National Audit Office report on DWP employment support: the Kickstart Scheme

Kickstart is a large scale intervention, designed at speed to prevent a significant rise in youth unemployment and the long term "scarring" effect this can have on young people's life chances. But the Department for Work and Pensions (DWP) has limited assurance that Kickstart is actually having the positive impact intended, according to a new report by the National Audit Office (NAO).

The Kickstart scheme was launched by DWP in September 2020 in response to an expected surge in youth unemployment as a result of the COVID-19 pandemic. It aimed to create ‘high-quality six-month work placements aimed at those aged 16-24 who are on Universal Credit and are deemed to be at risk of long-term unemployment' through funding provided to employers to create new jobs.

Within the context of the ongoing pandemic, the planned end of furlough in October 2020 and an expected rise in youth unemployment, there was a clear rationale for Kickstart in the summer of 2020. With a budget of £1.9 billion and a cost of around £7,000 per participant, Kickstart is more than twice the cost per participant of DWP's next most expensive support scheme. The Department calculated that its benefits to society will outweigh its costs by up to £1.65 for every £1 invested if it is targeted effectively at the right people and the jobs created would not have otherwise been funded by employers.¹

DWP set up an initial version of the scheme rapidly. The Department based the Kickstart Scheme on a previous programme, the Future Jobs Fund, which ran from 2009 to 2011, but made changes it did not have time to test before implementation. This included greater private sector involvement, so that the jobs more resembled real jobs that would help young people find sustained employment after the scheme. However this created the risk that some funding would go to businesses that would have created jobs anyway. The scheme also experienced a number of technical and logistical problems, and attracted some criticism from stakeholders about unclear rules, and a lack of published data on progress. The Department made changes in response, continuing to develop its rules, systems, and management information over time.

The labour market conditions have developed in ways that were not then expected. Repeated lockdowns meant many of the young people who started to claim Universal Credit at the start of the pandemic were on Universal Credit for over a year before the scheme could get going at scale. As the programme did begin to scale up, the economy was reopening, which increased the risk of government subsidising jobs that would have been created anyway. By summer 2021, the Department acknowledged it was unrealistic to achieve its initial aim of 250,000 young people starting a Kickstart job by 31 December 2021, and is now planning on the basis of up to 168,000 starts by the end of March 2022. Some 100,000 people have started jobs created by the scheme so far.  Nonetheless, the Department decided to continue the scheme on the basis that it could have a positive impact for the large number of young unemployed people who have been on Universal Credit for over a year, which has trebled since the start of the pandemic.

While Kickstart was created to target those young people who were ‘deemed to be at risk of long-term unemployment', DWP did not set any formal eligibility criteria for the scheme beyond being aged 16 to 24, claiming Universal Credit, and seeking work. There are no firm rules to restrict eligibility to those most likely to benefit. DWP empowers front-line work coaches to use their discretion as to which of those young people eligible for the scheme would benefit most from it, and provides training and guidance to help them make these judgements. This may mean that it is better able to tailor support to individuals' needs, but DWP cannot know how effectively the scheme has been targeted without monitoring how work coaches have used that discretion.

DWP has limited assurance over the quality of the work placements created by the scheme, or whether jobs created by employers are truly additional and would not have existed without the funding provided. The employability support or training employers must provide is not specified, and DWP does not collect data to monitor what support they actually provide. Employers are asked to explain why the jobs they want Kickstart funding for are additional and are then asked a series of questions about these aspects of their bid, but the delivery of these commitments is not routinely monitored by DWP.

The Kickstart Scheme has now been extended to March 2022. The overall impact of the scheme will not be fully clear until DWP completes its planned evaluation of participants' future employment prospects, several years from now. It is important in the meantime that the DWP monitors whether it is on course to achieve its assumptions and can adjust the programme accordingly. The NAO has made recommendations to DWP to help it ensure the scheme remains on track and learn from this experience the next time such a scheme is needed. These include monitoring whether work coaches refer the right people to the scheme and assessing why there are many people who, in principle, are eligible for the scheme but are not taking up the outstanding vacancies. DWP should also conduct routine inspections and monitoring of Kickstart employers to ensure that they are fulfilling the condition that these jobs are high quality and additional.

Gareth Davies, the head of the NAO, said:

"At the start of the pandemic, DWP acted quickly to set up Kickstart to help young people into work when youth unemployment was predicted to rise significantly.

"However, DWP has limited assurance that Kickstart is having the positive impact intended. It does not know whether the jobs created are of high quality or whether they would have existed without the scheme. It could also do more to ensure the scheme is targeted at those who need it the most."

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Notes for Editors

1. This calculation was dependent on:

• Kickstart participants spending, on average, 52 more days in work (and 80 fewer days on benefits) in the five years after their Kickstart placement, compared to non-participants; and
• Kickstart jobs creating real economic value, with at least 50% of jobs being 'additional', meaning they would not otherwise have been created.