On Thursday last week, delegates gathered at one of Edinburgh’s iconic venues — the Hub (pictured on the right) — to hear the results of our research looking at the economic impact of Scotland’s FE Colleges. As anyone familiar with the Scottish sector will be aware, the last few years have seen huge upheaval, with a restructuring that has left just 26 institutions serving the country, rather than the 37 that existed in 2011. However, as our Economic Impact Study suggests, the sector is providing great value to learners, taxpayers and the Scottish economy as a whole.
The event, which was organised by Colleges Scotland, featured a number of speakers including Shona Struthers, Chief Executive at Colleges Scotland, Angela Constance MSP, Dr Linda McTavish CBE, Chair of The Lanarkshire Board, and EMSI’s co-founder and senior economist, Dr Kjell Christophersen.
Shona Struthers began the event by citing the reason Colleges Scotland had commissioned the countrywide study as being about wanting to get “external and credible evidence” of the impact FE colleges are having in Scotland. Dr Christophersen then took the audience through how EMSI’s impact studies are conducted, and how they differ from most impact studies for the following reasons:
1. Many studies simply measure the impact of college and staff expenditure and apply a multiplier to arrive at the total impact. EMSI’s studies, on the other hand, recognise that there is an ongoing economic contribution made by college students who find employment in the area after finishing their training. This figure — Added Workforce Skills or Productivity — is crucial in terms of determining the real value a college brings
2. Those studies which do go further than simply measuring college and staff expenditure, tend only to go as far as looking at the impact on learners. However, there is also a tangible impact on society and taxpayers, and the EMSI Economic Impact Study calculates this
3. Our study, unlike many others, also takes into account “alternative uses of funds” — how money might be spent if a college didn’t exist — which we then subtract from the gross figure to leave us with a net impact
Dr Christophersen then went through the findings, with some of the most significant being:
– Every £1 that learners pay for their education at Scotland’s colleges yields £6.30 in higher future wages
– Society will receive £6.30 in return for every £1 invested in Scotland’s colleges
– Taxpayers see an average annual rate of return of 15.6% from their investment in Scotland’s colleges
– The accumulated impact of former learners who are currently employed in the Scottish workforce amounts to £14.2 billion in added income in Scotland’s economy each year.
– Altogether, the economic impact of Scotland’s colleges to the business community in Scotland is £14.9 billion each year.
These figures represent an impressive return on investment for learners, society, taxpayers and the economy, and as Dr Christophersen remarked, “We have a public investment which behaves as though it is a private investment.” His presentation and a fact sheet with more results can be downloaded here and here.
In her address, Angela Constance MSP, praised the report and talked about how it adds value to the other positive work that colleges are doing. Linda McTavish then closed proceedings in a speech that included reference to the Beekeeper Analogy:
“Flower blossoms provide the raw input bees need for honey production, and smart beekeepers locate near flowering sources such as orchards. Nearby orchard owners, in turn, benefit as the bees spread the pollen necessary for orchard growth and fruit production. This is an uncompensated external benefit of beekeeping, and economists have long recognised that society might actually do well to subsidise positive externalities such as beekeeping.Educational institutions are in some ways like beekeepers. Strictly speaking, their business is in providing education and raising people’s incomes. Along the way, however, external benefits are created. Learners’ health and lifestyles are improved, and society indirectly enjoys these benefits just as orchard owners indirectly enjoy benefits generated by beekeepers. Aiming at an optimal expenditure of public funds, the impact model tracks and accounts for many of these external benefits and compares them to public costs (what taxpayers agree to pay) of education.”