The Kickstart scheme: reflections three years on

Three years on from the advent of the Kickstart scheme – the Government’s employment programme which created jobs for young people aged 16-24 during the Covid-19 pandemic – the Department for Work and Pensions (DWP) has published a process evaluation report looking at the effectiveness of the scheme. Of course, the labour market looks very different now to the summer of 2020, with concerns about high nominal pay growth, public sector strikes and stubbornly high economic inactivity higher up policy makers’ agenda than worries about youth unemployment. But it is worth pausing to reflect on the effectiveness of the Government’s billion-pound scheme to consider how well it rose to the challenge of protecting young people from the labour market disruption caused by the pandemic.

It’s understandable that youth unemployment is no longer a major concern: despite creeping up slightly in the past few months, the youth unemployment rate remains remarkably low. The unemployment rate among 16-24-year-olds was 11.4 per cent in March-May 2023, down from a pandemic peak of 14.9 per cent in mid-2020, and only half as high as the financial-crisis high of 22.5 per cent in 2011.

This reality looks far better than projections did in early 2020, when a surge in youth unemployment was widely expected and the Office for Budget Responsibility (OBR) forecast a rise in unemployment that would have led to more than 600,000 young people finding themselves newly unemployed in 2020 alone. In the face of these bleak unemployment predictions in 2020, how well did the Kickstart scheme do in supporting at-risk young people? Last week’s report provides some new findings from surveys and interviews with Kickstart participants and employers to help answer this question.

First, the good news. Overall, a majority of participants and employers had a positive experience of the Kickstart scheme: 70 per cent of young people were satisfied with their Kickstart job seven months on from starting, and a similar proportion (73 per cent) of employers were satisfied with their experience.

Encouragingly, a vast majority (94 per cent) of young people reported experiencing some on-the-job training during their Kickstart role, and this training was deemed useful by almost all (94 per cent) of those who started a Kickstart placement. This is in stark contrast to overall woeful rates of workplace training, with less than one-in-three 16-24-year-olds (29 per cent) receiving work-related training in 2020, down from 39 per cent in 2002. Notably, among participants dissatisfied with their experience of Kickstart, four-in-five (78 per cent) would have liked more training as part of their role.

The employment outcomes of Kickstart participants also look encouraging. One of the major worries after the announcement of the Kickstart scheme was that young people might not be supported in finding lasting employment opportunities, given that the Kickstart scheme only funded part-time work (25 hours per week) for a total of six months. But seven months on from starting a Kickstart job (i.e., one month after the funded placement ended), two-thirds of young people were still in employment, education or training, and this figure rose to three-quarters of young people being in employment, education or training after ten months. However, it is hard to know what to make of these figures without knowing how different they look to the employment trajectories of young people more generally: we await publication of another DWP evaluation which will aim to shine light on this issue by comparing the outcomes of Kickstart participants with similar young people who did not participate in the scheme.

More concerningly, Kickstart participants who started out most disadvantaged in the labour market (for example, those with no or lower qualifications, those with no prior work experience, and those with long-term claims for Universal Credit) had less positive employment outcomes after the end of their six-month Kickstart placement. Similarly, the Kickstart scheme appears to have been less effective for young people with health conditions that substantially impact their daily life. Almost half (47 per cent) of young people with such a health condition left their Kickstart placement without completing the full six months, compared to just over a quarter (28 per cent) of those without a reported health condition. Indeed, half (51 per cent) of young people with such health conditions were not in employment, education or training (NEET) seven months after starting their Kickstart placement. This seems to confirm the widely-held concern that the Kickstart scheme would follow previous employment support programmes (such as the Work Programme) in being less effective for those with health conditions.

A wider challenge with the Kickstart scheme is that it was only open to those young people aged 16-24 who were in receipt of Universal Credit and ‘at risk of unemployment’. This necessarily excluded young people not claiming means-tested benefits (for example, some young people living with their parents or with a working partner who would not be eligible for Universal Credit) and those who weren’t actively looking for work in 2020. As the chart below shows, the main impact of the pandemic on youth employment turned out to be a rise in economic inactivity more so than a rise in unemployment. The number of 18-24-year-olds who were NEET and unemployed was only slightly higher in early 2023 than on the eve of the pandemic, at 280,000 and 274,000 respectively (a rise of 7,000). On the other hand, the number of 18-24-year-olds who are NEET and inactive has risen from 425,000 to 441,000, an increase of 16,000.

While youth unemployment seemed like a real threat in early 2020, it was clear from 2021 onwards that this was not going to be the lasting legacy of the pandemic: for example, only 96,700 young people had started Kickstart placements by the autumn of 2021, far fewer than the 250,000 placements budgeted for by DWP. So, although Kickstart seemed like a sensible support scheme in 2020 – and clearly had benefits for some young people during the crisis – more could have been done to adapt the scheme to address the rise in economic inactivity seen from 2021 onwards, for example by widening the eligibility criteria for participants.

Finally, there is a wider lesson to learn from the less positive outcomes of Kickstart participants with health conditions: the Government needs to do more to support young people with health problems to find and sustain good quality work. Failure to do so will become an increasingly big problem, given that the number of young people who are not working due to ill health has doubled in the past decade, and these young people now make up a quarter of all young people who are not in work or study.

With youth unemployment low, and increasingly fewer young women out of work to care for family, the existing Jobcentre Plus approach to supporting young people into employment won’t cut it. Instead, support needs to reflect that young people who are out of work due to ill health will require both health support and employment support. The Government can learn from successful pilots where mental health support has been integrated with employment support: for example, participants who engaged with employment advisers within IAPT (now known as the NHS Talking Therapies, for anxiety and depression programme) were more likely to move into, and remain in, work than those who did not. The Government must also reflect on the fact that many of these young people who are not working due to ill health are further disadvantaged by having low levels of skills – a shocking four-in-five young people who are workless due to ill health only have qualifications at GCSE-level or below, compared to a third of all 18-24-year-olds. As such, it must be a priority to make it easier for young people to ‘catch up’ and achieve these qualifications later in life. How best to support young people with ill health into sustained employment is a subject we will return to this winter as we conclude our work as part of the Health Foundation’s Young people’s future health inquiry.