Allowance would replace child benefit

Susan Young

Labour's proposed education allowance for under-18s should be paid to the student, not the parent, to boost staying-on rates, new research suggests.

Research by the Institute of Fiscal Studies shows that an Australian scheme that hands a means-tested amount to 16- and 17-year-olds has led to a 3. 5 per cent increase in the numbers of students staying in education.

Just under 40 per cent of pupils in their final two years of school receive AUSTUDY at rates of up to Pounds 35 a week.

The scheme suggested by Labour would abolish child benefit for over-16s, and would pay a means-tested sum that has not yet been publicly announced but might amount to Pounds 30 a week for the poorest families.

The researchers, Lorraine Dearden and Alexandra Heath, suggest that a relatively cheap option for Britain would be to abolish all child benefit for over-16s. It would be replaced by an education allowance of Pounds 10.80 a week - the amount of benefit currently paid for the eldest child - going directly to all 16- to 18-year-old school pupils.

This would not make most families on benefit worse off, and those who might suffer - people on Family Credit - could be reimbursed for the "modest" overall cost of Pounds 50m.

"Obviously, more generous income support schemes could be devised that targeted relatively poor families along the lines of the Australian AUSTUDY scheme, but these would come at additional cost," said Ms Dearden.

"However, given the importance of early educational outcomes on a person's future labour market success, more generous schemes targeted at relatively poor families should be given serious consideration by policymakers if we are to increase school participation rates among children from relatively poor backgrounds."

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