Education: National saving or investment?

By Ben Durbin

Tuesday 25 June 2013

With George Osborne’s spending review imminent, difficult choices are being made on how to prioritise funding for public services, with the current ring-fencing of school budgets being questioned by the likes of Reform.  It has therefore never been more important for spending decisions to be based on solid evidence. With this in mind, NFER has this month produced a special issue of its journal, Educational Research, on Value for Money in Education.

Co-editing the special issue has been a fascinating process, and has provided a great excuse to read a variety of papers from leading academics in their fields.  In light of this week’s announcements, one of these is particularly noteworthy.

What proportion of our national income should be spent on education, particularly in times of austerity? Is education a luxury to be cut along with the national equivalents of an overseas holiday and satellite TV package? Or is it an investment, bringing the expectation of later returns from a more productive workforce? ‘The role of education in economic growth: theory, history and current returns’ provides evidence in favour of the latter position, building on the case developed by the economist Theodore Schultz.

The implication of this is that cuts to spending now could have far reaching implications for future economic prosperity. And as well as not making economic sense, there are moral implications to compromising the education of a whole generation (which for those children in question, once lost, cannot be recovered through a future reinstatement of current spending levels).

But of course, it is not enough simply to guarantee sufficient levels of overall investment. Value for money will only be achieved if this funding is allocated and spent in the most efficient and effective ways, informed by the best available evidence. This is a responsibility of government, but it is also a challenge that can be taken on by teachers, headteachers and the so-called middle tier such as local authorities and academy chains.

The responsibility also lies with organisations such as NFER to ensure that our research is relevant, accessible, and above all useful. It is a challenge we are taking seriously, and I’m proud to be leading our efforts in this area.

Nowhere is the need for substantial and well-informed investment better illustrated than the crisis among our young people not in education, employment or training (NEET). The macroeconomic arguments around levels of educational spending revolve around the notion of ‘human capital’ – the level of investment in an individual’s knowledge, skills, and ultimately their ability to participate productively in the workforce.

These young people possess the necessary ‘human capital’, but at present this is being lost in translation – or rather, transition – when it comes to progression into the workforce or further education and training.

This is a human tragedy, and an economic disaster. It’s like we’ve taken the family savings and, rather than investing them in a high interest savings account, we’ve just hidden them under the mattress.

That is why for the past couple years NFER have made an investment of our own – in a programme of research seeking to tackle the challenges of going from Education to Employment. We have undertaken reviews of existing literature on the topic, conducted new research and, most importantly of all, are producing practical guides for schools (such as this practical guide for headteachers on the provision of careers guidance). We are currently planning the next stages of this programme, so would love to hear from anyone interested in being involved.
When the spending review is announced tomorrow, and as an education system we continue to adapt and respond to our rapidly changing world, we therefore need:

  1. For government to maintain its investment in education to secure our future prosperity.
  2. For all those involved in education to take responsibility for ensuring spending is directed on initiatives and interventions that have been proven to work.
  3. For more to be done to tackle the current NEETs crisis, so that all young people leaving education go on to reach their full potential.