Rishi Sunak announces £2bn jobs fund to help young people beat coronavirus crisis

Rishi in the Commons

Rishi Sunak has announced plans today to pay the wages of hundreds of thousands of young people on work placements for six months as he warns that they must not “bear the brunt” of the coronavirus crisis.

The chancellor has used his summer economic update to publicise a £2 billion “kickstart” work placement scheme in which the state will cover the minimum wage for young workers, with employers able to top up pay packets.

Each person will receive about £5,500 from the government over half a year, while businesses will receive £1,000 for taking them on. The measure, which will be aimed at those aged between 16 and 24 who are claiming universal credit and are at risk of long-term joblessness, could help 300,000 people and comes amid concern about mass youth unemployment.

The plans will form part of Boris Johnson’s “opportunity guarantee” for young people, which will also include a huge increase in apprenticeships. Firms could be given £1,000 for each apprentice they take on.

The chancellor also announced a temporary cut to stamp duty to stimulate the housing market with the threshold rising from £125,000 to £500,000.

Other measures to stimulate the economy include a potential VAT cut for the hospitality sector and a £3 billion green jobs package, including vouchers of up to £5,000 for people to insulate their homes.

Mr Sunak said: “Young people bear the brunt of most economic crises, but they are at particular risk this time because they work in the sectors disproportionately hit by the pandemic.

“We also know that youth unemployment has a long-term impact on jobs and wages and we don’t want to see that happen to this generation. So we’ve got a bold plan to protect, support and create jobs — a Plan for Jobs.”

Fears are growing over mass redundancies when the government’s furlough scheme ends in October. The hardest-hit sectors have called for it to be extended.

Young people are more likely to be furloughed and the number of under-25s claiming unemployment benefits has increased by 250,000 since March. Under the work placement scheme the government will cover 100 per cent of the minimum wage for 25 hours a week, with employers able to add to pay.

Frances O’Grady, general secretary of the TUC, welcomed the move as a “good first step” to prevent mass youth unemployment. “But we’ll be checking the small print to ensure every job provides proper training and a bridge to steady employment,” she added.

Anneliese Dodds, the shadow chancellor, said that the government was “yet to rise to the scale of the unemployment crisis” and added that it should abandon its “one-size-fits-all” approach to ending the job retention and self-employment schemes. “In addition, older people who become unemployed, and those living in particularly hard-hit areas, will also need tailored support,” she said.

Dodds told Sunak that the furlough scheme “must not have merely served to postpone unemployment”, but must now “live up to its name, supporting employment in industries which are viable in the long term”.

“We need a strategy for the scheme to become flexible, so it can support those businesses forced to close again because of additional localised lockdowns,” she will say. “There is still time to avoid additional floods of redundancy notices.”

Among the job measures already announced are a £111 million scheme for firms in England to get a £1,000 bonus if they offer unpaid traineeships. Mr Sunak will also detail the £3 billion green package, with grants for homeowners and public buildings to improve energy efficiency.

The chancellor has said that he sees the threat of mass unemployment facing young people as a matter of “social justice”.