses to take advantage of it, especially at a time when many of them are going to be laying people off.”
The Department for Work and Pensions has been in discussions with industry bodies and training providers over Kickstart, with more detailed guidance on the shape of the scheme due this week. It is understood that the first Kickstarters could begin work in November.
A source at one leading industry body involved in the talks said employers are keen to support the scheme but need clarity over what counts as extra jobs. He said: “Nobody wants to take the risk of making a fraudulent claim on a scheme, it is always better to not engage with it.”
Official figures already show 435,000 or 11.1pc of 18-24 year-olds are unemployed – the highest level for four years, with the number of benefit claimants more than doubling to 531,000 since March.
Stephen Evans, chief of the Learning and Work Institute, said Kickstart could help avoid a generational disaster but said that time is of the essence.
He added: “Unless the scheme is up and running soon, there is a danger that many thousands of young people could simply fall through the gap.” A Government spokesman said: “Our Kickstart scheme will ensure that all businesses who are offering new, quality work placements are able to take part.”