The Education Maintenance Allowance did not improve attainment or earnings for disadvantaged young people in England

In a new report, funded by the Nuffield Foundation, researchers from the Institute for Fiscal Studies find that while it did increase participation in full-time education, the Education Maintenance Allowance (EMA) failed to achieve its ultimate aims of improving educational attainment and labour market outcomes. In fact, the results suggest that the EMA may even have led to a drop in later-life earnings of up to 3.5% for its most disadvantaged recipients (those eligible for free school meals in Year 11).

The EMA was a weekly payment to disadvantaged young people aged 16–19 in full-time education, first introduced by the last Labour government in 1999 and discontinued in England by the coalition in 2011. At an eventual cost of around £900 million a year (in today’s prices), it was intended to incentivise these young people to remain in full-time education and hence to generate long-term improvements in educational attainment, employment and earnings for eligible students. The EMA remains in place in Scotland, Wales and Northern Ireland.

The EMA did lead to an increase in full-time education participation amongst 16- to 17-year-olds eligible for free school meals of around 2.5 percentage points. However, this increase mostly came from students who would otherwise have been in work-based training programmes or part-time education. The EMA did not significantly reduce the share of students who were not in education, employment or training (NEET).

While receiving the EMA, students earned less from part-time work, suggesting they spent less time in paid employment alongside their studies. This reduced exposure to the labour market appears to have had lasting consequences – by their mid 20s, the most disadvantaged recipients were slightly less likely to be in employment and more likely to claim out-of-work benefits.

Introduced as a pilot scheme in 1999 and rolled out nationwide in 2004, the EMA provided up to £30 per week to students from low-income backgrounds who remained in full-time education between ages 16 and 19. This was worth around a quarter of what a young person could earn working a full-time job at minimum wage in 2004. Between 2004 and 2011, when the scheme was active in the whole of the UK, it cost the government around £6 billion in today’s prices.

The research focuses primarily on the effect of the national roll-out in England on students eligible for free school meals, almost all of whom were eligible for the full EMA award. It provides the first evidence of the EMA’s effects on outcomes beyond secondary education.

The research also finds:

• The positive effect of the EMA on full-time education was limited to students enrolled at further education colleges, with no increase in participation at schools. The effect was largest for boys, for students with very low grades at GCSE and for those receiving support for special educational needs.
• The EMA may have increased attainment of Level 1 (below GCSE) qualifications, but there is no evidence of an increase in qualifications above Level 1. For students taking A levels or equivalents, there was no significant improvement in grades or increase in university enrolment due to the EMA.
• There is tentative evidence that the EMA resulted in a small reduction in criminal behaviour, particularly for students with very low grades at GCSE, which persisted into later life.

For students who were eligible for free school meals, theEMA only generated 40p in benefits for every £1 the government spent on the policy despite the fact that the money was transferred directly to students. This mostly stems from the estimated negative effects on employment and earnings later in life, which also reduced later-life tax payments and increased government spending on out-of-work benefits. The EMA appears to have had fewer negative effects for slightly less disadvantaged students who were still eligible for the EMA, though still generated less than £1 of benefits per £1 spent.

Nick Ridpath, a Research Economist at the Institute for Fiscal Studies and a co-author of this report, said:

‘The EMA, which cost billions through the 2000s, did not have the hoped-for positive effects on educational outcomes and later employment. Indeed, it looks like it may have had negative consequences by discouraging disadvantaged young people from getting work experience. The Scottish, Welsh and Northern Irish governments, which still fund this scheme, might want to take note.’

Dr Emily Tanner, Programme Head at the Nuffield Foundation, said:

‘The findings from this research underscore the scale of the challenge in increasing both participation and meaningful engagement in post-16 education and training. With the Curriculum and Assessment Review underway, there is an opportunity to ensure that 16–19 learning pathways at all levels provide more effective routes into good employment.’