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Chris Wright: A step in the right direction, but will the Chancellor’s kick-start scheme help those who need it most?

Today it is more than encouraging to see Government recognise the urgent need to support young people into employment. Here, Catch22 CEO Chris Wright discusses the questions we’re still left with, and what more we can all be doing to help young people thrive during this recovery effort.

08 July 2020

800,000 young people will leave education this year and I certainly don’t envy themIn the cold light of the COVID-19 world, their options are worryingly limited. 

One option is to choose to stay on in education – if they can afford it. Others will want, and need, to apply for paid work; but with the industries and roles traditionally taken up by young people hit hard by COVID-19, opportunities will be few and far between. Some might apply for apprenticeships; a proven way to get onthejob experience whilst building skills. But with apprenticeship starts falling by an estimated 50% since the start of lockdown, competition will be high and places limitedIt is encouraging to see that Government has today recognised this, by offering financial incentives to employers of up to £2,000 if they hire an apprentice.  

Others will opt to take up some form of training, with the hope it will lead to paid employment in the not too distant future. This is what the Chancellor has today put £2 billion behind – in the form of a fund that will subsidise six-month work placements for people on Universal Credit aged between 16 and 24.

Lifelong change or just a stop gap? 

Without doubt this is a positive and much needed move. However, it also raises many questions. We know that many young people who may be entitled to Universal Credit don’t claim it, meaning they’re likely to fall off the radar for this scheme. And whilst building skills and getting job-ready is important, how will these opportunities translate into sustained, quality jobs? What will the quality of these placements be and how can we ensure that pre-employment training is high quality and provides a very real route into work? How will the young people on these placements be able to afford to live on the minimum wage – and related to that, what guarantees are there that employers will top up the wages to the living wage or above? 

As further details of the scheme emerge, these questions will need to be addressed. 

Make the most of what’s already in place 

Given the scale of the contraction of the job market and the impact on young job seekers, more interventions are going to be needed. £2 billion investment in the kick-start scheme is considerable, so the question is – what other options could be looked at that incentivise employers to take on young people, without costing the Treasury even more? And how can those from the most vulnerable backgrounds be supported into sustained work? 

One area that deserves exploration is the apprenticeship levy. The total levy underspend in 2019 was nearly £2 billion. That’s a lot of money that employers are wasting and which is going back to the Treasury. Apprenticeships give young people the opportunity to earn while they learn in areas focused on business need. So how the levy could be flexed to benefit young people? 

  • Focus the levy on young people 

Much has been talked about reframing the apprenticeship levy so that it supports young people into work as we know currently that’s not always the case. There is a big opportunity to flex the levy to focus on young people – for example by allowing employers to spend up to a certain amount of their levy pot on something other than skills and training.  This might include ‘off the job costs’ – e.g. recruitment costs or the salary of an apprenticeship manager – as an added incentive for employers to continue (and ideally expand) their apprenticeship programmes.   

It could also include purchasing quality, targeted pre-employment training, which supports young, inexperienced participants into apprenticeships – and vitally gives them a direct route into employment.   Our Digital Edge programme, funded by Microsoft, is a great example of a quality pre-apprenticeship programme aimed at young people from disadvantaged backgrounds that in just 4 weeks equips them to enter digital apprenticeships. 

  • Incentivise levy transfer  

Many non-levy paying organisations (i.e. small and medium sized enterprises) are not benefitting from levy transfers and therefore are not hiring apprentices.  At the same time, many larger organisations are not transferring unspent levy  - either because they are unaware of which organisations are interested in receiving the funds, or because of the bureaucracy involved.  

Far more needs to be done to publicise ‘matching’ services – linking up levy paying organisations with SMEs who wish to receive funds. And again, there should be more flexibility on how the levy can be spent so that smaller companies can spend transferred levy funds on quality training for young people to help them build the skills to get into work. A great example of incentivising levy transfer is the London Progression Collaboration’s ‘Reskilling the economy’ campaign. 

Mobilise young people 

There is growing momentum around the idea of mobilising young people and equipping them with the skills to become active citizens and contribute to their local communities in a meaningful way, a little like the National Citizen Service does for some young people already. This is particularly where the demand for social and charitable activity is growing and jobs are at a premium. Such ideas – including the ‘year of service’ and the ‘youth corps would see Government provide money to employers to subsidise the wages of young peoplemeaning they would be paid a wage equivalent to that of an apprentice The young person would be deployed into a role that meets the needs of their community – allowing them to gain work experience, positively contribute to society and once completed, enter sustained work. 

Be bigger and bolder 

This is a big intervention – and we know similar interventions on this scale have worked well in the past. But we have to make sure those who are already ‘left behind’ are not consigned to the scrapheap – everyone must treated as an asset to be invested in, not a problem to be solved. 

There is a risk that the impact of this scheme is limited and time-bound.  There is a big reliance on employers to ‘top up’ wages and ensure the work experience is meaningful – giving young people a step onto the job ladder, not just a shortterm placement that leads nowhere. Much can be learnt from organisations such as Barclays for example, whose Connect with Work scheme supports people who face barriers in getting into work by providing tailored skills training and connecting them to businesses that are recruiting. 

So let’s back young people now into the careers of the future – because we know it’ll bring returns for all of us as we head for a greener, more creative and technologically-driven economy.