The most generous of the schemes announced in the summer economic update is the Kickstart Scheme. This has been designed to help 16- to 24-year-olds into work through the creation of high quality six-month work placements.
The success of the Coronavirus Job Retention Scheme seems to be the inspiration for the Kickstart Scheme, and like the job retention scheme it will allow employers to receive up to £6,500 per work placement to cover the individual’s wages and associated costs – presumably employer National Insurance and pension contributions – as was the case with the job retention scheme.
Without second guessing the detail yet to be announced, the grant available would easily cover the costs of paying an employee National Minimum Wage (NMW) for 25 hours of work per week, as demonstrated below:
|Weekly||6 months (26 weeks)|
|NMW for 24 year old||£8.20|
|Gross Pay for 25 hours work per week||£205||£5,330|
|Employer NI due||£4.97||£129.22|
|Employer Pension contribution||£2.55||£66.30|
|Total cost to employer||£212.52||£5,525.52|
We do not yet know how the scheme will work and whether there will be a minimum contribution towards the cost of employing the individual, as there has been with flexible furloughing. Given the grant wouldn’t appear to cover the costs of employing a 24-year-old on a full-time basis, it may be that there will be an element of employer contribution in the detail to be announced.
While the Chancellor did not mention it in today’s speech, one of the key conditions employers need to be aware of is the requirement for the individual being hired to be receiving Universal Credit prior to undertaking the work placement.
This condition will limit the pool of individuals employers are able to recruit from, which may outweigh the benefits of making use of the Kickstart Scheme.
For example, one of the conditions for Universal Credit is that it is only available for 16- and 17-year-olds who do not have parental support, which would suggest the scheme is not available to those aged 16 and 17 who live with their parents.
Potential employees may have not needed to make a claim for Universal Credit to date, meaning employers could find themselves in a position of asking the individual to register for the benefit before they are taken on.
More broadly, there are unanswered questions we will need the detailed guidance to address, including:
- Will there be a minimum number of hours the employee has to work to qualify?
- Will the age restriction apply only at the commencement of the placement, or will a 24-year-old who turns 25 during the six-month placement continue to be eligible?
- Will there be any restrictions or qualifying criteria on what counts as a ‘high quality’ placement?
- How long will the scheme run for and will there be a deadline for employers to register for it?
In a separate measure announced to provide further support for the creation of jobs for young people, employers providing ‘high quality’ traineeships for those aged 16 to 24 will receive £1,000 per traineeship from the government to help with the cost.
This will only be available for new traineeships and further details will be announced shortly. As with the Kickstart Scheme, we hope the detailed guidance will provide clarification on the qualifying criteria and what is considered to be a ‘high quality’ traineeship.
New apprenticeship support
In a final measure to support job creation, the Chancellor has announced a new payment to be provided to employers who take on new apprentices between August 1, 2020, and January 31, 2021. This will be in addition to the £1,000 already paid to employers taking on apprentices aged 16 to 18.
A payment of £2,000 will be paid to employers taking on apprentices under the age of 25, reducing to £1,500 for apprentices aged 25 and over.
These measures are certainly a step in the right direction and will help create jobs for the young, who are predicted to be hardest impacted by job losses as a result of the pandemic. However, while the separately announced Job Retention Bonus will help to preserve some existing jobs, there will inevitably be many roles that are redundant post-pandemic. I would hope that further announcements go beyond providing incentives for employers to create new jobs and provide additional support to those looking to re-skill and re-train existing employees and further preserve jobs.