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Cash for firms that hire young trainees

Measures to help combat youth umemployment are expected to be announced this week - Sean Gallup/Getty Images
Measures to help combat youth umemployment are expected to be announced this week - Sean Gallup/Getty Images

Companies will be paid cash bonuses by the Government to hire young people as trainees, the Chancellor will announce, as part of a package of measures to alleviate post-coronavirus unemployment.

Rishi Sunak will deliver an economic statement on Wednesday, with the central focus of helping people get back to work. As part of a series of measures to help Britain recover, he will announce £1,000 cash “bonuses” for employers who hire young people into traineeship programmes.

The £111 million scheme is the first time firms will receive direct government subsidies for taking on trainees. The money is available for those aged 16 to 24 and will be capped at 10 jobs per employer, or £10,000. It is understood employers will be able to determine how to spend the £1,000, as long as it directly or indirectly contributes to their traineeship schemes.

Last night, Mr Sunak told The Daily Telegraph: “Young people are on the front line at risk of unemployment, so we’re backing them and the companies that they can learn from. We know traineeships work so we’re investing in their skills and our collective future.” A traineeship is a course with work experience that helps ready young people for work or an apprenticeship.

It can last up to six months and applicants receive work placements and help with writing CVs, as well as English and maths tuition if needed. The positions are not paid, but employers cover expenses and the cost of courses. Eligibility will also be extended to young people who have A-levels.

It will be in place in England from September, with funding also provided to Scotland, Wales and Northern Ireland. Three quarters of 18 to 24-year-olds who complete traineeships move on to employment or further study within 12 months, the Government said.

The £111 million expected to be unveiled on Wednesday will triple the number of traineeships. In 2019, 15,000 young people were taken on. Mr Sunak is also expected to announce money for “green jobs”, designed to ensure that employment is “created in the right way”.

This is expected to include “several billion” pounds to “green up” homes, allocated to homeowners through a voucher scheme, a government source said. The scheme would aim to help boost employment, with investment to help people transition to new green jobs. A wider retraining programme, aimed at those laid off during the pandemic, as well the long-term unemployed, is also expected.

A report by the Resolution Foundation, the think tank, will tomorrow call for the Government to launch a £17 billion jobs support programme, including a job and training guarantee for young people, delivered through Jobcentre Plus, at a cost of £6.3 billion. It will also advocate raising the threshold for employer National Insurance contributions to £15,000 for new hires into growing companies, which would cost £1.3 billion, and extending the Job Retention Scheme for the hardest-hit sectors until the end of this year.

James Smith, research director at the foundation, said it was “a price worth paying to avoid leaving a generation of young people permanently scarred”. Thérèse Coffey, the Work and Pensions Secretary, said the Government would double the number of work coaches in job centres, adding that they would be “at the heart of our renewal”.

Temporary cuts to VAT are also under discussion by Treasury officials. Industry and government sources said the Treasury had signalled a temporary cut to VAT on hospitality goods, as well as announcing an intention to “zero-rate” construction equipment.

An insider said VAT cuts on construction equipment would coincide with the drive to boost infrastructure and house building. There are also suggestions that Mr Sunak will introduce a stamp duty holiday for homebuyers, although this is not expected to be in place until the Autumn. It is understood that proposals have been discussed to lift the threshold at which people pay the tax from £125,000 to £500,000.