Staying-on rates have increased by up to 10 per cent in those areas where the educational maintenance allowances are being piloted. The rise is well beyond expectations and justifies Government plans to extend the scheme nationwide.
The pound;150 million project - which currently covers 56 local authority areas - gives students means-tested payments of between pound;30 and pound;40 a week providing they regularly attend lessons.
The Department for Education and Employment said this week that in Stoke-on-Trent, Bolton, Middlesbrough and Nottingham, staying-on rates have increased by more than 7.5 per cent.
"Schools and colleges have reported that drop-out rates are much lower than we would normally expect - only 3 per cent of those in receipt of the allowance have dropped out," a DFEE spokesperson said.
A second incentive for all students who move into further education is the "smart card", ann-ounced last week by the Cnnexions youth service. The cards will monitor attendance and reward the holder with discounts on leisure, as well as educational, goods.
But the Government was accused this week of bribing young people to stay in education. Chris McGovern, chairman of the traditionalist History Curriculum Association, said many 16-year-olds were being put on unsuitable courses in an attempt to "boost Government statistics".
Speaking on Radio 4's Woman's Hour, he said: "I am not against education maintenance grants properly targeted to those in genuine need. But this is not a good use of public funds.
"This is a clear use of bribery. What message does that send out if we say education is not attractive unless we offer these bribes?"
But lifelong learning minister Malcolm Wicks said the allowance eased the pressure on less well-off children to leave school to get a job. "In those cases pound;30 or pound;40 makes a difference. It allows young people to make choices to suit their aspirations and abilities."