IFS shoots coalition’s deadweight EMA cuts argument to pieces

Using a new fangled technique the IFS yesterday finally shot to pieces the coalition’s arguments in favour of abolishing Education Maintenance Allowance.

Using a new fangled technique – called cost-benefit analysis or something – the Institute for Fiscal Studies yesterday finally shot to pieces the coalition’s arguments in favour of abolishing Education Maintenance Allowance. It is a decision not based on sensible public policy; it is quite simply about cutting come what may. They reached for any argument possible in the process hence the peculiar and, credit where credit’s due, original use of the ‘deadweight’ argument. It’s just not a good way to assess the impact of programmes and investment – at all.

Last week, I confronted the ‘deadweight loss’ argument which the Government claims is 88 per cent based on a survey that was conducted on its behalf. My argument was that a whole swathe of public policy interventions would be discontinued if this were the test. Let’s not get into a statistical to and fro.

In fact, let’s play a game. How many policy areas can you think of where there is large degree of ‘deadweight’? There will be dozens and dozens.

My opening shot was GP check ups (the vast majority would pay for health check ups if the government didn’t so that’s the ‘deadweight’). The IFS came up with two more: the government’s policy to support start-up businesses outside the south-east which arguably has a deadweight of 96 per cent and child benefit payments to the families of kids who are older than 16. Anyone else for the ‘deadweight’ game?

The IFS research goes further. Not only does it find that EMA improves participation and attainment – its central objectives – but it pays for itself. Improved qualifications lead to improved wages which means more growth and more taxes. And when the £56,000 lifetime cost per NEET is taken into account also EMA, on a balanced cost-benefit analysis, starts to look like a rather good policy.

The IFS findings understate the impact that colleges are finding on participation and attainment where success rates (which is retention multipied by achievement) in excess of 5 per cent above college averages are often reported for recipients of EMA.

Hot on the heels of EMA abolition comes the Skills Funding Agency’s ‘Guidance note 6’ also published yesterday. Sounds relatively innocuous doesn’t it? If anything the changes to the funding of further education contained with the note are more damaging to the least advantaged than even EMA. From a policy standpoint it is also perplexing as it will evidently hold back active welfare policy and, yes, social mobility.

The real horrors are in section 13. Fee remission will be discontinued for the following over-24-year-old groups (with the exception of those going for a GCSE equivalent level 2 qualification):

– Those in receipt of Council Tax Benefit;

– Those in receipt of Housing Benefit;

– Those in receipt of Income Support;

– Those in receipt of Working Tax Credit;

– Those in receipt of Pension Credit;

– Those in receipt of contribution based ESA (unless in the Work Related Activity Group); and

– The unwaged dependants (as defined by the Department for Work and Pensions) of those listed above.

The very first paragraph of the note states:

“This reform is founded on the principles of fairness, shared responsibility and greater freedom:

· Fairness means supporting those in need, including prioritising young adults; the unemployed on active benefits; and those without basic literacy and numeracy skills.”

How on earth can this be seen to be fair, share responsibility, and provide for greater freedom? This is a continuation of this coalition’s nasty habit of saying it is doing one thing while actually doing the diametric opposite.

A qualification is not only a way to become more active in life, it provides work opportunities and helps an individual keep work once they have it. The IFS hasn’t done one of those new fangled cost-benefit things on this policy. If they did I am almost certain the impact would be enormous. Quite why the Department for Work and Pensions and HM Treasury were willing to allow this policy through is bizarre. For the individuals impacted they are now faced with a £2,000+ charge for a standard full-time qualification. It is just not going to happen.

EMA was just the tip of the iceberg when it comes to the impact on the least advantaged of the myriad of changes to the funding of skills. It is far worse than the abolition of EMA alone. All there is left to do is plead. Yes, plead to Vince Cable. Please do not do this. It makes no sense. It will wreck lives. It will hold people on benefits and they will increasingly suffer there. Please revisit these policies immediately. That’s what it has come to – pleading.

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