News story

Further Education boosts economy by £75 billion

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The study, commissioned by the Department for Business, Innovation and Skills examined the economic value generated by Government funded post…

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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.

  1. 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.

  2. 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.

  3. 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](http://www.bis.gov.uk/newsroom) for more information.

Notes to Editors

Contact Information

Name BIS Press Office Job Title

Division COI Phone

Fax

Mobile

Email NDS.BIS@coi.gsi.gov.uk

Name Katie Kilgallen Job Title

Division Department for Business, Innovation & Skills Phone 020 7215 1861 Fax

Mobile

Email katie.kilgallen@bis.gsi.gov.uk

Published 30 March 2011