Kickstart scheme is no-go for small employersby
The government’s Kickstart scheme launched today, encouraging businesses to create job placements for young people. However, employers looking for funding must have a minimum of 30 job placements.
As the coronavirus ravages the job market and redundancies continue to stack up, Chancellor Rishi Sunak’s Summer Statement pledge to offer job placements for young people finally gets unveiled.
Businesses are now able to sign up to the £2bn scheme and offer young people aged 16-24 a six-month work placement. However, employers can only use the scheme to offer jobs to youngsters currently on universal credit.
Employers that create jobs for those “at risk of long term unemployment” will be subsidised 100% of the age-relevant National Minimum Wage, national insurance and pension contributions for 25 hours a week. In the Summer Statement, Sunak said these grants will be around £6,500.
The Department for Work and Pensions (DWP) will choose the applicants for the jobs and youngsters will be referred into the roles through their JobCentre Plus work coach. The government expects the first Kickstarter to begin at the start of November.
Big or small
When the Chancellor announced the Kickstart scheme back at the Summer Statement he said urged every employer, “big or small, national or local” to hire as many Kickstarters as possible. The caveat that employers must offer a minimum of 30 job placements somewhat restricts the scheme to big businesses. For example, the government has noted that the supermarket Tesco is a high profile sign up of the scheme.
However, the option for smaller businesses that have fewer than 30 job placements is to partner with another organisation, such as a Local Authority, Chamber of Commerce or a registered charity. The intermediary will then make a combined bid for several businesses. Alternatively, employers can also join forces with others in the same business park or shopping centre and nominate a representative to submit the application.
The roles on offer
During this application process, employers will be asked to show that the job placements are new jobs and detail how it will develop basic skills and employability for long-term work.
This requirement fulfils Sunak’s Summer Statement promise that the positions will be “good quality jobs” that will provide “Kickstarters with training and support to find a permanent job”.
With the furlough scheme winding down in October and redundancies becoming a reality for a lot of businesses, the Kickstart scheme is not designed to be a band-aid. The guidance highlights that the job placements must be new jobs and would not cause existing employees or contractors to lose their job or have their hours reduced.
How employers get paid
The Kickstart grant is paid in arrears after the individuals’ pay has been reported through RTI. In addition to the Kickstarter grant, employers will also receive an initial £1,500 set up cost once the young person has started. This setup cost will cover any support and training for the placement and would also help pay for uniforms or anything else needed as part of the induction.
Employers will receive this money once the young person has been enrolled on their payroll and is being paid through PAYE. The grant will be taxed for the employer, but this will be off-set by the employment costs.
Driven by the need to not “lose this generation”, the Kickstart scheme was one of Sunak’s plans to protect jobs in July’s Summer Statement. The package to support young people to find jobs also includes a £2,000 payment to employers for every apprentice hired under the age of 25 and an investment into the National Careers Service for bespoke advice on training and work.
Unveiling the Kickstarter scheme today, Sunak said: “This isn’t just about kickstarting our country’s economy – it is an opportunity to kickstart the careers of thousands of young people who could otherwise be left behind as a result of the pandemic.”
But reaction to the scheme has focused on the 30 placement minimum. On Linkedin, Stuart Hurst, a director at Accounts and Legal, called the requirement "a massive barrier to entry for many small businesses wanting to use the scheme". He added: "I had so many clients chomping at the bit for this scheme and now feel very let down."
Also on Linkedin, Ben Steele, the owner of Steele Financials, said the reality of grouping with other businesses would be "pretty tough to organise".
"As an advocate for young people and their careers, it saddens me that this scheme won't help them gain experience in small/independent businesses," he said.
Will you or your accountancy firm organise a group application on behalf of some of their clients?