A Jobcentre Plus sign in London. Without the chancellor’s latest initiative, youth unemployment is expected to reach record levels
Without the chancellor’s latest initiative to help those aged 16 to 24, youth unemployment is expected to reach record levels © PA

“It was expensive, badly targeted and did not work”. Former UK prime minister David Cameron did not mince his words about the last youth employment scheme set up in a recession. That has not deterred the current Conservative government from the same gambit, only three times bigger. The success of the “kick-start” job scheme is far from assured. Business, which taxpayers have supported through the pandemic, will share the blame if it fails.

The £2bn initiative announced by Chancellor Rishi Sunak on Wednesday will create six-month work placements paying the minimum wage for hundreds of thousands of people aged 16 to 24. Without this, youth unemployment is expected to reach record levels. Being out of work or education for six months or longer is debilitating. That is bad for the jobless — and for businesses that might otherwise employ them.

Will Mr Sunak’s scheme work? The record of the 2009 Future Jobs Fund is more encouraging than Mr Cameron implied. After two years, the participants were 11 percentage points more likely to be in unsubsidised jobs. The snag was that hardly any of these were in the private sector.

That feeble showing was not entirely the fault of companies. A government worried about EU state aid rules imposed rigid criteria. But employers do have a history of holding back. When a Labour administration set up its “New Deal” for young people in 1998 the take-up by businesses was well short of forecasts. 

Companies that participate in the latest scheme should receive a modest financial benefit. The output of the youngsters they take on should have value, at the lesser cost of supervising them. But businesses may plead other priorities, including the aftermath of Covid-19 and Brexit.

Moreover, the sectors most likely to employ young people have been hardest hit. A fifth of under-25s work in the accommodation and food sector or arts, entertainment and recreation. That compares with 6 per cent of older workers, says the TUC. Mr Sunak’s announcement of extra help for hospitality and tourism is well-judged.

Such largesse underlines a broader point. The relationship between government and business has changed. The exceptional support provided by the Treasury during the pandemic has created reciprocal responsibilities. This time, the onus is on businesses as well as politicians to make the plan succeed.

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