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Lives in the balance, by Vidhya Alakeson

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29 April 2005

The political parties are all talking up the importance of education in the election debate. But, asks Vidhya Alakeson, is spending going where it is most effective?

After eight years of a Labour government, it came as a shock to discover that it is now more, not less, likely that a child of working-class parents will remain working class. For a government outspoken about social mobility, this is stark evidence of failure.

A report published this week by the Sutton Trust shows that family income has a greater influence over a child's chances of succeeding at school in Britain than in other developed countries, including the US. That influence has grown stronger over time. The researchers argue that the education system has replaced selection by ability with selection by income, a view apparently shared by the prime minister's senior education adviser, Andrew Adonis.

The main culprit is the pattern of spending on education and training. The UK spends three times as much per student in higher education as it does per child under five: £1,800, compared with £5,300 a year in 2003. We invest the most after 16, when it is too late to really make a difference.

If the government is serious about its commitment to life chances, it needs to turn the current pattern of spending on its head. Investment in the early years can make the biggest difference to the life chances of children from less affluent backgrounds.

Research conducted by the Institute of Education shows that by seven, a clear divide has emerged. Fifty-nine per cent of children eligible for free school meals achieve the government's expected standard at seven, compared with 70% of children who are not.

This gap in attainment remains and is reflected in GCSE results at 16. In 2002, 32% of young people whose parents were in low-skilled, routine jobs, achieved five A*-C GCSEs, compared with 77% whose parents held top professional jobs.

Capitalising fully on the potential of the first five years requires greater investment than we currently make. According to estimates from PricewaterhouseCoopers, we need to spend an additional 0.7% of GDP on the under fives, just over twice what the government spends at the moment.

This figure represents the gap in spending between what the Social Market Foundation believes needs to be spent on early education and care to promote the life chances of the least well-off, and the government's Ten-Year Childcare Strategy published in December 2004.

Above all, more money is needed to raise the qualifications of the early years workforce, perhaps the single biggest determinant of positive outcomes for children. Only half of Britain's 100,000 nursery workers have any kind of childcare-related qualification.

But, ambitions to have more graduates in the workforce need to be paid for. The average annual salary of a childcare worker is £7,800, compared with £22,662 for a graduate-trained nursery or primary school teacher. The £125m Transformation Fund set aside for quality improvement is evidently not up to the task.

The Conservatives' proposal to pay parents who qualify for the Working Tax Credit an additional £50 a week for child care also falls short of what is required. Without additional funding, parents will be forced to bear the burden of raising standards in the form of higher prices. This will penalise less well-off parents whose children could benefit most.

By reallocating spending away from later years to support high-quality, affordable education and care for all children under five, the government would bring investment in line with its commitment to life chances.

According to human capital experts at the University of Chicago, starting early increases the likely effectiveness of any education programme for two reasons.

First, skills are more easily developed early in life because the brain is more malleable, particularly for IQ- related skills. Secondly, an early start increases the effectiveness of later education and training by building lifelong competence and a motivation for learning.

Evidence of the impact of early education backs up these theoretical arguments. The latest results from the largest UK preschool study, the Effective Provision of Preschool Education (EPPE), show that two years after starting school, children who attended preschool outperform their peers with no preschool experience.

The boost for children from poorer backgrounds is particularly significant. Attending preschool ensures that they score above the expected minimum at seven for writing, reading and maths.

Current spending favours those who stay on in education past 16 rather than ensuring that all are given the best start. This is most likely to be young people from better off families. Forty-eight per cent of children whose parents held professional jobs entered university in 2000, compared with 18% whose parents were in skilled, semi- or unskilled jobs.

In particular, savings should be made on higher education and education and training for the low-skilled. High levels of public investment in these areas do little to promote the life chances of the least well-off.

In the fraught debate about higher education funding in England, opponents of the introduction of top-up fees argued that they would prevent young people from less affluent backgrounds entering university. However, an analysis conducted by the Institute for Fiscal Studies shows that financial constraints only affect around 7% of young people.

A far bigger barrier for the majority from disadvantaged backgrounds is poor school attainment. Without five good GCSEs, the academic route of A-levels and higher education is closed off.

There is a strong progressive case for top-up fees that the government failed to make with any conviction in the run-up to the Higher Education Act 2004. Raising top-up fees to limit growth in public funding for universities would free money that could be spent earlier. This would increase the likelihood of young people from poorer backgrounds achieving the necessary grades at 16 to continue along an academic route.

This would also bring the costs of a university degree more closely in line with the benefits that accrue to individual graduates. According to the National Institute for Economic and Social Research, graduates earn 50% more than non-graduates and £120,000 more over a lifetime than someone who goes out to work with two A-levels.

Seen in this light, the Liberal Democrat proposals to scrap university tuition fees and get rid of the child trust fund do little to promote life chances. More money would go to the middle classes at the expense of children from poorer families.

Significant savings could also be made on education and training programmes for low-skilled young people and adults. Much of the £7bn that is spent on these programmes does little to improve the employability or earnings of participants.

In some cases, participants are actually worse off having undertaken training. In large part, this is because policymakers have consistently failed to heed the lessons from research into what works for the low skilled.

For example, despite strong evidence that National Vocational Qualification (NVQ) Level 2 offers poor returns, compared with other qualifications at the same level, the government has failed to channel funding for Level 2 towards qualifications that are more likely to improve employment prospects and earnings.

Findings across the Organisation for Economic Co-operation and Development show that subsidised work is a far more effective means of securing permanent employment for low-skilled workers than education and training. It is also far cheaper: £398 a month compared with £929 a month for training, according to a study of Swedish labour market programmes conducted by the Institute for Fiscal Studies.

Replacing ineffective training programmes for the low-skilled with wage subsidises would improve the life chances of participants and release money to be invested earlier.

Over time, investing early will reduce the numbers playing catch-up in adulthood. The evidence is unequivocal that second chances are less effective and cost more than achieving well the first time round.

Politicians of all persuasions place great hope in the promise of education to extend opportunity. The outgoing government is no different. It has hoped that extending the welfare state to include services for families and children under five will bring about the kind of expansion of opportunity that compulsory education has failed to deliver.

Evidence of the effects of high-quality preschools on children's cognitive, social and emotional development suggests that this hope is not misplaced. But realising the potential of early years to improve the life chances of the least well-off depends on adequate investment to create accessible, high-quality services.

Maintaining the spending pattern for another five years will not transform Britain into a more open society. It's not more time that's required – it's a fundamental rethink in spending on education and training.

Vidhya Alakeson is a research fellow at the Social Market Foundation

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