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Cath Everett

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How will EMA cuts affect the nation’s workforce?

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The coalition government has slashed the £560m Education Maintenance Allowance to £180m, while backing a ‘StartUp Britain’ initiative that some industry experts are skeptical will make the necessary impact.
 
 
 
Michael Gove, the Education Secretary announced yesterday that EMA, which provided 650,000 16- to 19-year-olds with grants of between £10-30 per week to continue their studies, would be replaced with discretionary bursaries of £1,200 per year targeted at 12,000 "vulnerable" teenagers.
 
The remaining cash, which amounts to about £165m, will be passed directly on to schools and colleges to distribute as they see fit. EMA was introduced by the Labour government in an attempt to tackle the longstanding problem of high teenage drop-out rates from education, particularly among poorer students.
 
But Gove said: "There are real questions as to whether it is socially just to be paying 45% of students a cash incentive to stay in learning when we could be concentrating our resources on removing the barriers to learning faced by the poorest."
 
The existing EMA will be safeguarded until the end of the current academic year and all students currently in the first year of their course, who are already receiving £30 payments, will be given £20 in 2011/12.
 
But Andy Burnham, Labour’s shadow education secretary said: "At a time when [students] should be looking ahead to exams, they are worrying about whether they will have the financial support they need to stay in education – it’s a betrayal of young people and will lead to more of them dropping out."
 
The news came as Prime Minister David Cameron gave his backing to a private sector-led campaign that is aimed at boosting the number of new businesses in the UK, although he made it clear that no direct government funding would be made available.
 
StartUp Britain is the brainchild of a group of London-based entrepreneurs and aims to foster the creation of new start-up companies as well as educate existing owner-managers to ensure that more young businesses survive the difficult early years.
 
About 270,000 new firms are started each year in the UK, but 80% cease trading in their first year following bankruptcy or because founders return to salaried employment.
 
The scheme will be based around an online portal, which provides budding entrepreneurs with resources to help them start a business such as marketing tips and information on regulations.
 
It also offers free advertising and office space from 60 multinational companies such as Barclays, McKinsey and Experian as well as 1,000 hours of mentoring support from The Supper Club, a national networking group for high-growth companies.
 
But Professor Colin Mason from the University of Strathclyde’s Entrepreneurship Centre told the Daily Telegraph that the initiative would not have a significant impact on the economy and should be focused on fostering high-growth businesses instead.
 
Mason co-authored a report in 2009, which found that 6% of UK businesses with the highest growth rates, so-called ‘gazelles’, generated half of the new jobs created by existing businesses between 2002 and 2008.
 
"The UK’s enterprise problem is the lack of high-growth firms, which go on to be ‘companies of scale’ rather than not enough start-ups. We need quality, not quantity," he said, adding that the government was looking to foster growth "in the wrong places".
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