The Pocket Money That Costs £549 Million a Year

A Big Smile – How Much Pocket Money Did She Get from the Government?

Students who stay at school after age 16 are entitled to Education Maintenance Allowance – if their parents are on low incomes. As with so much that is wrong with our tax and benefits system, the EMA was introduced by Gordon Brown when he was Chancellor. The EMA is paid at £10, £20 or £30 a week, depending on the student’s household income, with students in households earning over £30,810 getting nothing. Part time earnings of the student are not taken into account, and nor are any State benefits received by the household.

So it is very clear that this is an Allowance that is paid depending on the parents’ income, and not that of the child. But it is paid direct to the child.

The main aim of the EMA is apparently to persuade more children to stay in education after age 16. It is suggested that in many households, especially poorer ones, students feel under pressure to go out to work as soon as possible, and education is not valued.

In which case, how bizarre that the Allowance is paid to the child and not to the parents. I can see the point of allowing the parents of children older than 16 to continue claiming Child Benefit and Child Tax Credits if the children stay on at school. But why pay an allowance to the child concerned – but based on the parents’ income?

Proponents also suggest that it encourages attendance by students who are in education after age 16, since the payments stop if they don’t turn up. In reality, there is precious little evidence of any impact – and that is to be expected. Those who stay on in education after age 16 are the ones who want to be there. Ask any teacher.

The other part of the picture is, of course, that thanks to the barmy policies of the old Labour government, the compulsory education leaving age is being raised to 17 from 2013 and to 18 from 2015. And the Tories have not proposed to stop that. This means that in a couple of years, the EMA may end up being simply a bribe for the kids from poor homes to attend their classes and not bunk off.

Dale Bassett, of the Centre Right thinktank, Reform, is quoted by the Guardian as urging complete abolition of the EMA:

The EMA was meant to encourage low-income 16- to 18-year-olds to stay in education. But at a cost of over £500m last year, the scheme is not delivering value for money. Research shows that the EMA has had little if any impact on overall educational attainment. With more young people than ever already in post-16 education, there is likely to be a high rate of these people being paid to have education they would have had anyway – and when the school-leaving age is raised to 18, the allowance will become completely obsolete. In these fiscally straitened times this is not an effective way of spending over half a billion pounds of the education budget.

Even supporters of the EMA only point to increases of less than 5 percent in the rates of children staying in education. It would be more interesting to see some research into what the children typically spend the Allowance on – and I bet the result would be CDs, video games or chocolate.

And nobody ever seems to point out the effect on children from “wealthy” homes earning over the magic £30,810, who see their classmates getting pocket money from the government while they get nothing. What effect does that have on their motivation?

EMA was a typical Gordon Brown disaster, spending a huge amount of public money with ill defined goals, no idea whether it is achieving its aims and an unfair impact on claimants. And yes, there’s an agency to run it – the Young People’s Learning Agency, launched in April 2010 (which is also responsible for funding Academies). It employs 450 people.

The EMA costs £549 million per year. At a time when the government is considering serious and painful cuts in public spending, involving, for example, more rigorous assessments of people’s right to Disability benefits, is it really right for the government to be spending that kind of money on pocket money for children?

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9 thoughts on “The Pocket Money That Costs £549 Million a Year

    • Agreed – although to abolish means testing completely you would need to go the whole hog and adopt something like the combined tax and benefits system you proposed in the UKIP manifesto.

  1. Spot on!

    To have £30 cash in your hand each week at age 16 can make quite a difference to your lifestyle, especially when compared to those whose parents may earn ‘a lot’ but are struggling to pay bills that, for the lower paid, tend to be subsidised by the state.

    Those who are eligible for EMA might also be eligible for subsidised travel and money towards ‘essential equipment’ – which can include a laptop. If parents are on income support these same students can claim a meal subsidy.

    Children from families earning over the limit get nothing, unless their parents can afford it.

    The differences continue into the higher education system, with subsidies and grants available for some – entirely dependent on parental income (taken into consideration until the student is 25). Students have the same outgoings and similar earning potential after graduation, but only those with ‘wealthy’ parents end up having to repay student loans taken out to pay tuition fees and for accommodation and subsistence.

    • You’re quite right to point out that this continues into higher education. And there, of course, it is even less defensible since students (who are obviously over 18) are clearly treated as independent in every other way.

  2. I spent most of my EMA including bonuses (which includes a £100 leavers bonus) on alcohol, weed, music and clothes, in my eyes money well spent.
    It’s a ridiculous waste of money however you will encounter stiff opposition if you try to scrap it.

    • It may be true that there would be stiff opposition if the government tried to scrap it. But you’ve said yourself that it is a ridiculous waste of money. It’s all very well trying to buy off opposition with taxpayers’ money, but the taxpayers are getting restive already and at some point they themselves will revolt if they think they are being taken for a ride.

  3. I’m at a school in Hertfordshire, quite an affluent area and quite a few people in my school get EMA.

    I think the idea is ridiculous, I know people in private schools with one parent on over £100,000 a year but the other under the threshold and therefore get £30 a week.

    I think this is just another clear example of how the benefit system has become a way of getting free money. I am completely for benefits, don’t get me wrong. But what angers me about people who cheat the system like this, is that they are basically stealing from people who really do need the money.

    • You are quite right, Emma. When people who don’t need State benefits get them, it means there is less for those who really do need them.

      On EMA, the latest news now is that the new government has indeed decided to abolish it. The government statement reads:

      EMA will close to new applicants in England from January 2011. Learner support funds will be available through schools, colleges and training providers to help students who most need it to continue in learning. If you currently get EMA you will continue to receive it for the rest of this academic year, but you will not receive it next academic year

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