Viewpoint - There is a better way than the EMA

21st November 2008 at 00:00
A `pupil premium' that redirects cash to disadvantaged students would have a greater impact on social mobility

The November 7 edition of FE Focus took aim at the Policy Exchange's proposal to end the education maintenance allowance (EMA) to pay for a "pupil premium" that would see extra cash attached to children from disadvantaged communities.

Let's be clear. I do not think, as the headline claimed, that EMA students are "undeserving", in the sense that there is clearly a social mobility issue for young people from poorer backgrounds. But I question whether the EMA is the best way to achieve increased mobility.

The stated aim of the EMA is to increase participation and attainment among 16 to 19-year-olds. It is only worth spending Pounds 550 million a year on the EMA if it not only achieves these goals, but also does so more effectively than any other method on which one could spend the money. It manifestly fails to pass this cost-benefit analysis.

Initial evidence suggests the EMA has boosted participation by between 1 and 4.5 per cent. If we assume the higher figure is correct, EMA is costing about Pounds 17,500 for every extra post-16 student; the lower figure indicates a cost of Pounds 78,500. On attainment, research from the Institute for Fiscal Studies suggests there might have been a fractional improvement, but it is hard to say whether this is due to the EMA or other factors, such as grade inflation.

There have been no studies looking at data collected after the national roll-out of the EMA in 2004, but I would be surprised if further research came up with different results.

Studies by Robert Slavin at York University of international evidence on financial incentives for students indicate that this pattern - of some rise in participation but little or no increase in attainment - is common where such schemes are used in the developed world. (It is different in the developing world, where incentive schemes increase participation because poverty is more acute.)

If the effects on participation and attainment are small, the opportunity cost is enormous: Pounds 550 million is a huge amount, especially in a period of belt-tightening. We believe the pupil premium we recommended would have a much greater impact on participation, and especially attainment.

Under our proposals, institutions that took more students from poorer communities (a close match to those who benefit from EMA) would get significantly more money and could boost the prospects of such students much earlier in life. Institutions that service mostly wealthy areas would have an incentive to take students from poorer communities, reducing class segregation in education over time.

I say "institutions" because, although we focus on schools, there are strong arguments that a national funding formula with a pupil premium should also apply to FE colleges. (The Government is already looking at a national 14-19 funding system.)

If the premium were applied, colleges could use the extra money as they saw fit. So, if they wanted to, they could continue to fund an EMA-style incentive system for poorer students. But my hunch is that colleges would think of better uses for the funds, such as hiring more staff or improving facilities.

The EMA should never have been introduced. It would have failed any reasonable cost-benefit analysis for government expenditure. Had the Government bothered to look at the international evidence, it would have seen that this kind of incentive never works. It's time to accept that there are more effective ways to spend the cash.

Sam Freedman, Head of the education unit of the Policy Exchange.

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