Tomorrow’s People youth programme ‘returns £3.80 for every £1 spent’

11 Aug 2016 News

A new study of the economic impact derived from the work of employment charity Tomorrow’s People over a seven-year period suggests that its youth programme delivers £3.80 worth of benefit for every £1 it costs to run.

It also suggests that the value of its work has increased over time, as the new report builds on earlier studies.

Tomorrow’s People has always been a trailblazer in terms of measuring the impact of its services.  Several years ago it employed Tank and Oxford Economic Forecasting to devise a methodology for evaluating the economic benefits of its work and in 2011 FTI Consulting and Pro-Bono Economics used that methodology to establish the value of the charity’s programmes over the years 2007-2011.

At the time, FTI estimated that for every £1 spent, the resulting benefits amounted to £2.88.

This latest study, carried out by Bank of England economists volunteering for Pro-Bono Economics, uses a slightly revised version of the FTI methodology and a longer history of data to produce benefit/cost ratios for the years 2007 to 2014.

The most reliable results derive from Tomorrow’s People’s youth schemes, especially its Working-It-Out (WIO) programme which aims to get disadvantaged 16 to 18-year-olds into jobs, training or education.  WIO is funded mainly by donations from private donors and operates mainly as an umbrella programme for independent schemes conducted locally around the country.

During the seven years analysed, the charity worked with nearly 4,000 young people.

The study analysed three different categories of data - the financial cost of operating the programme, the number of participants who secured jobs or went into training or education, and figures on youth unemployment rates, the minimum wage, tax rates and benefit payments – to quantify the impact of the WIO programme on future tax revenues, benefit payments and the costs of crime and healthcare of a 20-year horizon.

Researchers concluded that the total value to society of the charity’s work on the programme was £63m, comprising £22.2m in benefits saved, £15.7m in greater tax receipts and almost £25m of reduced spending on healthcare and crime.

“We estimate that the benefit-cost ratio for the WIO programme for the period 2007 to 2014 was 3.80, ie every £1 invested in the programme yielded economic benefits worth £3.80,” the report stated. “[This is] materially higher than the estimate obtained by FTI for the period 2007 to 2011.”

The researchers also found that the amount of benefit increased in the latter years of the study, by around 35 per cent, coinciding with the rapid expansion of the WIO programme – the average number of participants per year grew from 275 in 2007-2011 to 575 in 2012-2014.

Encouragingly, annual costs increased by just 12 per cent and there was no discernible dip in the programme’s effectiveness.

The researchers were at pains to stress that the simplifications and assumptions inherent in the methodology meant that the conclusions should be treated with a degree of caution, but added that this “should not detract from the headline message that the WIO programme offers genuine economic benefits”.

In his foreword to the report, Bank of England governor Mark Carney (pictured) wrote: “The quantitative estimates presented in this report are, of course, still subject to a range of caveats and should not be interpreted too literally. 

"But the overall message is clear: the work Tomorrow’s People does with young people adds real economic value, and has continued to do so over an extended period and against the backdrop of significant changes in government policy as well as the economic environment.”

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