Kickstart breaks down: NAO reports on massive underspend and ‘deadweight’ jobs

At a cost of £7k per participant, Kickstart has become DWP's most expensive support scheme

At a cost of £7k per participant, Kickstart has become DWP's most expensive support scheme

Kickstart


The country’s spending watchdog has found the government is oblivious to the quality, targeting and scale of “deadweight” Kickstart jobs.

A report by the National Audit Office has also revealed the flagship programme is set for a £650 million underspend, as officials now estimate they’ll only reach 168,000 starts compared to the 250,000 the chancellor Rishi Sunak was aiming for.

But at a cost of around £7,000 per participant, Kickstart has become the Department for Work and Pensions most expensive support scheme.

The department claimed its benefits to society will outweigh the costs by up to £1.65 for every £1 invested, but only if it is targeted “effectively at the right people and the jobs created would not have otherwise been funded by employers”.

The NAO found the DWP has “limited assurance” over this, because the department does not collect or monitor the necessary data.

Meg Hillier MP, chair of the public accounts committee, said the “jury is out” on whether Kickstart will end up being value for money and “whether it will actually help those groups of young people who truly need it”.

She expressed concern at the DWP’s “worryingly light-touch approach to setting targets or tracking performance”, considering the government pumped £1.9 billion into the scheme.

A government spokesperson said their officials acted “quickly and decisively to establish Kickstart at the start of the pandemic when it was feared unemployment levels would more than double – as this report acknowledges”.

Kickstart was launched in September 2020 in a bid to prevent a significant rise in youth unemployment in the face of Covid-19.

It offers six-month paid work placements to those aged 16 to 24 who are on Universal Credit and deemed to be at risk of long-term unemployment – with the government picking up their wage bill.

Employers were only supposed to benefit from the wage-subsidy if they could prove the jobs were “additional” and would not have existed without the funding provided.

Even before the scheme got under way, the DWP assumed that only 50 per cent of the economic output of Kickstart jobs would be additional, the NAO found.

The department calculated the figure could be as low as 30 per cent, but claimed the scheme would still have a positive social return if it “also has the intended employment impact”.

The NAO report states the DWP also “recognised the risk” that non-additionality could increase as the economy recovered and does not expect its evaluation, planned to be released in several years, to “achieve a robust estimate of Kickstart’s impact on the wider economy”.

Labour market conditions developed in unexpected ways that hampered the take-up and effectiveness of the scheme, according to the audit office.

It found the number of young people claiming Universal Credit and searching for work for more than a year has continued to increase, from 48,800 in February 2020 to 144,000 in September 2021 – a 195 per cent increase – despite Kickstart.

By summer 2021, the DWP acknowledged it was unrealistic to achieve its initial aim of 250,000 young people starting a Kickstart job by December 31, 2021 and is now planning on the basis of up to 168,000 starts by the end of March 2022, following the scheme’s extension.

Some 100,000 people have started jobs created by the scheme to date. DWP expects to spend £1.26 billion in total.

Wider issues with the scheme’s rollout are laid bare in today’s report.

As the DWP launched Kickstart at pace due to the pandemic, it experienced “a number of problems, leading to some criticism from stakeholders about unclear rules, a lack of published data on progress and short notice about changes”.

It has also “generally taken several months to fill the vacancies that have been filled”, with employers waiting an average of 62 days for the DWP to complete administrative checks on each application, according to the NAO.

This echoes the findings of a recent FE Week investigation, in which businesses slammed Kickstart as overly “complex, bureaucratic and slow”.

The NAO has told the DWP to start monitoring whether work coaches refer the right people to the scheme and assess 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: “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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