OMG CSR EMA RIP

Taking a car load of teenage boys to play football in Surrey last night, I found the Comprehensive Spending Review has certainly had an impact. The boys were incensed by the abolition of Educational Maintenance Allowances (the weekly allowance of between £10 and £30 paid to 16-18 year olds in full time education). They predicted dire consequences including fewer kids from poorer families staying on in education, more students failing to attend lectures (EMA payments get withdrawn if students miss classes) and a rise in the crime rate.

Although understandable, were their predictions so over the top? There surely will be consequences. While most people go to school reasonably close to where they live, poorer teenagers are more likely to go to FE colleges post 16 and these are often several miles from home. Without EMAs these travel costs may be prohibitive. A couple of the boys to whom I gave a lift last night have cleaning jobs early in the morning but, again after travel costs, these jobs won’t compensate for the loss of £30 a week.  

I am not surprised that EMAs were targeted by the Coalition. I don’t suppose many cabinet ministers know youngsters who receive the allowance, which must disproportionately flow into Labour constituencies. But there is a more substantial reason for Treasury hostility, one which led to tough questions being asked about EMA cost effectiveness even in my time in Government.

This problem is the deadweight. EMAs were introduced as a way of persuading poorer kids to stay in education. But they are a blunt tool given estimates which suggest about four out of five people who get the allowance would probably have stayed on in education anyway. If the country is facing austerity then a form of spending in which only 20 pence in the pound is having the desired effect is surely an obvious target?  It may be tough on my son’s mates but life is tough and the public finances must be brought under control.          

To some this is an open and shut case. But here are three possible reasons to think twice:

1. All known methods of increasing post compulsory participation among disadvantaged groups are expensive and the EMA is actually comparative quite cost effective.

2. The conditional element of EMAs (as I said you don’t get the allowance if you don’t do the course) may be the reason why there have been impressive improvements in educational attainment among the EMA group.

3. Even in a time of austerity isn’t there a case for saying that poor young people who stay in education should have enough money to be able to pay the basic costs of food, clothing and travel?  

The Coalition says it will replace EMA with a more targeted form of support but this lacks credibility. First because the amount of money the Government says it intends to save on EMAs (£0.5 billion) is near enough its total cost and second, because the problem with EMAs is not their eligibility (they are already means tested) but the deadweight. Targeting would mean identifying which young people would not stay on without the subsidy, but without introducing lie detectors to year eleven classrooms it is very difficult to see how this could be done. 

As we learnt from Gordon Brown’s 10 pence tax debacle, it isn’t until a service or payment is actually taken away that people start to protest. While I predict a backlash against the changes in child benefit eligibility, I don’t expect to see much of a fight about EMAs. Working class teenagers lack the resources, skills and allies to make a row. But if you asked me to balance the savings made by a CSR cut with the likelihood of malign social impact, I’m afraid I’m at one with my car load of dismayed footballers.

PS Yesterday I mused briefly about the different approaches of the Prime Minister and the Chancellor. The excellent Peter Oborne – who knows ten times as much about these things as me – writes about this today.