Education: 16 to 18 Year-olds

Lord Willis of Knaresborough Excerpts

Monday 4th April 2011 Grand Committee

Asked By

[Lord Willis of Knaresborough]

To ask Her Majesty’s Government what plans they have to offer support to 16 to 18 year-old students in full-time education.

[The Deputy Chairman of Committees (Baroness Fookes)]

My Lords, I intervene at this point because we believe that a Division in the Chamber is imminent. We must make a start but once the Division is called, I then have to suspend the Committee immediately for 10 minutes. I am extremely sorry if that interrupts anybody’s flow of speech but I thought it important to mention it.

[Lord Willis of Knaresborough]

Thank you for that warning.

I am grateful to noble Lords for speaking in this not so packed Room in this short debate on support for 16 to 18 year-olds in full-time education. It is rather sad that the Room is not packed for such an important topic. I am particularly grateful that my noble friend Lord Fink is with us. We are delighted that he is making his maiden speech and we very much look forward to his contribution. I actually sought this debate in July 2010 and it is testimony to the potency of EMAs that, despite last week’s announcement of a very welcome replacement bursary scheme, the question of support for 16 to 19 year-olds remains a contentious issue. Indeed, when the Mayor of London argued on BBC “Question Time” last week that the new scheme did not go far enough, he expressed—

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[Lord Willis of Knaresborough]

My Lords, I am very grateful that we are having this debate on support for 16 to 18 year-olds and particularly delighted that my noble friend Lord Fink has chosen to make his maiden speech this evening. I sought this debate in July 2010 and it really is testimony to the potency of this issue that, despite the Secretary of State’s very welcome Statement last week, the issue of support for 16 to 19-year-olds remains contentious. Indeed, when the Mayor of London—an uncontentious figure—argued on BBC “Question Time” last week that the new scheme did not go far enough, he expressed the views of many of us who believe that the Government produced little sound evidence for ending EMAs and threatening participation, other than the need to save money.

The decision to save £560 million by scrapping EMAs was hardly unexpected. Indeed, given the parlous state of our finances, I appreciate that the money had to come from somewhere. However, the argument for doing so—that this was an ill targeted scheme, that it was unsuccessful and that it had huge deadweight costs—simply did not bear scrutiny. The Government largely pray in aid the 2007 IFS evaluation, claiming that 90 per cent of students in receipt of EMAs would have stayed on regardless. Those are the so-called deadweight costs. Yet the IFS did not make that claim. Rather, it was a somewhat shoddy report by the NFER that surveyed students prior to them even entering post-16 education. In fact, the IFS concluded in 2007 that the EMA achieved its aim of increasing and retaining participation by some six percentage points—the key aims of the previous and the current Governments.

What is more, if deadweight costs are to be key criteria for revenue reduction, what about the winter fuel allowances for the over 60s, many of whom, like those in your Lordships’ House, could well afford their own heating? What about subsidised student loans, which go predominantly to the better-off, not to mention child benefits paid to large numbers of those whose children are not remotely at risk? Indeed, a far more reliable source of evidence about the effectiveness of EMAs came from the CfBT Education Trust 2009 research project, Should we end the Education Maintenance Allowance?, which clearly showed the success of the programme. So does the mountain of direct survey evidence from the AoC, the 157 Group and from schools, demonstrating the crucial part that EMAs have played in providing support for students, especially for travel and equipment and particularly for vocational courses.

However, the Minister will be surprised to hear that I am not calling for the EMA scheme to be retained. The direction of travel announced by the Secretary of State last week is right and I pay tribute both to the Government and to my honourable friend Simon Hughes, the MP for Bermondsey and Old Southwark, for producing an interesting proposal. It passes responsibility to schools and colleges for its execution and secures £70 million of Treasury cash to achieve the welcome but modest £180 million budget for the new scheme. Perhaps the Minister, in his summing up, will confirm that this is new money and that he is not simply top-slicing existing 16 to 19 programmes.

I am calling for the restoration of more of the £570 million that the scheme currently spends so that a wider group of students can be supported. Without a larger bursary fund we cannot start to tackle issues such as travel costs, which are one of the largest obstacles to participation and retention post 16.

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[Lord Willis of Knaresborough]

My Lords, for the third time, I am making the case not to retain the EMA scheme as it stands but to retain a significant part of its budget. However, to make a credible case for retaining resources while still delivering substantial savings to the Treasury actually requires us to think differently. I concede that young people from families with household income of up to £16,200 a year—the maximum income level for free school meals—have largely been protected to some degree by the bursary proposals, although the IFS paper last Tuesday made a different assessment. But if parents have a joint gross income above £30,800, young people at present do not get a single penny of EMA. My concern is that the Government are putting at risk participation by young people from families with incomes between £16,200 and £30,800—hardly the affluent middle classes.

There is a widespread belief that 16 to 19 financial support is simply limited to EMAs; it is not. There are two other significant sources of financial support: 16 to 19 child benefit and 16 to 19 child tax credit, which are treated not as education but as social security. However, at 16 plus, child benefit and child tax credit are not paid to parents for every child. They are paid only on condition that young people are in full-time education or unwaged training. Parents with 16 to 19 year-olds in jobs, apprenticeships, part-time education and those not in education, employment and training—the NEET group—do not receive child benefit or child tax credit. That is, some 15 per cent of all 16 to 18 year-olds.

I am inviting the Minister to view 16 to 19 child benefit and 16 to 19 child tax credit as financial support for education, not simply for social security. Currently, around £1.5 billion is spent on 16 to 19 child benefit and £2.3 billion is spent on child tax credit, which, when added to the EMA spending, amounts not to £700 million but to £4.3 billion of taxpayer support. Is the Minister confident that this entire £4.3 billion pot is being deployed in such a way that maximises post-16 participation, supports students and delivers value for money for taxpayers? No doubt the Minister will argue, correctly, that the Government are increasing the level of means-tested child tax credit, including for families with 16 to 19 year-olds in full-time further education. But at the same time the availability of child tax credits is being scaled back to those with a gross household income of around £26,000 from 2012-13. In any event, the extra payments for those below £26,000 a year were never intended to compensate for the loss of EMA which, as the Secretary of State has admitted, is up to £1,000 a year.

No one can deny that the EMA is not progressive, as payments are restricted to young people from households where less than £30,800 is coming in, but if there are deadweight costs in the EMA, what is the level of deadweight cost in 16 to 19 child benefit? The reality is that 16 to 19 year-olds from better-off families will stay on in full-time education irrespective of whether their parents get £20.30 or £13.40 in child benefit.

A week ago in the other place the Secretary of State argued that,

“there are real questions as to whether it is socially just to pay 45% of students a cash incentive to stay in learning when we could concentrate our resources on removing the barriers to learning faced by the poorest”.—[Official Report, Commons; 28/3/11; col. 52.]

The fact that he made that statement is quite interesting. If that is the case, how can it be socially just to pay child benefit to better-off families with 16 to 19 year-olds who will stay on anyway? So rather than cut £360 million in financial support from the EMA, which risks reducing participation of young people from relatively poor families, the Government should look at finding the £360 million from 16 to 19 child benefit paid to better-off families, which will not put participation at risk. That is the tenor of my argument. At present, the Government have opted to divert EMA funding from the relatively poor to the poorest, rather than divert 16 to 19 child benefit funding from the better-off to the relatively poor. We should debate that argument.

I believe that there is an overwhelming case for decoupling payments of nought-to-16 child benefit, paid to every child, and payments of 16 to 19 child benefit paid only to young people in full-time education and unwaged training. I also believe a common means test should apply to financial support for all 16 to 19 year-olds. I accept that that would extend means-testing. If you are going to target support, you have to have some form of means-testing.

As for balancing the books, my noble friend Lord Sassoon provided Written Answers to me on 7 December about potential savings from restricting 16 to 19 child benefit. For illustrative purposes, if 16 to 19 child benefit was restricted to those with less than £31,500—just £700 above the present maximum threshold for the EMA—the Treasury could save a whopping £875 million. Restricted to those with a gross household income of £37,500, the savings would be £600 million, with the equivalent savings just for England being £740 million and £510 million. I am arguing that there is an alternative way of providing the support for 16 to 19 year-olds, which could be targeted through the bursary scheme hugely effectively following the Government’s proposals, and by thinking differently about how we use the maximum resource rather than having pots of money in silos which do not move.