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21 February 2011

Graduate Internship Scheme should not be axed, says FSB

Reference number: PR/2011/16

FSB News Release


Graduate Internship Scheme should not be axed, says FSB

With graduate unemployment at its highest since 1992, the Federation of Small Businesses (FSB) is urging the Government to extend its highly successful Graduate Internship Scheme, due to come to an end in March 2011. 

Unemployment figures to the end of December 2010 showed that almost one million 16-24 year old are out of work and that youth unemployment has reached 20.5 per cent. Many of these will be graduates that have not managed to find a job since leaving university. 

Since February 2010, the Graduate Internship Programme has supported paid internships in small businesses for 8,500 graduates. However, this scheme will be scrapped in March 2011. The FSB believes that this is a mistake.  

In its new paper ‘FSB plea to save the Graduate Intern Scheme'' the FSB details how, through investment to extend the scheme, at least 5,000 new internships placements can be made at a cost to Government of £8 million – instantly reducing benefit payments by at least £1.5 million. 

With 25 per cent of interns being offered permanent work this would also boost Treasury coffers by a further £3.37 million over the course of one year in reduced Job Seekers Allowance payments, and add a further £5.4 million in tax payments, as well as boosting the productivity of the UK economy. 

John Walker, National Chairman, Federation of Small Businesses, said: 

"The current Graduate Internship Scheme has proved highly successful, with some interns going on to start their own companies and others being offered full-time positions with the business they interned for. 

"The investment needed to keep the scheme going would be more than outweighed by the contribution that the Treasury would see in reduced benefits payments and the increased tax-take from those that gain employment as a result of the internship. 

"The UK''s young people are the future of the economy, yet we are seeing youth unemployment approaching one million. It is time that the Government invested into this vital sector so that we don''t see a generation of youngsters consigned to the dole queue."


  1. The FSB is Britain''s leading business organisation with over 210,000 members. It exists to protect and promote the interests of the self-employed, and all those who run their own business. More information is available at
  2. The current Graduate Internship Scheme only runs in England, the devolved regions have their own policies. 
  3. More information on the FSB Graduate Internship Scheme is available at
  4. Currently a graduate on Job Seekers Allowance would receive £51.85 a week. Over the course of a six week placement this would be a cost of £311.10. If 5,000 extra placements were created in small businesses (as with the last Graduate Internship Scheme) it would mean a saving of over £1.5 million in benefits alone. 
  5. Based on 25 per cent of graduates being offered a full-time position by creating 1,250 extra jobs the Government would also save £3.37 million on Job Seekers Allowance payments in the first year of employment without taking into consideration other benefits.
  6. If it is assumed that these jobs are offered at £16,000 then each job would return £4,350 of Income Tax and National Insurance to the exchequer in the first year. The tax accrued through creating 1,250 extra jobs (if we take assume that 25 per cent of jobs are offered) would exceed £5.4 million.  

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