The kickstart scheme (Updated)
Chancellor Rishi Sunak had announced the plan of a new Kickstart Scheme of the Government in July 2020. The scheme was part of the Government’s “plan for jobs” to further invest in helping the economy during COVID-19.
The pandemic has, on the one hand, left small businesses wondering how to recover their businesses; on the other hand, it has also moved young individuals to universal credit because of a lack of job openings and due to the economy entering into a recession. The kickstart scheme was directed towards young people who are at risk of long-term unemployment, and to prevent this risk.
On the 2nd of September 2020, the Government announced the details of the Kickstart scheme. So what exactly is this kickstart scheme, and how will it work? Our expert Business advisors have curated this guide to answer all the basic questions and much more that you would need to know.
What is the Kickstart scheme?
The kickstart scheme is a £2 billion investment scheme that will provide funds to prevent young people from becoming dependent on Universal Credit for too long. The Government will provide funds to employers to create work placements for young people aged 16 to 24 for six months. The scheme is expected to be open until December 2021; however, there is an option for a further extension.
The Government is going to pay the hired youngsters directly to the employers. The grant will include a national minimum wage, pension contribution, and National Insurance contributions based on 25 25-hour per week placement.
The idea, therefore, is that a young individual with potential but at risk of long-term unemployment will get a placement and an opportunity to learn. While the employers will get additional resources with no extra cost as the Government will bear the funding burden. Furthermore, the gained experience will improve the chances of the younger generation to find sustainable employment in the future.
How does it work?
The Association of Employment and Learning Providers believe that the scheme will aim at youth that have limited skill sets and will provide them with better opportunities to learn. Young people who are otherwise struggling to find jobs as graduates will work with experts, job centre work coaches, and other employers for a minimum of six months to learn new skills and get a work placement.
During the initial 13-week period of the scheme, these individuals will be made to become work-ready. The mentees will be learning new work techniques and skills to later start work placement for a further 13 weeks. These people aim to achieve permanent employment or apprenticeships in the end.
Precaution is taken for fair usage
To prevent any misuse of the scheme, the Government has taken the initiative to prevent the employer companies from applying for the apprenticeship scheme with their existing employees. Employers must create new jobs and cannot replace the existing staff with a lower wage.
The scheme will ensure the funding for the participants will create no extra costs for hiring for the employers. However, any company hiring the participants will have to invest in training and mentoring them to utilise the full benefit of the scheme. The employer will not only get a fresh, enthusiastic mind to work with but also the amount of £2000 upon the hiring of each new apprentice that can work as a bonus for the company.
There is no hard and fast guidance for employers, but you must provide employability support to these participants. Remember that the participants should be in the age group where they might not have the experience you may require, so consider carefully how much time and resources you may have to put into the training of these employees.
It is better to consult your accountant or hire a professional accountant near you to estimate whether you are ready for such a commitment financially and in terms of your time.
Can you apply for the Kickstart scheme?
There is no specific information released by the government regarding the mentees who will work under the scheme. The initial criteria are just the age limit of 16 to 24 years and the reliance on universal credit. Furthermore, the participant must be one who is at a long-term unemployment risk during the pandemic.
It is, however, made clear that the employers can not hire under the Kickstarter scheme by themselves but will be compelled to employ the recommended and referred participants through job centres. Department for Work and Pensions (DWP) coaches will identify these people using a structured and flexible approach to assess the needs of an individual.
Employers that have a minimum of 30 new job placement vacancies available can apply directly for this scheme. There is no other limitation; every business, small, big, local or national, can directly apply for the scheme.
If you are offering Fewer than 30 Job placements
Micro and small businesses offering fewer than 30 job placements can not directly apply for the scheme but have to partner up with other organisations or similar employers to apply together. If you are interested in applying for the scheme through a group, you must join the group of other employers and nominate a representative for the group to apply. Moreover, you can register with existing representatives.
The other organisations you can partner with can be:
- Local authorities
- Charities
- Chamber of Commerce
- Trade bodies
Our expert business advisors recommend contacting your local DWP partnerships team for a better understanding of how the partnership grouping opportunities work.
With the new announcements regarding the Kickstart Scheme, the government of the UK has opened the doors of the scheme for small businesses. Through the new initiative, small businesses that want to hire only one or two Kickstarter employees can easily participate in the scheme.
According to the New Update, small businesses that can offer fewer than 30 jobs will now bid through an intermediary. This intermediary will then make a combined bid for 30 new job openings to keep the process simple.
This process has made it simple for small business owners in comparison to initial requirements. The initial requirements asked small businesses to find other participant businesses by themselves and select a representative.
Eligibility of the representative
The Government has clearly stated the eligibility of a representative. An eligible representative must have:
- An acceptable experience of handling partnership agreements with third parties
- Robust governance and financial processes to manage the application.
The Government will assess the representatives for their suitability for the role and may contact them for further information. The scheme is not currently accepting applications from inexperienced representative applicants. However, it will provide further information on such groups who do not have experience and want to apply for the Kickstart scheme.
How to apply for the £2bn kickstart scheme?
Businesses that can offer 30 or more job placements can apply directly online by submitting their applications. However, businesses offering fewer job vacancies will have to apply through the representative of a group of interested employers. The representative will apply on behalf of the group.
As a representative, you will have to provide details of the 30 new job placements that your group of employers has proposed. Along with that, you must provide the details of the businesses of the employers and the support they can provide to their participants.
Video: Kickstart Scheme
Do you want to learn how to apply for the Kickstart scheme? Watch the video for complete details.
Requirements of the Application
If you are interested in applying for the scheme as an employer, you must provide the following with your application
- The Charity Commission number or the Companies House reference number
- The address of the organisation and the details on how to contact you
- Detailed information about the job placements you are offering, along with their location
- Supporting document of how the job placements you are offering are new jobs.
Requirements of the supporting document
The supporting documentation must include the following information:
- The information regarding the new jobs shows that they are not replacing the planned vacancies or the existing placements.
- The new job placements will not cause existing apprentices, employees, or contractors to reduce their employment status or, worse, lose it.
- Any changes to the workforce in your company within the last 6 months (redundancies or to working hours)
- The overall size of your workforce and the number of people affected by the recent changes in the workforce.
- Information regarding those affected (Job role, average salary and more)
- The potential funding source is if you would be able to offer the job placements without getting funds through the Kickstart scheme.
- Any information about the recruitments you have processed or paused in the last six months
- You must state the similarities of the processed or paused recruitments to existing job placements or planned roles or the roles that individuals have performed previously with fewer working hours or before redundancies.
- Why are you planning to create similar roles using the kickstart scheme?
- If you have previously contacted any relevant trade union and their advice (if they have given one)
- How your organisation or the one you are representing can contribute to the employability skills of the participants in the scheme.
After the submission of the Application
Following the completion of the application according to the requirements demanded by the Government, DWP will review your application to check if it meets the criteria of the Kickstart scheme.
After the initial review, your application will then go to the designated panel for further consideration. They may contact you or your representative for further information as part of the application. The approximate period that they may take to respond to your application is 1 month.
You will receive a letter if the submitted application meets the criteria of the scheme. The letter will have a grant agreement about what your company or group of employers have agreed to offer. The agreement will also state the amount of funding you will receive as part of the Kickstart scheme.
You are required to sign the agreement using the details in the letter received and return the agreement before the start of any job placement. You will also have to provide any details regarding your requirements for the candidates for each offered job placement. After the agreement, young people who have matched your offered job placements will contact you. You can only employ a candidate who is referred by the Kickstart scheme to obtain the funding.
What if it fails?
However, if your application fails to meet the set criteria of the kickstart scheme, you will receive an explanation and feedback. You may apply again with further information based on the feedback, as there is no limit to the number of times you can apply. However, you can not legally appeal for reconsideration.
How will you receive the funding?
After you have successfully signed the agreement and recruited the referred persons, you will receive the initial setup costs. You must confirm that the young individual has started working in your company by being enrolled on your payroll and being paid through PAYE. Hire expert local payroll specialists to process your payroll effectively, as it may affect the chances of getting a grant from the Kickstart scheme if not done correctly.
To check whether the hired young individual is still employed, DWP will use the PAYE and payroll information from HMRC. Only once the information is confirmed is when you get the grant in arrears. During the job placement, they may also contact you or the hired employee to check what kind of employability support are they receiving.
Why were small businesses concerned about the new scheme?
Even though the UK Government has decided to take this initiative to provide support for both employers and employees. However, micro and small businesses are concerned about the new scheme. The concern is about the inability to apply directly if the offered job placements are fewer than 30.
According to business leaders, this extra layer of bureaucracy will work as a barrier to stop many from applying. Moreover, companies often do not have the sort of relationship with similar businesses to access the funds.
The Federation of Small Businesses has criticised the scheme by saying that it appears as if the scheme was designed with larger businesses in mind and is not aligned with the needs of small businesses. The requirement of 30 job placements at a minimum is hard to achieve and will be hard to create for small businesses.
Conclusion
The Government has launched the £2bn Kickstart scheme to support young people reliant on Universal Credit. The scheme will pay employers to create at least 30 job placements for young people at risk of long-term unemployment. They will pay the statutory minimum wage, covering overheads, for a minimum of 25 hours a week for six months.
The eligible employers or representatives of small business groups can apply online by meeting the requirements mentioned above. The employers have to ensure employability support to the referred participants.
Clear House Accountants are expert Accountants in London with an expert team of business advisors and payroll accountants. These highly skilled experts specialise in providing the support businesses require. Our accountants have been trained on all aspects of the Kickstart scheme and can provide the support and guidance required.
Top Questions Answered regarding the new Kickstart scheme
How much will the Government pay as an administrative charge?
According to the DWP, the representative bodies will receive £300 for each person starting a kickstart job as the administrative cost.
Why can’t I advertise for the job to find the ideal candidate?
Employers interested in the scheme will have to hire the candidates referred to the company through jobcentres and the DWP. The DWP will assess the participants according to the criteria, and only eligible young people will be considered for further recruitment. Employers will have to describe the job roles, and DWP will only refer the compatible candidates to the job placements.
Do I have to employ the monitored young Kickstarter after six months?
No, there is no such demand in the scheme. However, you may continue to employ the person if you wish to. The main goal of the scheme is to mentor young people and make them work-ready and more eligible for future job roles.
Can I interview the prospective candidate?
Yes, as long as you’re interviewing the DWP-selected candidates, you can use your usual effective hiring criteria.
How can I upskill a Kickstarter?
You can ask them to learn through free courses online to be work-ready for the job role. However, the DWP is not accepting job roles that require extensive training to perform. You may upskill the Kickstarter candidate by making them efficient in CV writing, interviewing and time management. The other schemes you may use are the buddy scheme, mentoring scheme, and regular in-house training sessions.
The buddy scheme is where you will appoint an old employee who has enough experience to work with the newly hired employee. The buddy will be responsible for keeping board the new employees while teaching them how things work around the company in an informal environment.
Mentor scheme, as the name suggests, is a scheme where there is a more formal environment between the new apprentice and a more senior employee. This scheme will help the Kickstarters to understand more formal work structures and processes.
Whereas, the online session with seniors and managers will help the candidate in developing new skills.
