The pros and cons of the government's new Kickstart jobs scheme
The government’s new work placement scheme, which provides funding for employers to offer work placements to young people, is appealing. But the red tape could put off some small businesses.


The headlines of the Treasury’s new Kickstart jobs scheme are attractive. The state is providing £2bn of funding for employers prepared to offer work placements of up to six months to 16 to 24-year-olds currently on universal credit.
The money will cover the cost of paying each participant’s wages – at the national minimum wage – for 25 hours a week, plus associated national insurance and pension costs. There is also £1,500 per job available for set-up costs, support and training.
The scheme could support businesses in a wide range of industries. Employers have to show they are not using Kickstart to replace existing or planned vacancies; they are also required to explain how they will help potential candidates develop their skills and experience.
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But those stipulations aside, the scheme offers employers a fully funded mechanism for taking on young workers without requiring them to commit to offering permanent roles.
The big downside for small businesses is that to apply directly for funding, employers must be able to offer at least 30 qualifying placements. Treasury officials argue that this is necessary for the scheme to be manageable and economically viable. But small business groups, including the Federation of Small Businesses (FSB), have pointed out that many smaller organisations won’t be able to support anywhere near so many placements.
Importantly, however, the restriction does not rule smaller employers out of taking part. Indeed, the Treasury is keen for as many small and medium-sized businesses (SMEs) as possible to get involved in Kickstart. Businesses unable to offer 30 placements are entitled to team up and then apply to take part in the scheme jointly. These joint applications can be managed by one of the firms taking part, or through intermediaries such as local chambers of commerce or other business groups.
However, there is no getting away from the fact that these arrangements impose an extra level of bureaucracy on smaller employers wanting to take part in Kickstart.
The additional red tape may be particularly taxing for a business that signs up as leader of a joint application, though it will get an additional £300 from the government to cover its costs.
The government points out that it has set up a network of regional advisers who can help with applications and administration, but direct funding for small businesses would clearly provide a speedier route to accessing the scheme.
Nevertheless, it is important that small businesses recognise Kickstart is very much open to them and the support it offers is potentially very valuable. Ministers have also promised to continue consulting with groups such as the FSB on how to make the scheme work better for smaller employers and concessions may be forthcoming.
In the meantime, full details of the initiative, including application forms, are available on the gov.uk website. Despite the complexities, Kickstart represents a real opportunity for small businesses plotting a path back to growth and expansion, while also trying to mitigate the risks of the ongoing uncertainties in the business environment.
State-backed loan scheme set to expire
Businesses are running out of time to borrow money from the government-backed Coronavirus Business Interruption Loan Scheme (CBILS). Applications for CBILS funding must be received by 30 September. Lenders then have until 30 November to process loans.
More than 60,000 businesses had arranged CBILS loans worth £13.7bn by the middle of last month, the most recent period for which government data is available.
The scheme offers loans of up to £5m, repayable over periods of up to six years. The loans are available from around 50 banks and specialist lenders, with the government promising to step in where businesses default on repayments, in order to encourage lenders to take part in the scheme.
To be eligible for CBILS, your business must be based in the UK and have an annual turnover of less than £45m. Lenders will ask for documents and other information to assess whether the business will be able to repay the loan; you may also be asked for a personal guarantee on advances of more than £250,000, although lenders aren’t allowed to ask you to put up your home as security.
Bear in mind that lenders do not have to accept your application. You will need to be able to show that – leaving aside the effects of the pandemic – your business is a viable proposition. Interest rates vary from lender to lender, although the government picks up fees and charges for the first 12 months of each loan.
For businesses wanting to borrow less than £50,000, the Bounce Back Loan Scheme may be a better option, with less onerous application processes and an interest rate fixed at just 2.5% a year. This scheme is due to remain open until 4 November.
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David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.
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