Bonus scheme to help protect jobs and reward employers for bringing in young employees
Chancellor Rishi Sunak has today rolled out a £2bn job creation scheme as part of what has been described as a "mini-budget" summer statement.
Known as the Kickstart Scheme, it would apply to employers who bring in 16 to 24 year olds into trainee programmes from September.
The scheme will pay to create jobs for any 16-to-24-year old "at risk of long-term unemployment" with initial government funding of £2bn, but no cap has been set.
It will be available to any employer of any size, with applications opening next month and the first young people set to begin in their jobs in the autumn.
Mr Sunak also announced a £1000 bonus for each employee an employer brings off furlough and keeps them in a job until January. To get the bonus, firms must pay at least £520 a month to the employee. Sunak estimated that it would costs up to £9bn if everyone on furlough were to benefit.
Colin Fitzgerald, distribution director for group protection at Legal & General, welcomed the Kickstart Scheme. He said: "Business recovery now rests on having engaged and motivated employees. This, in turn, will help improve the lives of everyone in the UK: creating real jobs and a better infrastructure to help overcome the current economic catastrophe and come out the other side a more responsible and sustainable society."
He added that while structured training programmes will help attract help candidates into targeted jobs, as well as improve cash flow for SMEs, it is also important to remember that training and development should form part of a wider employee wellbeing programme.
This, he said, should be a "built upon a clearly articulated purpose" and "with reward and benefits programme at its heart" that is "designed and communicated in line with employee needs and hardwired to business goals".
"The pandemic hasn't changed any of this," said Fitzgerald. "What it has done - especially during lockdown - is made leaders realise the crucial importance of employee wellbeing to productivity and profitability."
According to research by Mercer, 61% people trust their employer to look after their wellbeing, but only 29% of HR leadership have a health and wellbeing strategy in place. Fitzgerald suggested that employees now entering the workforce for the first time place a premium on how companies care for them, putting greater attention onto how employers take responsibility for wellbeing issues like stress, burnout and social uncertainty.
"There's a common misconception that that wellbeing programmes are too costly, especially for SMEs. But they're only too costly where benefits are ill-thought through and not communicated well," he said.
Fitzgerald drew attention to potential benefits and cost-effectiveness of life insurance, critical illness insurance and income protection provided by employers, alongside employee assistance programmes and mental health support in workplaces
The insurance profession
The Chartered Insurance Institute (CII), meanwhile, saw the Chancellor's announcements as an incentive for the insurance industry to support the UK workforce.
Keith Richards, managing director of engagement for the CII, said: "A six-month spell of employment could be an excellent way for young people to discover how insurance is a vital profession where they could have a rewarding career.
"The job creation scheme must be properly integrated with other initiatives such as apprenticeships, to ensure that there is a pathway for young people from their initial experience to achieving the skills and knowledge required to be a fully competent insurance professional."
Stamp duty holiday
As part of the announcement, the Chancellor also confirmed a stamp duty holiday in a bid to boost movement in the housing market.
The change will take effect for those buying houses valued up to £500,000 and will last until 31 March 2021. The new discount comes into force immediately.
As a result of the change, nine out of 10 buyers will pay no stamp duty at all.
Stamp duty is a tax levied on those buying property or land above a certain value. Currently, all house-buyers in England and Northern Ireland must pay stamp duty on properties over £125,000. First time buyers are exempt from stamp duty on properties worth up to £300,000, or, in higher priced areas such as London, on the first £300,000 on properties costing up to £500,000.
Walker Crips Property Income director James Allen warned the move risked greater volatility in the long-term.
He said: "Unfortunately, the Chancellor has not learnt the lessons from a recent Tory incumbent in his post. When former chancellor Osborne touted his change to stamp duty, there were concerns from the market about a spike in transaction completions before the rises came into effect, followed by a dramatic slowdown with tax takings falling in relative terms. All of these things subsequently happened.
"We now have a new policy that looks like history repeating itself. The stamp duty ‘holiday' is likely to increase transactions in the sub-£500,000 market, adding liquidity and volatility into an already liquid part of the market. Tax take will obviously fall and, at the end of the holiday, transactions are likely to slow significantly again, risking price volatility at a time when the market is craving stability."
He added: "In order to achieve the Chancellor's aim of protecting the housing market, the most obvious route would be to simply reverse the counterproductive changes introduced by Chancellor Osborne. We know what effect they had when introduced, so we can say with high conviction what effects their reversal could hold."
Meanwhile John Tonkiss, CEO of property developer and manager McCarthy & Stone, described the announcement as a "no brainer", and one he "wholeheartedly" supported.
"We've long argued that high moving costs have stunted the housing market. They keep older people stuck in large homes and prevent new chains being created that would ultimately benefit young people and first time buyers. The chancellor's announcement today should be extremely helpful to get people moving," he said.
"The timing is also important given the pandemic's impact on the housing sector over the last few months. Hopefully it will help older people who have struggled in unsuitable housing during the crisis to feel supported to make a move to somewhere that can better meet their needs, be it a bungalow or a retirement community."