A series of employment measures under the “Plan for Jobs” banner announced by chancellor Rishi Sunak in his summer statement include a new scheme to head off mass youth unemployment as a result of the coronavirus pandemic.

The Kickstart Scheme is a £2bn fund aimed at those aged between 16 and 24 who receive Universal Credit and are considered at risk of long-term unemployment. The scheme will pay for six-month work placements, covering 100% of the national minimum wage – plus national insurance and mandatory pension contributions – for 25 hours a week. Applications will open from next month, with the first ‘Kickstarters’ expected to begin placements in the autumn. 

In a statement, the government said the Kickstart Scheme would give young people the chance to build their confidence and skills in the workplace, and to gain experience that will improve their chances of going on to find long-term, sustainable work. The scheme will potentially mean jobs for around 350,000 young people.

The government is particularly concerned about the long-term impacts of unemployment on young people due to their lack of experience in the workplace. Research published in May by think tank the Resolution Foundation predicted that the current economic crisis risks pushing an additional 600,000 people aged 18 – 24 into unemployment in the coming year, and causing long-term damage to their pay and job prospects, unless major new support was provided. 

Following Sunak’s announcement, Kathleen Henehan, research and policy analyst at the Resolution Foundation, said action to keep youth unemployment down is crucial to avoiding lasting damage to careers that are just getting started. “Young people have been hit hardest by Britain’s growing jobs crisis, with 30% of 18 – 24-year-olds furloughed, and one in 10 already having lost their jobs. History also shows it is crucial that these jobs are created quickly, with local authorities central in making that happen at anything like the scale the government intends.” 

However, Henehan warned that the objective of the scheme was ambitious. She added: “350,000 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.”

Tania Bowers, general counsel and head of public policy at the Association of Professional Staffing Companies (APSCo), describes the scheme as a “generous initiative” but expresses concern about the practical challenges of providing work-based training. “At a time when businesses are going to be struggling to recover from the Covid downturn and continuing to face Covid-related absences and potential lockdowns, it may be logistically difficult to deliver six months’ worth of meaningful training and support to the workers on the scheme,” she says. 

“The apprenticeship scheme, despite its limitations, is well established and results in a recognised qualification so may be a preferable route for many people, particularly school leavers, graduates and those mid-career. We are continuing to ask government for more flexible use of apprenticeship levy funds and the widening of the scheme to include agency workers.”

Despite presenting a good opportunity for employers to take on trainees at a subsidised cost, employers will need to ensure their recruits receive wider support and career coaching as part of their employment. Sharon Walpole, director of Careermap, a specialist recruitment site for young people, urges employers to consider their long-term plans before taking the Kickstart funding. “It can be a great opportunity to take on staff during transition periods during the pandemic and a way to find a fresh talent pool. If it can only be a short-term fix or there isn’t the space for permanent recruitment, then there should be a responsibility to give a quality experience for anyone taken on during this scheme so that skills gained will help with finding employment elsewhere later,” Walpole says. 

Bearing in mind the extra management pressure brought about by the impact of the pandemic, combined with the end of the transition period for the UK’s exit from the EU at the end of the year, employers should make sure they have the bandwidth to make the most of the scheme, warns business growth and innovation expert Erica Wolfe Murray.

In anticipation of huge demand for the scheme by young people, Wolfe Murray urges employers to have a clear brief of the role they have in mind and the type of candidate they want. “Companies can use this scheme to find their young guns of the future. Why use it just for extra pairs of hands, when the candidates could potentially help your company develop and grow? Look for Kickstarter candidates who bring skills your business doesn’t have.”

Bearing in mind the scheme is aimed at so-called NEETs – those not engaged in employment, education or training – businesses should think carefully about whether the administration and staff supervision requirements justify use of the scheme. “They may find it is a better decision to focus – in part or in full – on recruiting from other pools of potential staff, for example mature individuals who’ve now been made redundant because of the recession,” says Robert Salter, global mobility and employment tax service director at Blick Rothenberg. 

Nick Behan, a partner at recruiter Norman Broadbent, said the Kickstart Scheme offered incentives for the tech industry to move away from the traditional freelance model to an employment model. “Businesses in the industry safeguard cash in the short term, extending the funding runway while removing intellectual property risk, which can arise from the use of freelancers,” he said. 

However, he warned that employers in the sector should be aware of the possible restriction on the ability to claim R&D tax credits against these employee costs. “There is also the issue of additional employee/employment legislation to navigate,” he said.