Further Education
participants generate an additional £75bn for the economy over
their lifetimes, with Apprenticeships generating around £40 for
each pound of Government investment, new research shows.
The study, commissioned by the Department for Business,
Innovation and Skills examined the economic value generated by
Government funded post-19 qualifications – including
Apprenticeships, National Vocational Qualifications (NVQs)
undertaken in college and workplace settings and Basic Skills
Qualifications. The estimates were calculated using data from the
cohort of learners that started qualifications in 2008 / 09.
Key findings include:
FE participants that started a qualification in 2008/09 will
generate an additional £75bn for the economy over their working
lives, over and above what they would have contributed if they had
not achieved these qualifications.The benefits include increased
wages and improved employment prospects for individuals, as well
as benefits to employers stemming from increased productivity.An
apprenticeship is found to add the most value on average, compared
to other learning streams. The return on Government investment for
apprenticeships works out at around £40 for each £1 of Government
funding, when taken as an individual’s first qualification at that
level.
Vince Cable, Secretary of State for Business, Innovation
& Skills, said:
“Further Education is a fundamental part of this Government’s
growth strategy. We have committed to funding at least 250,000
more adult apprentices over the next 4 years than the previous
Government planned for, because we recognise that they offer real
opportunities to young people and equip businesses with the
trained workforce they need. We have also freed the sector from a
number of unnecessary bureaucratic burdens so it can better
respond to the needs of learners and businesses.
“This research adds further weight to our conviction that further
education has a vital role to play in ensuring we have the skills
that will build a stronger and more balanced economy."
John Hayes, Minister for Further Education, Skills and Lifelong
Learning, said:
“Further Education is the unheralded triumph of our education
system. This research illustrates just how important it is to this
country - our economy, society and individuals’ lives.
“That is why we are funding an unprecedented number of
Apprenticeships and freeing colleges from unnecessary burdens. We
are also helping employers, colleges and training providers to
work together to boost skills through the £50m Growth and
Innovation Fund.
“All these reforms will ensure that economic contribution of FE
will continue to rise in the years to come.”
Martin Doel, Association of Colleges Chief Executive, said:
“This research gives valuable new insight into the powerful
economic impact of post-19 education in Colleges and other FE
providers. Students, Government, the taxpayer, communities and
businesses are getting a strong return on investment from these qualifications.
Notes to editors
1. http://www.bis.gov.uk/policies/higher-education/research-analysis
2. The model outlined in this report aims to measure the
economic value of the Government-funded qualifications provided by
the post-19 Further Education (FE) sector, including colleges,
private training providers and voluntary & charity sector providers.
3. The approach to measuring the economic value of the sector was
to estimate the Net Present Value (NPV) associated with
undertaking different qualifications and aggregating them up to
the sector as a whole. The NPV is calculated by estimating the
discounted benefits from achieving a qualification over the
working life of the learner, and subtracting the costs associated
with undertaking the qualification:
The future benefits consist of higher wages and better
employment prospects for learners, as well as ‘spillovers’ to
other individuals and employers;
The costs consist of Government funding and fees paid by
individuals or employers, as well as output forgone during
learning.
4. The results presented in the report reflect the allocation of
FE participation funding in 2008/09 and the best evidence that is
currently available on the benefits. The aim of the exercise was
to produce a framework which can be continually updated as better
and more up-to-date evidence becomes available. In this sense, it
should be seen as a continual work-in-progress. Given that the
current evidence is incomplete and imperfect, it was necessary to
make a number of assumptions to fill the gaps.
5. The NPV of qualifications started in 2008/09 is estimated to
be £75bn over the years in which successful learners remain in the
workforce. Apprenticeships deliver the highest NPV per
qualification started; but in terms of the return on Government
investment - the NPV of each qualification divided by its funding
costs - vocational qualifications delivered in the workplace offer
a similar return to apprenticeships at around £35 - £40 per pound
of funding.
6. BIS's online newsroom contains the latest press
notices, speeches, as well as video and images for download. It
also features an up to date list of BIS press office contacts. See
http://www.bis.gov.uk/newsroom for more information.
Contacts:
BIS Press Office
NDS.BIS@coi.gsi.gov.uk
Katie Kilgallen
Phone: 020 7215 1861
katie.kilgallen@bis.gsi.gov.uk