We, the undersigned economists, support the Save EMA campaign and oppose the government's plans to abolish the education maintenance allowance, a scheme which helps and encourages students from poorer backgrounds in England, aged 16 to 19, to stay on in education (Hughes calls for £100m to help poorer students, 14 March). On a day when figures show youth unemployment at an unacceptable level, the last thing our country and those who govern us should be doing is removing or cutting support to that very age group.
More importantly, extensive quantitative evaluations of the EMA have shown that it has significantly improved both staying-on rates and qualifications for students from poorer backgrounds. Econometric evidence from researchers at the Institute for Fiscal Studies, published in 2005, found that the EMA significantly increased participation rates in post-16 education among young adults, and concluded that its impact was "substantial"; subsequent IFS research, published in 2008, showed, moreover, that the EMA significantly improved their educational outcomes.
The government has chosen to ignore this rigorous and independent evidence, and has instead argued that the abolition of EMA is justified by high levels of "deadweight" – ie that many young people in receipt of the EMA would remain in education even without it. But even if this is true, it is not a sound economic argument for abolishing EMA - it could equally be argued that the government should not vaccinate children against meningitis or polio, since the vast majority of children wouldn't contract these diseases anyway. Virtually all government programmes, even the most successful, have some deadweight cost. The real question is whether the benefits, economic and social, of the EMA exceed its costs overall. On this, the IFS concluded that even looking at only the narrow economic benefits of EMA – the higher wages that its recipients would go on to enjoy in future – these are likely to exceed the costs in the long run. And this takes no account of the wider social and economic benefits. So the EMA, which costs the government £550m, is not a deadweight loss as the government claims.
The chancellor has promised a budget for growth. But over the long term, growth depends above all on the skills and qualifications of the workforce. Unemployment for young people without qualifications is already about 40%. And, as the chancellor will be aware, the Treasury estimates that there will be only around 600,000 unskilled, unqualified jobs in our economy by 2020. Abolishing the EMA – which enables many young people to gain the qualifications that they will need in the future – is not a recipe for long-term growth. At the very least, Mr Osborne should listen to Save EMA's Deal's a Deal campaign and provide funding for the 300,000 teenagers enrolled on two-year courses who expected to receive the EMA in their second year. The argument that there is no alternative to scrapping EMA is false. We urge the chancellor to use the opportunity of the budget to reconsider the government's plans and to continue a programme that not only benefits poorer students, but the economy as a whole.
James Mills Save EMA
Jonathan Portes Former chief economist at the Cabinet Office and director of the National Institute of Economic and Social Research
David Blanchflower Bruce V Rauner professor of economics, Dartmouth College, USA, and University of Stirling
Ann Pettifor Director of Prime (Policy Research in Macroeconomics), executive director of Advocacy International, and fellow at the New Economics Foundation
John Van Reenen Professor of economics, LSE
Tony Dolphin Senior economist and associate director for economic policy, IPPR
Robert Rowthorn Emeritus professor of economics, University of Cambridge
Paul Gregg Professor of economics, University of Bristol
William Brown Montague Burton professor of industrial relations, Cambridge University
Marcus Miller Professor of economics, University of Warwick