We have the Midas touch

Colleges save taxpayers thousands by turning every pound;1 invested in them into pound;7 for the nation

successful colleges can be worth pound;7 to the country for every pound;1 invested in them, according to a detailed survey of one institution's economic impact.

US researchers commissioned to study Warwickshire College found this was the value of the cumulative benefit of higher earnings, reduced crime, lower unemployment and better health over its students' working lives.

The report says the taxpayer is saved an estimated pound;317,000 a year in social costs, by cutting the number of smokers by 101, the numbers of obese people by 93, saving 27 people from moderate to severe mental illnesses, eliminating 574 criminal offences and taking 27 people off unemployment benefit.

Ioan Morgan, the principal of the pound;32 million-a-year college and chairman of the 157 Group of successful colleges, welcomed the report, although he said he thought some other institutions would prove to contribute even more.

He also suggested that economic analysis of colleges' contributions could prove more useful than Ofsted's judgments.

Some of the benefits come directly back to the taxpayer, the report said.

For every pound;1 spent, pound;1.30 is returned by reducing social costs.

But the biggest effect is in growing the economy as a whole.

"Warwickshire College not only pays its way, but also generates a significant surplus that government can use to fund other programmes. It is unlikely that other government programmes could make such a claim," the report's authors said.

Mr Morgan commissioned the survey after they became widespread in US community colleges.

The pound;10,000 cost of the report was met by the Learning and Skills Council, which supported it as a pilot project. Mr Morgan wants more colleges to commission reports, and eventually for the LSC to make them a formal requirement.

"I do believe it enhances the reputation of colleges. It shows what fantastic and effective organisations they are," he said.

"It gives Bill Rammell (the further and higher education minister) a good case to go to the Treasury and ask for money, because he will be able to prove what an effective group we are."

Eventually, a robust economic analysis of colleges' contribution could reduce the need for Ofsted inspections, he suggested.

"If you look at a college and it's in a local economy that's performing well and the community is getting a really good rate of return from it, what other questions do you need to ask?" he said.

The assessment of the impact of Warwickshire College takes into account students moving abroad whose skills are lost to the UK. It also assumes that if the college and others like it did not exist, 10 per cent of students could still find a similar education elsewhere.

The survey found that the qualifications picked up by students boost the economy by about pound;9.2 million a year, much of it in the immediate local area.

Over the lifetime of one cohort of students, their time at college will be worth pound;220 million to themselves, their employers and the country as a whole, nearly seven times the original public investment.

The study concludes that the general public benefits more than the individual student. A single credit at the college, which takes 15 hours of study, increases after-tax earnings by pound;15 a year. But the social benefits as well as the growth of the economy are worth pound;35 a year to the public as a whole.

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