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Higher Education and ESF Objective 3
An Evaluation of Impact

Aston J, Dewson S, Hillage J, Bates P, Usher T
Report 438, Institute for Employment Studies, March 2007

a study commissioned by the Higher Education European Social Fund Unit

The Institute for Employment Studies (IES) was commissioned by the Higher Education European Social Fund Unit (HE ESF Unit) to carry out an assessment of the impact of the involvement of Higher Education Institutions (HEIs) in the European Social Fund (ESF) Objective 3 programme in England. In order to make this assessment, IES evaluated a series of projects that had been delivered with the support of ESF grants awarded to the HE sector for national (England) level activity.

The aim of the evaluation was to provide a greater understanding of the social, economic and labour market impacts of these projects (HE ESF projects).

The evaluation comprised four main methodological elements:

• desk research phase
• literature review
• secondary data analysis of HE ESF Project closure reports
• case study research – in-depth case studies were carried out with 16 HE ESF projects spanning the three ‘programme’ years (2001/2002, 2003/2004, 2005/2006) and the broader policy themes, to ensure that a good coverage of activities and (likely) impacts was achieved.

This summary presents the findings from the evaluation as a whole.

Background to HE ESF

The HE ESF Unit has been responsible for managing the biennial allocation of resources from the ESF Objective 3 programme at a national level since 2001. The aims of ESF Objective 3 in its entirety are to:

• tackle long-term unemployment
• help young people and those at risk from not being able to find work
• improve training, education and counselling for lifelong learning
• encourage entrepreneurship and adaptability in the workplace
• promote equal opportunities and improve the role of women in the workforce.

The main themes under which projects have been funded by the HE ESF Unit are: high-level skills training, widening participation, HE/Small and Medium Enterprise (SME) links, and research into aspects of labour market discrimination. A total of 270 projects and approximately 80 HEIs have successfully competed for funds totalling some £42.5m. In the main, projects have been funded over two-year periods, under specific headings including: training for unemployed graduates to meet national skill shortages (2001/2002), graduate employability and SME development activity (2003/2004), and solutions to gender discrimination (2005/2006).

HE ESF Projects

This evaluation concentrates upon the projects delivering high-level skills training and employability skills to unemployed graduates and those projects involved in linking HEIs to SMEs. The range of project activities broadly follows the themes under which HE ESF funding has been made available. These centre on:

• postgraduate level, accredited courses, ie MSc, MA, PG Cert and PG Dip for unemployed graduates
• employability courses, usually non-accredited, for unemployed graduates to assist them into work or self-employment
• support and/or training for individuals employed by, or running, SMEs, which may or may not be accredited
• support and/or training to overcome gender discrimination.

Most of the case study projects reported that they aimed specifically to improve individuals’ employability. Some provided technical or vocational skills, others aimed to move graduates into self-employment, or to improve the IT skills of older graduates. All project applications were predicated on the basis of national labour market need. Projects cited reports on national skills shortages from Sector Skills Councils and supporting anecdotal and published evidence from employers in related industries which showed that there was a gap between the skills of undergraduates (and some postgraduates) and the skills required by the industry. HE ESF projects have also been involved in supplying potential employees to employer partners, both as a consequence of industrial placements, and as a project activity itself. Many of the projects and courses, including most of the MSc courses, were designed in partnership with industry.

The beneficiaries from HE ESF fall into two broad camps: individuals and businesses, depending on the theme under which project activity has been funded. Forty-six per cent of all HE ESF individual beneficiaries were women and 54 per cent were men. This is a higher proportion of women than could be expected, given that many of the subject areas supported by HE ESF are ones that have been traditionally dominated by men. Most beneficiaries of HE ESF are older than the student body as a whole, reflecting the emphasis of the programme on the provision of postgraduate level training and high-level/management skills. The employability focused projects attracted a relatively high proportion of beneficiaries with disabilities and from Black and minority ethnic groups.

The majority of beneficiaries of the employability and postgraduate courses had experienced short spells of unemployment prior to starting their HE ESF course (61 per cent of all employability beneficiaries and 83 per cent of postgraduate beneficiaries had been inactive for up to six months).

Beneficiaries on SME projects constituted the largest group of HE ESF beneficiaries (63 per cent of all beneficiaries were on SME projects) and tend to be older than other beneficiaries. A significant proportion of these beneficiaries were employed, or ran businesses, at the time they took part in their HE ESF project.

Impact

The evaluation assessed the impact of the HE ESF projects in the short and longer term. Short-term impacts were considered in terms of:

• labour market impact on supply of beneficiaries’ hard and soft skills
• economic impact on sectors and employers
• institutional impact on HEIs and partnerships.

The evaluation also considered the longer-term impact of projects in terms of sustainability and transferability.

Labour market impact on supply of beneficiaries’ hard and soft skills

Data from project closure forms reveals that there are more favourable outcomes amongst the beneficiaries compared to ESF Objective 3 beneficiaries as a whole. Sixty-one per cent of postgraduate beneficiaries and 54 per cent of employability project beneficiaries entered full-time employment, with smaller proportions entering part-time employment and self-employment. Amongst ESF Objective 3 beneficiaries as a whole, 44 per cent entered work after their course ended. It should be remembered, however, that as holders of first degrees, the HE ESF beneficiaries had considerable advantages over other ESF Objective 3 beneficiaries when they began their courses.

The postgraduate courses which were included in the case studies for this evaluation revealed a number of key positive outcomes:

• high completion rates
• postgraduate qualifications achieved
• increased supply of high-level skills
• enhanced employability of beneficiaries
• funding provided for courses where no other public funding is available.

These HE ESF-funded postgraduate courses are clearly high in quality and industrial relevance; however, there is a caveat to their positive outcomes. Where courses would exist without HE ESF, and where there is evidence that UK students would still apply for and take up places on them because of their high quality and employment prospects, careful consideration is needed to ensure that ESF funding is targeted on the most deserving cases in order to maximise added value.

The employability projects were more heterogeneous than the postgraduate courses and were more directed at tackling areas of disadvantage. There were two main approaches to enhancing employability; those aimed at enhancing students’ technical or generic skills including business skills, and those aimed at improving the ability of the beneficiaries to function in the labour market and ‘sell’ their skills to employers. Between them they had a range of impacts which varied according to the exact focus of the activity:

• providing sector specific skills, including skills relevant to sectors with strong growth prospects
• providing generic and business skills to students to help them apply their technical knowledge
• increasing the confidence of students in their capabilities and work prospects
• increasing students’ job search skills and labour market awareness.

The SME projects had a strong focus on innovation and building partnerships between employers and HE and had the following impacts:

• developing sector specific and generic skills
• providing networking opportunities for students and small businesses leading to better recruitment channels for SMEs
• providing students with the skills to enter self-employment and start their own businesses.

Economic impact on sectors and employers

The SME and postgraduate projects have been positively influencing the supply of skills to particular sectors, some of which could be seen as growth sectors (eg new technology-dependent industries and creative industries). Anecdotal evidence from this evaluation has shown contributions in the following areas:

• high-quality course and training provision
• development and modification of courses and training in response to sectoral needs
• provision of the skills needed by growth sectors and by employers
• entrance of graduate beneficiaries to high-level jobs
• provision of HE ESF funding in the absence of other sources.

The postgraduate courses typically had strong links with industry, ensuring their sectoral relevance and the employability of their postgraduates. They were often provided and delivered with regular employer input to the syllabus, employer visits and employer-delivered modules. Most had industrial placements, and some included employer-led research projects. As a result, these courses produced postgraduates who were highly tailored to the needs of particular employers; hence, in sectors dominated by larger employers, there could be potential for more financial support from industry for this type of activity. Among SME projects, the focus has been on the development of key business skills (eg marketing), improving the functioning of the SME labour market (eg through the creation of Internet-based recruitment services) as well as promoting sector-specific training (through flexible learning methods).

Some of the employability projects addressed the needs of a particular sector, for example, the growing creative and technology-related industries, while others provided generic or business skills which could be applied more widely in employment or self-employment in many sectors. This made it more difficult to determine a sectoral impact, although the individual impact on many of the beneficiaries in terms of their subsequent entry to the labour market was clear, and this would, in turn, impact on the sectors in which they worked. In terms of their economic impact, the employability projects:

• addressed needs of particular sectors
• provided generic and business skills
• improved labour market functioning.

Many of the SME projects had similar impacts, eg on skill development, plus:

• helped the labour market in some sectors to function more effectively
• enhanced self-employment opportunities and prospects.

Institutional impact on HEIs and partnerships

Some HEIs have been awarded significant funds through HE ESF, and this has increased their confidence in bidding for competitive funding, and their skill at writing successful bids. In addition, capacity has been built within HEIs for managing and administering future projects. For those HEIs running HE ESF-funded postgraduate courses, there have been a number of benefits to the courses, departments and HEIs, including:

• course expansion, including recruitment of overseas students
• high-quality courses developed and maintained
• partnerships built and strengthened
• enhanced reputation of courses, departments and HEIs.

For the employability projects, there has been a different set of impacts for HEIs and their partners. Here, HE ESF support has been important in:

• shaping future strategy, provision and delivery
• developing confidence within departments and amongst particular staff to bid for competitive funding and to test ideas and innovatory methods
• fostering new and co-operative partnerships, particularly between HEIs
• capacity building within HEIs to bid for and use ESF and other funding streams
• providing lessons for the future.

Additionally, the SME projects have provided HEIs with opportunities to test new delivery methods, develop new sectoral and employer partnerships, and build the capacity of HEIs.

Longer-term impact: sustainability and transferability

Evaluations of previous ‘third-stream’ programmes have demonstrated that to maximise the impact, the successful elements of projects need to be sustained and disseminated to other areas where the benefits could be realised. From the postgraduate courses, there was evidence of sustainability and/or transferability in the following HE ESF supported areas:

• courses would continue without ESF support, although without it, places might go to different groups of people (ie not necessarily those most in need of support or training)
• partnerships would continue after projects had finished
• effective and high-quality course models have been developed and refined.

The employability projects tended to be new – designed and executed as a direct result of the HE ESF funding. As such, they had little or no access to core HEI funding or automatic continuation funding from other sources; however, there were a number of impacts with regard to sustainability and transferability:

• continuation funding gained by some – usually at a regional rather than national level
• continuation of new partnerships
• generation of new partnerships and resources.

The impacts of the SME projects were similar, with some projects having a life beyond the immediate ESF funding, and partnerships that had developed being sustained beyond the project.

However, a number of the employability and SME projects had stopped when the funding ended, and of those still running, few had concrete plans for how the projects would continue beyond the life of HE ESF funding or how the lessons learnt would be disseminated to a wider audience. Despite this, there was evidence that project staff had learnt much which could be put to use in the future, and that confidence and capacity had been built in departments to enable them to respond to future opportunities. A potential issue is that innovation tends to stay within the host HEI or even just the particular department, and the good practice and other lessons identified could be shared more widely.

Conclusions

In our conclusions, we outline the impact of the HE national ESF projects in terms of their economic and social contribution and their wider benefits to higher education. We also present some of the resulting lessons for future policy.

Economic and social contribution

The projects included in this case study evaluation have contributed to social, economic and labour market developments by:

• increasing the flow of high-level skills entering the UK labour market, particularly to some important growing sectors of the economy
• improving the quality of the flow of high-level skills and the relevance of training to employers’ needs
• enhancing the employment chances of postgraduates and improving the operation of the postgraduate labour market
• supporting widening participation of unemployed graduates on high-level degree courses
• supporting ‘at risk’ unemployed graduates, particularly within areas of high economic and social deprivation, into employment.

Since 2001 over 1,000 students have been supported at postgraduate level by HE ESF. Although some of these students would have taken up further study without such support, it has nonetheless had a clear effect on widening the pool of postgraduate uptake, with some projects attracting those who would not otherwise have been able to afford to study at a postgraduate level. The funds have financially assisted students not eligible for other forms of funding (eg from Research Councils), and so have filled a gap in the postgraduate funding regime. The funds have also enabled the development of high-quality, industrially relevant courses, providing specific technical skills sets of value to particular science, technology-based or other sectors in the UK. A critical impact has been the assisted flow of employment-ready postgraduates into the labour market. Some projects provided generic skills in addition to technical capabilities, or provided opportunities for entrepreneurship. HE ESF beneficiaries are more likely to gain employment than those involved with other ESF projects.

All of the projects contributed, in some way, to enhancing beneficiaries’ employability by developing their technical or generic skills, improving their confidence, increasing their understanding of employment opportunities, assisting them to build networks with potential employers, and demonstrating their credentials through work placements.

HE ESF has also enabled some HEIs to build better links with the small business sector through developing partnerships between employers, business organisations (eg business link) and sector-specific organisations. It has helped employees develop business and sector-specific skills, and has encouraged some postgraduates into self-employment and business start-ups.

In addition, HE ESF support has resulted in courses designed to meet skills shortages in particular sectors, including growing sub-sectors in the science and technology and creative industries. However, the contribution of HE ESF to the skill needs of the UK’s growth sectors could be more systematic as there may be other areas which could also benefit from further injections of high-level skills.

Wider benefits to higher education

The evaluation has demonstrated that the HE ESF programme has had a number of wider impacts on the participating HEIs, including the following:

• enhancing their overall reputation with potential students, other institutions and employers
• building overseas student recruitment channels, thereby enhancing the financial viability of the institution
• developing links with employers and employer bodies
• testing new delivery methods and other innovations
• building internal capacity for both mainstream and third-stream HE activities, in both specific terms such as project administration and management, and strategic terms by demonstrating the alternative funding streams available. In some cases it has enabled institutions to access other funding streams.

The caveat to these points is that the benefits were not always as wide as they might have been. Partnerships with employers tended to focus on the particular project and were not developed into wider relationships. Similarly, innovation and new delivery methods were not, in many cases, disseminated within or beyond the institutions as fully as they might have been.

Sustainability of activities post-HE ESF

The case study evidence provides some insight into the potential consequences of reducing the support provided by HE ESF to HEIs. While the effects are likely to vary project-by-project, some of the general implications include the following:

• Similar activities will continue – largely unaffected. Some employability projects may continue through internal financing or partnership backing.
• Similar activities will continue but at a regional level – eg through regional funds from Regional Development Agencies. This will reduce the scope for national collaboration.
• Similar activities will continue but with a different student composition – eg greater reliance on overseas students and students funded through other sources.
• The scope to tackle unemployment among graduates may be reduced – as projects will have to become more commercially viable.
• Some activities will cease. A high proportion of projects aimed at employability or third-stream activities will cease.

Lessons for future policy

The evaluation has inevitably had a backward focus; looking to the future the following points were identified which could help to maximise the social and economic impact of ESF support in the years ahead:

• Funds could be more targeted towards beneficiaries with specific needs, or who would not otherwise benefit from a higher degree, to maximise added value and avoid subsidising students who would find alternative ways of financing postgraduate participation and/or high-level skill acquisition.
• There could be better dissemination of the lessons learnt from the projects, especially postgraduate projects, both within and beyond the individual HEIs.
• Clearer exit strategies should be developed to ensure the knowledge and contacts gained are retained within the institution and the sector.
• Innovation in project design should be emphasised even more strongly, to maximise added value and to avoid any form of dependency on ESF support.
• Better links with sector-based organisations could be created to ensure that courses meet the needs of the overall sector and not the specific requirements of a few employers. Such links also need to be developed to maximise employers’ involvement in delivery as well as the design of postgraduate courses and other learning programmes.

Finally, to ensure the maximum added value is gained from HE ESF support for beneficiaries, HEIs and the economy as a whole, programmes should be aligned, where possible, with national skill strategies and in particular, the outcome of the Leitch review of skills.

Higher Education and ESF Objective 3: An Evaluation of Impact, Aston J, Dewson S, Hillage J, Bates P, Usher T. Report 438, Institute for Employment Studies, 2007.
ISBN: 978-1-85184-377-0. PDF Download only: £10.00

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