The UK is funding 6-month job placements for young people out of work — here's why serial entrepreneur James Caan, formerly of Dragons' Den, thinks the scheme could fail

• The UK government has announced a scheme to fund six-month work placements for 16 to 24-year-olds
• The first jobs will go live in November. Businesses must hire a minimum of 30 trainees, and smaller businesses can join together in a group to reach this threshold.
• Serial entrepreneur James Caan, a former investor on Dragons' Den, which inspired Shark Tank, tells Business Insider the scheme is too complex, and designed to grab headlines.
• But small businesses tell us the scheme is an affordable way of hiring help they desperately need.

The UK government is trying to boost young unemployed people's jobs prospects with a training scheme — just as coronavirus takes a bite out of their generation's prospects.

Small firms tell Business Insider the Kickstart initiative is an affordable way for them to hire support they need while helping young people learn new skills — but some experts warn the scheme is misdirected, and doesn't go far enough.

The Kickstart initiative will fund six-month placements in England, Scotland, and Wales for 16 to 24-year-olds who are claiming Universal Credit social security payments and deemed to be at risk of long-term unemployment. It will fund the minimum wage for trainees, which is £8.20 ($10.62) an hour for 21 to 24-year-olds, as well as pay national insurance and pension contributions.

James Caan was among the wealthy entrepreneurs that judged people's new business ventures on BBC series Dragons' Den, which inspired Shark Tank, from 2007 to 2010, and he believes the government's Kickstart initiative might be bureaucratic and poorly targeted.

Caan, founder of private equity firm Hamilton Bradshaw, tells Business Insider Kickstart is a "good initiative" — but that there has been too much effort to grab headlines rather than ensure the scheme works properly.

Businesses need to prove that the vacancy is a new position and explain why they need help to fill it.

They must also hire a minimum of 30 trainees and small- and medium-sizes enterprises (SMEs) can apply to group together through trade bodies and business networks to offer placements. This is too complex, Caan says.

"What I have experienced as a businessman is the simpler you make something, the more chance you have of it being successful," he says.

"SMEs can't hire 30 people in one go, this makes it predominantly for big corporates. Allowing firms to form groups just creates another layer of bureaucracy when the whole idea should be to make things easy."

He adds that the scheme is further complicated by Kickstart candidates being matched through local job centres.

"The objective is to put people to work, so we should let companies advertise or find their own talent and maybe have the job centre certify them, but leave the choice to the employer and accelerate the process," he adds.

He tells Business Insider the government should not forget older workers who are losing jobs, and suggests it is a waste of money offering employers incentives such as the furlough bonus to returning staff that many were bringing back anyway.

"Some of these funds could instead be used for cross-training people," he says. "Our economy is changing rapidly, the digital world is here to stay and we will have thousands of people out of work from sectors that are no longer as viable.

"Meanwhile, you have the rise of e-commerce, I feel our workforce is imbalanced. I would like to see some funding set aside for organisations helping people to retrain."

As if anticipating these sorts of criticisms, the government announced a "lifetime skills guarantee" at the end of September, promising free college courses for adults. The scheme will be detailed later in 2020, and it remains to be seen how effective it is. Caan spoke to Business Insider before the announcement, and did not respond to requests for comments afterwards.

On Kickstart, the government is still considering applications from businesses and representatives and Kickstart roles are expected to begin in November.

Business Insider spoke to some of the businesses hoping to take part.

'We can train the next generation of estate agents'

Estate agency trade body The Guild of Property Professionals is planning to apply to be a Kickstart representative on behalf of its members.

Jennifer Scott-Reid, the guild's head of employee development and engagement, says lots of small lettings and estate agents would jump at the opportunity to train the next generation of negotiators.

She says the guild can help with the support and training employers must provide to candidates.

"We are hoping to level the playing field for smaller agents in terms of arranging placements and the mentoring," she says.

"This is an informal way to get young people some work experience and understand what it's like being in a place of work such as good attendance, especially if they have just finished school.

"All these things could make them employable in six months either by an agent or others."

'We know what it's like to struggle in the jobs market'

Lauren O'Donnell, founder of overnight oat pots Oatsu, a non-cook porridge alternative that is soaked in plant milk, is working with Jess Salamanca, founder of vegan ice-cream Banana Scoops, and other food entrepreneurs to take part in the Kickstart scheme, with around 37 businesses looking to fill 87 roles.

O'Donnell is looking to hire in sales, marketing, and kitchen production. She says the networking group understands the struggles of out-of-work young people because many are also freelancers juggling several jobs.

She adds: "The Kickstart scheme is an affordable way for small businesses to quickly get support in the areas they need, whilst simultaneously supporting the professional development of talented young people who may be struggling to find work.

"Working in fast-growth food start-ups will allow these young people to develop a set of transferable skills they can take to any industry.

"We will offer thorough on-the-job training, careers guidance and CV and cover letter writing support."

'Kickstart provides a better alternative to a job interview'

Care homes developer Aspire LLP has a pipeline of building projects and is forming a grouping through the Surrey Chambers of Commerce.

Chief executive Michael Lucas says of Kickstart: "There is a lot of training required to get people familiar with our sort of work.

"We can find out about the person with a view to bringing them on full time.

"There is a good opportunity rather than a short-term interview to get to know someone and spend the time to train someone correctly."

Lucas says he couldn't afford to take someone on without Kickstart, adding:

"You have to generate some more business to pay people."This six-month window gives us an opportunity to generate business and then have a full-time role that isn't subsidized.

"We are generating cash to pay for more full-time positions."

He is hoping to create five placements, with roles varying from planning and development to land acquisition.

Lucas adds that people aged 16 to 24 are more suitable for the type of work required.

"When a young person comes onto books for the long-term, their salary will be at the market level for our industry and their experience," he says.

"An older person may be more knowledgeable but the potential for retaining them is lower."