Chancellor Rishi Sunak unveils new jobs retention bonus scheme

The Chancellor of the Exchequer, Rishi Sunak, has just announced a new jobs retention bonus scheme to help businesses who have furloughed workers during the COVID-19 pandemic.

Sunak has told Parliament that employers who have utilised the scheme and are now bringing staff some back will now be eligible to receive a £1000 bonus per employee.

He said: “The employee must be paid £520 a month each month through to January. This would be a £9bn policy to retain people in work. If you stand by your workers we will stand by you.”

Sunak has also revealed that the government will give companies £2,000 each to hire apprentices. He says firms will also get £1,500 to hire apprentices over the age of 25.

£1bn of government funding will be given to the Department of Work and Pensions to help job seekers following the coronavirus pandemic. The government also aims to double the amount of advisors dealing with jobseekers.

Regarding the future of employment in the UK, the Chancellor also revealed that the government will pay employers £1,000 to take on trainees.

Industry reaction

Michael Buckworth, Managing Director of law firm – Buckworths

The Chancellor’s mantra of ‘jobs, jobs, jobs’ is overdue. The job losses have already begun, with barely a day passing without a household name announcing vast staff cuts. As with all recessions, the youngest, lowest-paid employees tend to be let go first. And with an extra 620,000 18-24-year-olds expected to be unemployed by the end of the year, it’s no exaggeration to say we are at risk of losing a generation of workers.

The new kickstart scheme will help protect the younger generation from the brunt of the COVID-19 crisis. But the Government’s proposal to pay for the cost of 25 hours’ work a week for six months at National Minimum Wage for new traineeships risks locking young people into low paid, low hours jobs with little career progression. Instead, the Government should set an example to businesses throughout the UK and ensure that these trainees are fairly remunerated by covering the living wage and build in minimum standards for training and supervision.”

Whilst SMEs may welcome subsidisation of the salaries of junior members of staff, there is a risk that businesses conclude that the cost of training and supervising trainees outweighs the benefits and either fail to participate in the scheme, or use the trainees as cheap labour for six months.

Lee Biggins, Founder and CEO of CV-Library

Sunak’s summer statement offers some hope to young people and those who are on the furlough scheme. However, it’s always going to be met with criticism. The ongoing extensions to the Job Retention Scheme have been a lifesaver for businesses that are struggling, but it is also, sadly, delaying the inevitable; redundancies and mass unemployment.

Employers are working harder than ever to keep people on their books and ensure that there’s a job available to them once furlough ends. With the introduction of trainee programmes for young people, and more funding for apprenticeships, businesses will be encouraged to create employment opportunities for 16-24 year olds; but whether they make them remains to be seen.

We know that organisations are struggling in a huge range of sectors. Job numbers are slowly picking back up, but they’re nowhere near the levels that they were pre-pandemic. It’s great to see the Chancellor focus his budget on jobs, but we must remember that, providing a second wave is kept at bay, it’s going to take at least another 12 to 18 months for the job market to recover from COVID-19.

Property sector reaction

Josh Rayner, CEO of Rayner Personnel, commented: “A cash strapped property industry will not only welcome today’s stamp duty reprieve but will also be comforted by the news that the chancellor will help with recruiting new team members in the form of apprenticeships and support of coaching.

“Agents, conveyancers and mortgage brokers have been subjected to the uncertainty of Brexit swiftly followed by the paralysis of COVID-19, and so any efforts to help them bolster their depleted ranks while aiding them financially will be warmly received.

“The sum of £1,000 per trainee via the Kick Start Scheme will help to do this and while it may not seem a vast amount on the face of it, to coin a phrase, every little helps.

“This will also be aided by the newly announced Jobs Retention Bonus of £1000 per employee. With the property industry particularly hard hit due to lockdown, it should also go some way in bringing the sector’s workforce back to full strength, as well as the wider nation.

“A big hand for Rishi Sunak. His magic money tree seems to know no heights.”

Rishi Sunak’s ‘Summer Statement’

Today, the Chancellor of the Exchequer has;

• committed £111m to prepare young people for full-time work, tripling the number of so-called traineeships for 16 to 24-year-olds
• promised young people ‘high-quality’ work placements of up to 60 to 90 hours and giving organisations £1,000 for every individual given work experience
• launched its Kickstart Scheme (launching in Autumn) which pays young people minimum wage for 25 hours a week for six months minimum
• introduced sector-based work academies
• pledged to pay £2,000 for every organisation bringing on a 16-25-year-old and £1,500 for every 25+ year old brought on as an apprentice

However, according to Ben Hansford who worked for the government’s Skills Funding Agency for just under a decade and now heads up apprenticeships at Firebrand Training, says this won’t save 2020’s youth, who are quickly spiraling towards becoming known as the anomalous, jobless generation.

He said: “The measures announced in today’s Summer Statement are a very promising step forward and it’s fantastic that money is being invested into critical skills such as engineering and social care, as well as incentives for businesses to bring on apprentices and create jobs for young people.

“However, based on my decades of experience in this sector, there are some additional measures that the government must take to protect the future of the UK’s young people.”

Comment on traineeships

“The traineeship proposition is well thought out and I’m especially pleased that employers in critical sectors like engineering and social care will receive incentives to train young people. However, something to be aware of – pending further guidance from the government – is that both the traineeships and work experience being offered by the government are unpaid, unless if merged with the Kickstart Programme which only offers a minimum 25 hours meaning many young people will be forced to choose low-paid work over these in order to make ends meet.

“Secondly, it’s all very well offering organisations £1,000 to give young people work experience, but this sum barely covers one month’s salary for an entry level position and, as is apparent from weekly job cut announcements from big companies, there is a large lack of job placements to give to young people.”

Comment on the Kickstart Programme

“If extended slightly this will help solve the issues brought up by the unpaid traineeship programme also proposed. My chief concern is that employers will abuse this as it can be up to £6500 per “Kickstarter”, the government will only pay for 25 hours of work experience including training, which I believe may not be enough to properly educate and induct young people into the workplace. Bear in mind that apprenticeships require a minimum of 30 hours plus training it would be amazing if the Kickstart programme can be linked to an apprenticeship (which is a minimum of 12 months), if young people could use the six months as a Kickstarts to make real headway into learning new skills and begin a valuable career.

“As well, it’s important to note that the scheme will launch in September, when it is predicted that 700,000 young people are due to join the job market this summer. So, sadly, this may be too little too late.”

Comment on Sector-Based Work Academies and L2 & L3 skills in Social Care, Engineering and Construction

“This is a fantastic incentive if it isn’t recycling existing AEB (Adult Education Budget) funds (which it will be), this would normally mean it will likely take money away from critical sectors like IT and Engineering and siphon it towards lower skilled and entry level jobs. As such, the extra funds for Engineering and Construction are welcomed, but the highest in demand job in the world is Software Development, and the skills gap in Digital and IT has been overlooked again.”

What should the government be doing?

“The Chancellor admitted “Apprenticeships work” with 91% staying in work or going on to further training. The apprenticship incentives for 6 months will help unlock stalled recruitment programmes but this is the time government needs to use Incentivising retraining and re-skilling as part of a joined up package that will create a nation of people certified to fill the jobs the country truly needs right now.

“The Kickstarter programme has to find a way to link to the longer Apprenticeship programmes and incentives. This will provide “Kickstarters” with a clear progression and career ladder into a career, rather than it be a sticking plaster that leaves young people facing falling a cliff edge after 6 months. This joined up thinking would be more sustainable and provide a real incentive of £8500 to employers to take 16-24 year old Kickstarters (£6500) onto an apprenticeship (£2000).

“Securing the futures of this anomalous generation is the only way forward and there is no room for false promises and siloed initiatives.”

‘Kickstart scheme asks a lot from hard-hit employers’

Nigel Morris, tax director at MHA MacIntyre Hudson, says many employers will still be priced out of the government’s job creation scheme.

“The Kickstart package allows young people the opportunity to gain skills and experience in the workplace, but not without considerable commitment from employers, who already face significant challenges.

“The Chancellor’s aim is to give businesses the confidence to retain and hire, but with business activity and revenues hard hit across so many sectors, employers will struggle to meet national insurance costs, or to top up wages beyond the 25 hours covered. They will also find it difficult to commit to training costs, and they lack the resource to divert trained staff to support new employees.

“Given the six-month lifespan of this support, additional measures are required to prevent another cliff-edge deadline. While it may provide a short-term solution, the package still leaves many workers without support as the furlough scheme ends. There is also a risk that unscrupulous employers will exploit young workers and the opportunity to take on cheap labour.”