The economic impact of FE colleges

It will not have escaped your attention that the reality of funding cuts has been looming large over the FE sector for some time now. It will also not have escaped your attention that the manifesto pledges of the incoming Government have done little to alleviate fears in the sector that more cuts may be on the way.

Many in the sector will be worrying about what the future holds, but I want to draw your attention to something that my organisation, EMSI, is doing in partnership with the 157 Group, which we hope will have a powerful influence on decision makers to reconsider the issue of funding.

In comments made just after the election, Dr Lynne Sedgmore, Executive Director of the 157 Group, echoed the fears of many in the sector when she said, “There are now real risks from further spending cuts”. However, she then went on to make the following pledge:

“We will be strongly demonstrating the undoubted contribution of FE to the economy in a way that we hope will be hard to resist within the Treasury”.

One important element of what Dr Sedgmore was referring to is the publication of a new report, jointly produced by the 157 Group and EMSI, and timed to coincide with the Queen’s Speech at the state opening of Parliament. The 12-page report – “The economic impact of further education colleges” – is based on detailed economic analyses we have carried out with a number of colleges in recent years, which confirms in actual numbers the huge value that the sector gives to learners, businesses, communities, taxpayers and society as a whole. ??

The report begins with a look at the technical aspects of calculating the value of colleges. This can be looked at from two main standpoints: First, there is the direct monetary impact colleges have on their local economies as a result of their existence. Secondly, a college’s value can be seen in terms of the long-term benefits it brings to a variety of stakeholders, including learners, society and taxpayers.

The report then goes on to ask the question, “Where would we be without further education colleges?” Or to put that another way, if your local further education college announced that it was closing down, how much effect do you think this would have on your community and its economy? Would it harm local businesses? What about the effect on young people? How about society as a whole?

The answer to these questions is given by way of a series of case studies, looking at research we have conducted both on individual colleges as well as aggregate studies of multiple colleges. What comes through in all these examples is that colleges – and by implication the entire sector – give huge value to their local and regional economies, and therefore the Government can ill afford to ignore the sector, or to treat it as optional. As Lynne Sedgmore comments in the report:

“…if colleges across the country were to close, given the impact seen in these three examples alone, can there be any doubt that the effects would be catastrophic?”

The report concludes by stressing that the results of our research show FE colleges to be a vital part of the health of local and regional economies, and so any attempt to foster growth whilst ignoring them is unlikely to succeed. Therefore, if the Government is serious about driving growth, it must:

• Take the sector more seriously than in the past
• Recognise the huge value the sector brings to local economies, regional economies and, by implication, the national economy
• Work with leaders from the sector to develop a broad range of policies that will help foster growth in the long run.

Both the 157 Group and ourselves are very excited about this report and the potential it has to demonstrate beyond doubt to policy makers that colleges have a massive economic impact throughout the country, firstly on their local and regional economies and, as an aggregate, on the national economy as a whole. By amply demonstrating the vital role played by colleges in driving local, regional and ultimately national prosperity, our hope is that this report could prove to be a critical part of persuading the Government to invest in the sector. ??

You can download a copy of the report here.

Andy Durman is the Managing Director of Economic Modelling Specialists International UK (EMSI UK), the labour market information firm