Rishi Sunak reveals £2bn unemployment scheme to create hundreds of thousands of jobs
The government will subsidise hundreds of thousands of new jobs for unemployed young Britons as a part of a new £2bn coronavirus support package.
Chancellor Rishi Sunak will announce the launch of the Kickstart Scheme in his summer economic statement tomorrow, which will see the government subsidise jobs for 16 to 24-year-olds receiving Universal Credit benefits.
For each job on the scheme, the Treasury will pay 100 per cent of the National Minimum Wage for 25 hours a week with employers able to top up that amount.
For 21 to 24-year-olds that would mean £205 each week, while 18 to 20-year-olds would receive £161.25 and 16 and 17-year-olds would receive £113.75.
As a comparison, under-25s currently receive £85.68 a week on Universal Credit.
The announcement will come as a key pillar of the government’s bid to have its own Franklin Roosevelt-style New Deal to aid the post-Covid-19 economic recovery.
Boris Johnson used a major speech last week to speak about his goal of bridging “yawning gaps” in society by providing “not just a New Deal, but a fair deal for the British people”.
The New Deal was a set of public spending programmes aimed at lifting the US out of the Great Depression in the 1930s.
Sunak said today that young people were most likely to be the worst affected by the coronavirus economic downturn and that they should be the government’s first priority.
“Young people bear the brunt of most economic crises, but they are at particular risk this time because they work in the sectors disproportionately hit by the pandemic,” he said.
“We also know that youth unemployment has a long-term impact on jobs and wages and we don’t want to see that happen to this generation.
“So we’ve got a bold plan to protect, support and create jobs – a plan for jobs.”
Office for National Statistics figures showed the UK’s unemployment rate between February and April remained steady at 3.9 per cent thanks to the government’s furlough scheme.
However, during this period workers on company payrolls fell by 612,000 people meaning the unemployment rate is set to shoot up as the Sunak rolls back the support scheme from September.
Young people will be particularly hard hit, with three-in-ten 18 to 24-year-olds furloughed, and one-in-ten already made unemployed by the coronavirus crisis.
Kathleen Henehan, economist at left leaning think tank the Resolution Foundation, estimated that Sunak’s new jobs scheme would be able to provide 350,000 placements for young Britons.
“This is exactly the kind of approach needed, learning the lessons of what worked in the financial crisis,” she said.
“History also shows that it is crucial that these jobs are created quickly, with local authorities crucial in making that happen at anything like the scale the government intends.”
Federation of Small Businesses chair Mike Cherry added: “It has been worrying to see the rising number of young people out of work, and with 700,000 16-24 year olds due to join the labour market this summer this needs a major intervention to prevent a generation lost to long-term unemployment.
“Small businesses are disproportionately likely to employ young people, as well as people who were previously out of work, and therefore the government must implement its £2bn Kickstart Scheme in such a way as to allow smaller employers to play their part fully.”
The Kickstarter Scheme is similar to – but significantly larger than – Gordon Brown’s Future Jobs Fund, which was launched after the 2008 financial crisis.
The £680m fund created 105,000 jobs that were partly subsidised by the government, with the programme emphasising skills and training.
Responding to the government’s announcement, Labour shadow chancellor Anneliese Dodds said: “To the extent that the Kickstart programme is based on the Future Jobs Fund model, it should help many young people to access work.
“However, the government is yet to rise to the scale of the unemployment crisis. The urgent priority right now is to prevent additional unnecessary unemployment in the first place by abandoning the government’s one-size-fits-all approach to the removal of the Job Retention and Self-Employed schemes.”