The claim

“We are not abolishing EMAs – we are replacing EMAs with something more effective.”
David Cameron MP, Prime Minister’s Questions, December 15 2010

The background

Cameron brushed off Ed Miliband’s charge that he was “hurting social mobility” by scrapping the Education Maintenance Allowance (EMA) during 2010’s final PMQs today.

“I absolutely accept that we have to help people get from the very bottom to the very top,” the PM said, claiming that EMAs – a £30 weekly payment to 16-18 year olds whose parents earn £30,000 a year or less – would be replaced by a mysterious “something” more effective.

This prompted howls of derision. Given that Cameron himself applauded the scheme in the run-up to the election, FactCheck is intrigued to know how he plans to better it.

The analysis

Today, Cameron reiterated research showing that almost 90 per cent of those who received EMA planned to stay in education regardless of the grant.

Based on a government survey of around 2,000 students, the research shows that only 12 per cent of those receiving EMAs said they wouldn’t have been able to afford the course without the extra cash.

The government argues that it is a “deadweight” cost to give free money to this majority of kids who have every intention of staying on at school or college anyway.

Granted, doling out the EMA to teens costs taxpayers a substantial £560m a year.

But is the government missing the point? To what extent is the spend offset by those galvanised to learn by the £30?

The respected think tank, the Institute of Fiscal Studies (IFS), agrees that the EMA encourages a small boost to student numbers. IFS research found that it helped bolster the number of students staying on from 65 per cent to 69 per cent among 16 year olds, and 54 per cent to 61 per cent among 17 year olds.

But even taking into account the “deadweight” element, the IFS reckons the £560m cost is “completely offset” by the benefits to the economy from this small number of students.

Or put another way, the impact of the policy on those that really need it more than makes up for any spend on those who could do without it. Read Channel 4 News Economics Editor Faisal Islam’s blog which tracks this in greater detail.

The IFS also points out that focusing purely on participation doesn’t take into account other possible benefits of the EMA.

Even if students take the course without an EMA, they may go to more lessons in order to get the cash, or may have more study time as a result of not having to take on a part-time job.

The verdict

So what’s replacing the EMA?  The Department for Education told FactCheck the £560m pot will be replaced by “an enhanced” Discretionary Learners’ Support Fund.

This “more targeted” hardship fund currently pays out £26m a year – but it’s understood the government will multiply this by two or three times, in which case it could help that 12 per cent of poorest teens.

The oracle that is FactCheck however, foresees two possible problems with this.

The Discretionary Support Fund is only awarded once students are accepted on a course. Without the promise of extra funding, some poorer students may not risk applying.

Secondly, the Discretionary Fund is distributed by the colleges and schools themselves – at their discretion. This makes the process less transparent, its success less measurable. The EMA at least was a simple process of one means test, distributed centrally, making it clear who was eligible and who was not.

The EMA will be paid to the end of this academic year, August 2011, to students who successfully applied for it by the end of this month. The Department for Education says it won’t take any more applicants from January 1, 2011.

But with the government giving itself an “early spring deadline” on releasing full details of the EMA’s replacement, whether it will be a “more effective” policy remains to be seen.