Sunak’s Kickstart scheme not delivering value for money, NAO finds

Chancellor Rishi Sunak’s flagship £2bn pandemic jobs scheme to get young people into work may not be delivering value for money, the spending watchdog has said.

A report by the National Audit Office (NAO), and a separate one by a group of peers, has highlighted concerns that youth unemployment policies are either insufficient or flawed.

The Kickstart scheme, launched by Sunak in September 2020, offers government-funded “high-quality” job placements for 16- to 24-year-olds who are on universal credit and at risk of long-term unemployment.

A report by the NAO, which monitors value for money on public spending, said the Department for Work and Pensions (DWP) had only “limited assurance” that the scheme was working as intended.

Private sector firms that received state subsidies to hire young people might well have done so anyway, the NAO said, because the economy was reopening just as the scheme began to ramp up.

The report also found that there was relatively little early take-up for Kickstart due to successive lockdowns depressing demand for workers, so far the scheme has created 96,700 jobs rather than the targeted 250,000.

When firms did start hiring, the NAO said, there was little monitoring by government to check that the jobs it funded were of good quality, with young staff offered training and support, and that they were offered to the right people.

Gareth Davies, the head of the NAO, said: “At the start of the pandemic, DWP acted quickly to set up Kickstart to help young people into work when youth unemployment was predicted to rise significantly.

“However, DWP has limited assurance that Kickstart is having the positive impact intended. It does not know whether the jobs created are of high quality or whether they would have existed without the scheme. It could also do more to ensure the scheme is targeted at those who need it the most.”

Labour said its own analysis had found that the scheme was heavily weighted towards the south, with as many jobs created there as in the north and Midlands combined, despite higher youth unemployment in those regions.

Related: Youth jobs scheme creates just 490 posts in north-east of England

“The chancellor’s ‘plan for jobs’ has failed to plan for the jobs our country actually needs in the places that need them most,” said shadow DWP minister Jonathan Reynolds.

Frances O’Grady, general secretary of the TUC, said Kickstart was “not perfect” but that it had an important role to play.

“The government should now work more closely with unions on the next phase so that we can give young workers a voice in improving the scheme,” she said.

A government spokesperson said: “We acted quickly and decisively to establish Kickstart at the start of the pandemic when it was feared unemployment levels would more than double – as this report acknowledges.

“The scheme has already delivered over 100,000 new life-changing jobs for young jobseekers on universal credit who were at risk of long-term unemployment and will continue to deliver opportunities for young people.”

The NAO’s assessment of Kickstart was accompanied by a separate but similarly critical report by a cross-party committee on youth employment, which stands at 11.7%.

The peers accused the government of allowing hundreds of thousands of young people to languish in unemployment when they could be learning new skills or serving apprenticeships.

Lord Shipley, chair of the youth unemployment committee, said the government needed to overhaul England’s national curriculum, make careers guidance more sophisticated, improve skills training and reform the failed apprenticeship levy, with the aim of matching levels of youth employment seen in Germany.

The report produced 71 recommendations to bridge a skills gap that left many young people trapped on low incomes without the skills to change their circumstances.

Shipley, a liberal peer and former leader of Newcastle city council, said 631,000 young people were not in education, employment or training (NEET) and 475,000 were unemployed.

“It means 21.8% (141,000) of 18-year-olds are neither in full-time education nor work with training,” he said. He added that the Kickstart scheme was undermined by the government’s failure to integrate its training component into a broader skills programme.

Co-author Kenneth Baker, the Tory peer, who as education secretary in the 1980s pioneered computer skills training, said it was a mistake to cancel the ICT GCSE in 2016 when digital skills were essential. It meant only 11% of students below the age of 16 studied computing – a fall of over 40%, he said.

A government spokesperson said: “We are taking action by giving young people the opportunities they need to secure a job – and with the number of young employees on payrolls back above pre-pandemic levels – it is clear that our plan for jobs is working.

“We have announced an extra £1.6bn in funding by 2024-25 to support more 16- to 19-year-olds through high-quality education, on top of extra funding in 2020-21 and 2021-22. This has contributed to the record high proportion of 16 to 18-year-olds in education or doing apprenticeships since consistent records began.”