Kickstart could be costing over £20,000 per new job


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Commenting on the National Audit Office’s interim report on the Kickstart scheme, Professor Len Shackleton, labour market expert at free market think tank the Institute of Economic Affairs, said:

“Youth unemployment threatened to explode during lockdown, and it was not surprising that the government felt the need for preemptive action. One result was the Kickstart scheme, which aimed to subsidise employers to create up to 250,000 jobs.  

“The NAO’s report suggests that the scheme has been slow to start, is not properly monitored, and may simply be subsidising jobs which would have been created anyway. The subsidy per job is costed at £7,000. However, if only 30 per cent of such jobs are ‘additional’, as one Department for Work and Pensions estimate suggested and now seems very plausible, the cost per new job rises to well over £20,000. 

“In these respects Kickstart resembles many previous government job creation schemes which have had much less effect than their architects claimed. 

“The NAO also points out that the expected surge in youth unemployment has not occurred, partly as a result of furlough support and partly because the jobs market has recovered quickly, currently with a record 1.2 million vacancies. Despite this, the DWP is persevering with Kickstart.”

Commenting on the House of Lords Youth Unemployment Committee’s report on youth unemployment, Len said:

“The report calls for a raft of new measures aimed at reducing unemployment among young people, which is still too high (though well below that in most of Europe). There are undoubtedly problems with a minority of young people who have been unemployed for more than a year, and it may be that some further action is needed. 

“Nevertheless, the House of Lords report is a scattergun approach, with over 70 recommendations, 56 of which begin with ‘the government must’. Most of these involve uncosted extra government spending to achieve nebulous outcomes which cannot be measured in any obvious way.  

“It is a pity the Committee did not have time to digest the NAO’s report before instructing the government what to do. At a time when public expenditure has gone through the roof we need to be much more sceptical of claims that government can significantly improve skills and work attitudes and ‘create’ jobs through spending taxpayers’ money.” 

ENDS

Notes to editors

Contact: Emily Carver, Head of Media, 07715 942 731IEA spokespeople are available for interview and further comment.

Further IEA reading:

How to create new jobs, by Professor Len Shackleton

 



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