To ask the Secretary of State for Children, Schools and Families what estimate he has made of the returns to the economy of people gaining (a) level 1 and (b) level 2 vocational qualifications; and if he will make a statement.
I have been asked to reply.
Historically, vocational qualifications at level 2 have been associated with improvement in earnings where those qualifications were obtained in the workplace rather than in college, and for people who have no or low qualifications rather than those who are already qualified to level 2 or better, for example through having good GCSEs. Thus the skills strategy has emphasised the acquisition of vocational qualifications in the workplace and has prioritised funding toward those with low or no previous qualifications. There is also clear evidence that higher level qualifications provide substantial benefits but that those with low or no qualification face barriers to learning; so the skills strategy has also aimed to get people up to at least level 2, from where they will both be incentivised to continue in learning because of the substantial average earnings gain to be had, and because the personal barriers to further learning are likely to be lessened.
The latest evidence on the economic benefits for level 2 vocational qualifications was published in autumn last year(1). It changes this picture in that level 2 vocational qualifications give higher average earnings gain than previous studies have shown, and for a wider group of people. In many cases the gains seem to be better than the equivalent academic or general qualifications. Earnings improvements for young people up to the age of 25 who gained such qualifications experienced on average at least a 12 per cent. improvement in earnings, and for some qualifications much more. People with such qualifications also experienced substantial improvements in employment chances. The benefits continue to be larger for those with no or low prior qualifications than for those already qualified.(1)
That report also provided for the first time detailed evidence on level 2 vocational qualifications gained as adults (over the age of 25). The earnings differential is slightly lower than when acquired by young people, but they are still substantial, on average at least an 11 per cent. improvement in earnings. The exception in that study was the National Vocational Qualification at level 2 (NVQ2), which was associated with a lower improvement in earnings when acquired by adults. There are thought to be two reasons. First, there is a data difficulty, in that there are a relatively large proportion of adults in this country without qualifications. Many will have skills at around level 2, so a simple comparison of those with and without such qualifications does not reveal the true improvement in earnings for an individual who increases their skill level through gaining such a qualification. A further research study that will report later this year is using a different, longitudinal, approach and will identify more clearly the scale of benefit from gaining qualifications. Second, in the early years after NVQs were introduced, they were used extensively in government programmes for the unemployed, and hence they are disproportionately held by adults who have lower employability. As time goes on, and NVQs are used by the workforce more generally, the benefits are expected to become more apparent.
There is much less evidence on level 1 vocational qualifications. Recent evidence does show substantial positive improvements in employment chances for individuals who were low-achievers at school though(2).
(2) The Impact of Vocational Qualifications on the Labour Market Outcomes of Low-Achieving School-Leavers, Steven McIntosh, CEP Discussion Paper No 621, March 2004