CAREERS ADVICE FOR ADULTS: £9 SAVED FOR EVERY £1 SPENT

In late 2017, the Board of Careers Yorkshire and the Humber: National Careers Service commissioned dmh associates to undertake an economic review and analysis of the productivity and economic benefits of the service. The period under review focuses on data available from early 2015 – mid year 2017 and the primary focus is on face-to-face careers guidance for adults. To access the full report: Productivity and Economic Benefits Report 140918

Three key questions

• What level of fiscal return does the National Careers Service: Careers Yorkshire and the Humber make to HM Treasury?
• Is the National Careers Service priority target group, set by the Education & Skills Funding Agency (ESFA), linked to a payment by results, sufficient to meet regional/local needs?
• What lies ahead in Yorkshire and the Humber when it comes to the National Careers Service face-to-face careers guidance work with adults in the coming year(s)?

Level of fiscal return

• For every £1 invested in the National Careers Service: Careers Yorkshire and the Humber £9 is returned in fiscal benefits to the Treasury and the wider economy.
• The service paid for itself in less than 2 months. This would imply the service has already paid for itself 4 times over halfway through this fiscal year.
• The economic benefits created for the Treasury are, as a minimum, the cost savings in payments of Job Seeker Allowance (JSA) and other benefits, as well as the additional income to the Treasury accrued from income tax payments from those adults newly employed. The estimated economic benefit is £9,800[1] per successful intervention. As a result, funding for face-to-face careers guidance does not only pay for itself, but it also returns 9-fold towards the cost of the service. The real return is much higher, nearer double, given that this return on investment (ROI) is based on job outcomes within contractual rules (for 2016, 17.3% of job outcomes were claimable and used in the above ROI results versus 31% of customers who moved from unemployment to employment). Actual job outcomes are much higher. The ROI is also understated as it does not account for the value of learning outcomes or the value of progression in work and other societal benefits. A 2016 national survey on the face-to-face area based service conducted by the ESFA showed the following results:
• 31% of customers moved from unemployment to employment
• 55% of customers progressed in employment
• 68% of customers progressed in learning
• 58% of customers felt that the National Careers Service adviser played a part in achieving employment progression
• 60% of customers felt that their National Careers Service adviser played a part in achieving progression in learning.[2] (Service Impact 2016 data, p.15)

• The level of funding is set to drop by 24% in Yorkshire and the Humber from October 2018.[3] This reduction in funding is a false economy given face-to-face careers guidance gives direct fiscal benefits and creates the conditions for more individuals to progress towards meaningful education, training and/or employment. This, in turn, supports increased productivity and prosperity across Yorkshire and the Humber region.
• 24% funding cuts MAKES LITTLE ECONOMIC SENSE. While these cuts would save £1.3 million per annum in costs, they would see a £12 million fall in fiscal benefits, as well as a total societal benefit fall of at least £30 million.
• By March 2018, the National Careers Service-induced Job and Learning Outcomes (JLOs) are expected to increase by 10% on the previous year, with those entering Learning or Training increasing by 24%[4]. The Education & Skills Funding Agency (ESFA) is proposing significant changes regarding priority target groups, as set out in Table 2 within the main report.

[1] Fiscal benefits were assumed in 2013 by the Department for Work & Pensions (DWP) to be £9,800, and are the result of an individual entering work, paying taxes and ceasing to receive benefits. Societal benefits were assumed to be £14,610, the average wage expenditure in the UK. When total societal benefits are considered, the impacts are greater still. Both of these figures were uprated for inflation for 2015 and 2016, to represent the likely larger real benefits job outcomes generated last year

[2] Source: techUK National Careers Service Concept Viability Market Engagement Report

[3] Source: National Careers Service contract notice 2017/S 216-449280

[4] Refer to footnote 4.

This report is now released at a time when new National Careers Service Area-Based contracts in England will come into place from 1st October 2018. 

NOTE: The National Careers Service Area-Based contracts (2014) totalled £75,400,000 across 12 geographical areas. From 1st October 2018, the contract value is approx £40,000,490 to cover 9 new geographical boundaries i.e. there are fewer but larger regions. Over a four year period, the budgets have shrunk by 46%.

Productivity and Economic Benefits Report 140918

Ryan Hogg, Associate, an independent Economist provided invaluable insights. He attended Glasgow University where he achieved a first-class honours degree in Economics. Ryan worked in Warrenpoint Harbour carrying out impact assessments to advise the Harbour Authority on the implications of Brexit. He has also worked with the Ulster University Economic Policy Centre, helping to model the Economic Impact of the University of Ulster.

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