In the first part of this series we argued that since the overall context of the area reviews is on “raising productivity and economic growth”, one of the things that would stand colleges in good stead going into their review is the ability to articulate the economic value and contribution to local productivity that they are already making. Why would this be helpful? Simply because by having figures evidencing the real impact a college has on its community, it will surely make the job of convincing the steering group of the college’s contribution to local economic growth and productivity that much easier.
All colleges generate a number of economic benefits to various stakeholders. These include:
- Benefits to learners from higher lifetime earnings
- Benefits to society from avoided social costs
- Benefits to taxpayers from an expanded tax base
- Benefits to local businesses from increased consumer spending
- Benefits to local employers from a more productive local workforce.
Although no-one in the FE sector is likely to dispute these claims, the question is whether they can be substantiated with real figures. The answer to that is yes. For 15 years we have been conducting Economic Impact Studies (EIS), measuring the impact and value colleges generate and consistently finding that colleges give good value to learners, businesses, communities, society, and taxpayers too.
In terms of the Area Reviews, the figure that might prove to be the most useful is something called Added Workforce Skills. This figure is a calculation of the economic contribution made by a college’s students who find employment in the area after leaving, and therefore represents the increased economic growth that past and present learning is producing each year. Here’s how we calculate this:
1. We measure historic training at the college — typically going back 15 years — and then use this data in conjunction with wage differential data to determine the total amount of higher earnings associated with the educational achievements of past and present learners.
2. Since not all ex-students will be working locally, and not all students will be working in the curriculum area in which they studied, we factor this into our calculations by using local employment and earnings patterns to discern which industries learners are potentially working in and how much they are likely to be earning in those industries.
3. We then apply “multipliers” to the figure we arrive at, which calculates the effect that these higher earnings will have on the local economy as a whole. These multipliers are not “one-size-fits-all” figures, but rather a series of multipliers that take into account the nuances of the local economy.
The figure we end up with — aggregate higher earnings as a result of the college’s training, and the impact this has on the local economy — represents the increased economic growth that past and present learning is producing each year. It therefore really gets to the heart of what colleges are about – increasing employability, boosting earnings potential and raising productivity, especially in the local and regional economy. In terms of the Area Reviews, with their focus on productivity and economic growth, having this figure at their disposal could well prove to be a huge bonus for colleges that want to articulate just how much they contribute to local prosperity.
If you would like to speak to someone about how we might help you get prepared for your area review, contact Andy Durman (email@example.com)