UK’s £2bn Kickstart programme is a step backwards

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The writer is an angel investor and co-founder of and

Last week, the UK government announced the Kickstart scheme, a £2bn fund to cover the cost of minimum-wage jobs for 16- to 24-year-olds who receive universal credit for six months. The government claims this will create hundreds of thousands of jobs.

I have no doubt that it will fund hundreds of thousands of jobs. But funding a job is not the same as creating one. Although the jobs must not replace existing or planned vacancies, I fear that many of the funded positions will simply be rebranded versions of existing roles, allowing big employers to have a large part of their payroll covered by the taxpayer.

The requirement for beneficiaries to be on universal credit is one severe limitation. Many of the targeted young people are school or college leavers, or recent graduates. Their thoughts will have been focused on the employment market and career building, not accruing benefits with the welfare state.

The careers they want to build are also unlikely to be in the low-skilled, minimum-wage roles that the scheme mostly covers. The first employer to pledge support for the scheme is Tesco. Yet the giant supermarket has precisely the types of jobs likely to survive the Covid-19-induced recession without the need for government intervention.

I also expect some of the funded roles (potentially in more high-skilled industries) will be internships in all but name. A start-up or established business may simply shift their internships into the scheme to cover their costs. Is this money well spent? All too often, interns do not gain any extra employability, as their work is limited to non-core duties.

Such issues will lead some to see the scheme as a sweetheart deal between the government and big employers. The employer gets the taxpayer to fund their existing payroll commitments and both the government and the employer get a PR win. This will have little or no net effect on the jobs market over the long-term.

Schemes like this do not create the skills, jobs and businesses that Britain needs to stay competitive in the 21st century. Nor do they nurture the industries that will become more important. Given that the pandemic has been a boon for ecommerce and a death knell for shops on the high street, the government should be investing in the future, not the past.

Rather than dipping into the public purse to help Tesco pay for shelf stackers, that £2bn would be better spent on “skilling up” young people with digital retraining. Knowledge of coding, digital marketing and ecommerce are likely to do more for their employability, and more for improving national competitiveness. In Estonia, a leader in tech and e-governance, children have been taught how to code in primary schools since the 1990s. Israel, long dubbed the start-up nation, has the most rigorous school computer science syllabus anywhere; as a result, this small country has the highest number of high-tech companies and start-ups per capita in the world.

Some of the £2bn investment should also be targeted at helping businesses started by young entrepreneurs. Since 2018, my company has helped raise £4m of funding for 15 different start-ups. Without exception, these businesses were founded by young entrepreneurs who used their years between 16 and 24 to develop business skills. It is relatively rare to see a venture capital fund invest in someone older than 35.

The pandemic has exposed young people to the precariousness of employment, the need for adaptability and the attractiveness of entrepreneurship. Those who want to start their own businesses could and should have access to government-backed finance.

Britain still doesn’t have a Silicon Valley. But it needs one, particularly when it goes it alone after leaving the EU next year. We still need to catch up with Sweden, the US and Israel in the size of our venture capital industry. We also need to improve access to that industry by those who lack the right contacts — something my company seeks to do with its focus on those from disadvantaged backgrounds or racial minorities.

All this is the kind of thing that a government scheme would do better than a single firm. Alas, government priorities seem to be rooted in a pre-pandemic world.

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