Chancellor announces temporary job creation scheme for under-25s

£2bn investment in placements for young people forms part of a wider government plan to restart the economy after coronavirus

Chancellor Rishi Sunak (pictured) has today revealed a raft of measures to protect jobs and restart the economy after lockdown, including a £2bn temporary job creation scheme for workers aged 18 to 24.

Announced in Sunak’s summer statement, the investment aims to shield Britain’s young people – the age group hardest hit by the economic fallout from the coronavirus pandemic – from unemployment.

Under the “kickstart scheme”, the government will fund six-month job placements with a minimum of 25 hours per week through Universal Credit for 350,000 young people aged 18 to 24 who are at risk of long-term unemployment. This is three times as many jobs than the previous Future Jobs Fund (FJF), which was introduced in response to the last financial crisis of 2009. 

In his statement, Sunak also announced a ‘jobs retention bonus’ for employers who bring furloughed workers back into employment. Organisations will receive £1,000 for each worker they continue to employ until January, as long as they are paid at least £520 per month on average across that period. 

As part of the package, the government will also pay employers £2,000 for every apprentice under 25 they hire, and £1,500 for every apprentice aged 25 and over during the next six months.

Becci Newton, deputy director of public policy research at Institute of Employment Studies (IES) told People Management that the ‘kickstart’ scheme would likely prove successful if it emulated the FJF, which “sought to ensure that the jobs created did not displace existing jobs”. 

“We will need to keep a watchful eye, but the concept certainly has potential to make a real difference to young people,” she said.

Under the scheme, which is opening for applications in August, the government will cover the cost of 25 hours’ work per week at the national minimum wage (NMW), and employers are free to top up the payment. The first jobs are expected to commence in the autumn and run until December 2021, after which the scheme may be extended.

Speaking prior to Sunak’s official announcement today, Kathleen Henehan, economist at the Resolution Foundation, also welcomed the proposal but warned that delivery on such a large scale would be a challenge: “History shows that it is crucial these jobs are created quickly, with local authorities crucial in making that happen at anything like the scale the government intends.”

Lizzie Crowley, senior policy advisor for skills at the CIPD, told People Management that not only would HR departments have a key role in developing close partnerships with local organisations, they would also be responsible for securing long-term benefits from the support package: “Ensuring considerations are given to what happens once the subsidy comes to an end and thinking through how you will work with local organisations to support them moving on if you cannot support that individual within your organisation [is key].”

She added it was also important to ensure young people are “given access to training, support and development so they are not potentially doing a minimum wage, low-skill job”.

And Harry Quilter-Pinner, senior research fellow at the Institute for Public Policy Research (IPPR) said the scheme was a big step in the right direction, but warned that the chancellor's budget may fall short of what was needed to create meaningful employment opportunities. 

"We would also hope to see a training component included in the package alongside access to wider support, to ensure these measures are a stepping stone for young people to a more permanent high-quality job,” said Quilter-Pinner.

The temporary job creation scheme follows yesterday’s announcement that the government will expand its existing traineeship scheme, in a bid to curtail youth unemployment fuelled by coronavirus. It pledged to provide 30,000 new traineeships under a £111m funding boost to help young people in England get work experience, and businesses in England will receive grants of £1,000 to take on trainees.