Education Maintenance Allowance in Scotland: another case to watch

A recent study of young people’s views on the impact of poverty on education raised the issue of the cost of attending school, even when the school place itself is provided for free (Learning Lessons, discussed here).

That’s a prompt to recall that there is a system of payments for young people between the ages of 16 and 19, the Education Maintenance Allowance, which was introduced with the express purpose of encouraging young people to stay on in post-compulsory education, partly by helping them with extra costs.  It is available to those in school or an FE college (a concession for home schooled young people was also made in Scotland, which appears still to exist). EMAs are administered under national rules by local authorities and the Scottish Funding Council. The official EMA website is here. 34% of school pupils between 16 and 19 received an EMA payment in the latest year for which figures are available, 2012-13. (Reporting on the scheme has become noticeably less detailed recently: here is the 2008-09 report for comparison.)

These statistics also provide the long-term spending pattern.  Unusually, the historic data on spending is provided only for sub-categories (by institutional type or gender), so the overall spending pattern over time is not immediately clear.  However, the total can be easily calculated and is shown below (see table at foot of post: real terms figures calculated by this author using Treasury GDP deflators).   From its high point in 2008-09, spending on EMA has fallen by around £11m or 29% in real terms.   For reasons discussed below, Scotland will not be not alone in having seen a large reduction in EMA spending. Also, EMA is demand-led and demographics and economic context will  therefore be  important factors, alongside changes in eligibility, which affect total spending.  All the same, EMA joins means-tested student bursaries in higher education and Disabled Students Allowance as an example of falling spend in recent years on targeted, non-repayable grant support.

In 2014-15, the budget for EMAs  in Scotland is falling by 6.3% (8.2% in real terms: see Level 4 spreadsheet for 2014-15 budget here), from £31.6m to £29.6m.  The Scottish Government has explained that “This slight reduction to the overall budget reflects the changing demographics in Scotland.”  Even assuming the weekly payment will continue to be frozen in value at £30, 6.3% seems a large single year drop to expect in spend.  This is not least as the number of claimants rose by 3.3% in 2012-13, as the government’s own recent news release highlighted. Within that, the statistics show that the  number at younger ages was rising.

However, actual spending in the 2012-13 academic year was only £27.8m, against a budget that financial year of £31.6m (level 4 spreadsheet for the previous budget here).  So the relationship between budget and actual spending is not straightforward here and there’s more to understand about how far the fall in 2014-15 is due to an expected real reduction in spending or, for example, a correction of past over-budgeting.  A further complication here is that around half of EMA spend comes from local authorities’ general resources, so the national budget figure is not for a dedicated pot of cash, but must be partly based on the notional allowance included for EMA within the overall local government settlement.

Background

EMAs were introduced by the UK government in England as a pilot in 1999 and then fully implemented in 2004, with the (then titled) Scottish Executive having full devolved responsibility but choosing to go down the same route, as did the rest of the UK.  EMAs did not have cross-party support at Westminster (here and here are  short and useful summaries of the arguments and evidence about them).  Some research suggested that they had a limited effect on staying on  rates.  Other research argued that staying on rates had improved and some institutions said that they had improved attendance and performance (payment was partly linked to this). Around 39% of all 16-19 year old school pupils in Scotland received EMA support in the academic year 2008-09.

In 2009-10, the first reductions made to the scheme were in Scotland, after the Scottish Government’s ’16+ Learning Choices – First Step Activity and Financial Support’ consultation. Payments of £10 and £20 available at incomes up to just over £30,000 were removed and the income threshold for the £30 payment was lowered slightly to bring it into line with that of the ‘away from home’ element of further education bursaries (£20,351). An additional, higher, income threshold (£22,403) was also introduced for families with more than one dependent child. It’s worth pausing here to notice that this should mean that one-third of 16 to 19 years olds in school come from households with incomes below the low £20,000s and  therefore fall into the group most affected by the higher education grant reductions described in detail elsewhere on this site, and for whom the Welsh system of student support in higher education is generally better.

In 2010-11 a bonus payment for  good attendance and performance was also removed in Scotland, which reduced spending by £6m (around 20% of the budget at the time). This was linked to an overspend in 2009-10. These changes, which for two years left Scotland with the least generous EMA scheme in the UK,  were controversial.  However, the UK Government’s announcement during 2010 of its decision to abolish EMAs from 2011-12 left Scotland in a more generous state than England, which quickly became the dominant narrative and central to the rebuttal of any questioning of the reductions in Scotland.  This model of defence by comparison with England is of course familiar from the discussion of student funding in higher education. In spring 2011 it was announced that just under one-third –  £180m –  of the English £560m EMA budget would be recycled into a new, more closely targeted scheme, with £1,200 a year being offered “to those with the greatest needs, such as pupils in care, care leavers and the severely disabled”, plus a discretionary fund for schools and colleges.  This has however never been treated as a relevant development by the Scottish Government in its comparative descriptions.

Indeed, the Scottish Government’s 2011-12 draft budget went further, stating “In contrast with the decision to remove it in other parts of the UK [emphasis added], the Scottish Government will continue the Educational Maintenance Allowance (EMA) scheme” (p26) and “In other parts of the UK, the Educational Maintenance Allowance (EMA) scheme – the flagship programme for supporting young people from low income families – is being removed.” (p28).  Leaving aside any questions  about the English replacement arangements,  this was technically incorrect in a more fundamental respect. EMA continued (and continues) in Wales and Northern Ireland. In 2011, Wales followed Scotland in removing the £10 and £20 payments and the bonus, although it uses income thresholds for the £30 payment which are slightly higher.  Northern Ireland has also moved to the single payment of £30 a week, on very marginally higher thresholds than Scotland.  The conflation of “other parts of the UK” with England is also familiar from the way comparisons are made with student fee policy elsewhere in the UK by the Scottish Government. This mistake has been repeatedly more recently, in “Europe 2020: Scottish National Reform Programme 2014“, published by the Scottish Government on 29 April this year, which states: “In contrast to other parts of the UK, the Scottish Government has retained the Education Maintenance Allowance (EMA)”.  Official publications really ought to be more precise.

Conclusion

To give an idea of scale,  because spending on means-tested HE grants is falling so much,  in the current academic year spending on the main bursary for young students in HE is likely to be not much more than one and a half times the EMA budget.  So EMA is an increasingly  significant proportion of the non-repayable support available to young people from the lowest incomes in full-time education.  As discussed at length elsewhere on this site, more living cost support for young people in HE is of course available, but largely as loan.

Although EMA as a tightly mean-tested form of payment does not sit neatly within the Scottish Government’s general preference for universal benefits, Scottish Ministers appear to continue to be supportive of it: the recent Child Poverty Strategy stated “Scottish Ministers remain committed to having this support in place for the lowest income households.”

Learning Lessons argues that its findings raise policy issues which need attention.  What the future may – and should – hold for EMA might be worth bearing in mind there.

Barnett formula footnote

EMA is an interesting case study for Barnett formula effects. Prior to 2011-12, the Barnett consequentials of policy in England worked in Scotland’s favour.  £560m at 8.6% (I think this is the right percentage – it is near enough for this purpose)  gives £48m, much more than Scotland was spending on the same scheme.  This may be because of the difference in the age structure (England has a younger population) or institutional arrangements (young people tend to move into higher (or further) education at a younger age in Scotland).  But the post-2011 £180m gives a consequential of just over £15m, and did create a new pressure on the Scottish budget.  Even then,  some reporting suggested that transitional arrangements conceded after the original announcement might mean spending on EMAs in England falling less sharply to begin with.  So this is an example of where a cut made in a Whitehall budget certainly will have created a shortfall for the Scottish budget, but the impact has been less stark than might be expected from the simple fact of the abolition of the original EMA scheme for young people in England.

EMA total spending