Andrew Bingham
Main Page: Andrew Bingham (Conservative - High Peak)Department Debates - View all Andrew Bingham's debates with the Department for Education
Financial Education
Andrew Bingham Excerpts(13 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Andrew Percy
Alas, perhaps it is. I must say, however, that I will not be able to match the exchange of Shakespearian quotes between the two Front Benchers—
Andrew Percy
I am certainly not, as my hon. Friend interjects, the bard from Brigg. It is not going to happen, alas.
To return to the report, I thank the Minister for meeting me and my hon. Friend the Member for North Swindon (Justin Tomlinson) shortly before its publication. The Minister will recall that I said that if the Government did not take it seriously, I might well end up dousing myself in petrol and setting myself on fire, but I will not have to make that protest any more, not least because I cannot afford the petrol at the current prices and because we have had a positive response.
I thank all my friends on both sides of the House who sat on our inquiry. They included my hon. Friends the Members for Congleton (Fiona Bruce), for Wyre Forest (Mark Garnier), for Newton Abbot (Anne Marie Morris) and for Lancaster and Fleetwood (Eric Ollerenshaw) and the hon. Member for Darlington (Mrs Chapman), as well as myself and my hon. Friend the Member for North Swindon. It was a thoroughly valuable experience and I think we all enjoyed taking part in a cross-party inquiry on such an important issue. Because we conducted it in the way we did, on Select Committee terms and by hearing evidence, I think we all felt that the hours we spent doing that were probably some of our most valuable since getting elected. One can wonder whether a lot that goes on in here is having any impact or making any difference, particularly in some people’s cases, but on this issue we all felt that the experience was valuable and that we were engaged in something important.
Some hon. Members will have read our report, which is very comprehensive. I am not allowed to use props so I shall not hold it up. As can be seen from the executive summary, we have recommended that this subject should form part of the national curriculum. We want it to be compulsory across schools, and I shall say something about the mechanics of that in a moment. It is important to get some statistics into the debate about why this is so important. As people who have read our executive summary will have seen, it states that, according to a learndirect study:
“Two-thirds of people in the UK feel too confused to make the right choices about their money and more than a third say they don’t have the right skills to properly manage their cash.”
Sadly, we have seen higher and higher levels of insolvency in recent years, and we know that personal debt levels have exploded in the past 10 or 15 years.
I am not part of the generation about whom my hon. Friend the Member for North Swindon spoke. I am part of the generation after, having got on the housing market only last year but with considerable debts, which I have spoken about before. I am not one of those who will see the big increases in house prices that will take care of all those nasty credit card debts.
Let me explain why I got involved in all this. It has been a good partnership with my hon. Friend the Member for North Swindon because he is extremely financially competent, as anyone who knows him will know. Having shared a flat with him, along with another of our hon. Friends, I can certainly attest to his competency in all things financial—and perhaps to his being frugal as well. I am the antithesis of that, having made some incredibly bad financial decisions when I left school and went to university, including getting on the conveyor belt of credit card debt while at university and getting student loans even though that was the year before tuition fees came in. So I left university with an awful lot of debt and then did two years of postgraduate study, which I funded myself, which meant getting into even more debt. I am still paying off those debts today, and I do not mind the education side of them—it is all those other lifestyle debts that one builds up on credit cards that I am still lumbered with to this day.
It has been good to have a partnership of two people with different experiences of managing their debt looking at this issue. I was proud to be in the top set of my comprehensive school in Hull. I was quite bright and managed to get a GCSE in maths at grade C although I have always struggled with maths. I got good A-levels, a degree and postgraduate qualifications but I am still completely and utterly incapable of working out interest payments, APR and all the rest of it. I could not tell you what I pay in mortgage interest, Mr Deputy Speaker—I just pay up every month. I suppose I am an example of the people we have talked about and at whom the report is aimed. This is not moralising about debt. We have been very clear: this is not about saying that people should not get into debt or about educating people never to get into debt; it is about providing people with appropriate skills.
Andrew Bingham (High Peak) (Con)
I am delighted to follow my near neighbour, my hon. Friend the Member for Congleton (Fiona Bruce).
Like many others who have spoken, I congratulate my hon. Friend the Member for North Swindon (Justin Tomlinson) and his colleagues not only on securing the debate, but on their continual hard work, the pressure that they have put on the Government, and the publicity that they have secured—including the use of Martin Lewis to press home the importance of the issue. The launch of the all-party group on financial education for young people attracted more than 200 Members of Parliament, and it is now the largest of the all-party groups. I congratulate it on its report on financial education, which was released this week and which deals comprehensively with the subject.
I do not wish to be labelled a grumpy old man—I am sure, though, that my hon. Friend the Member for Brigg and Goole (Andrew Percy) will soon label me one—but I must refer back to when I was a lad.
Andrew Bingham
Yes, it was.
I remember my late father taking me to Williams and Glyn’s bank to open my first bank account and my walking out proudly with my Williams and Glyn’s plastic piggy bank, which I suspect I still have somewhere and is probably worth a lot on eBay. They say that servicemen can always remember their Army number; I can still remember my bank account number from that day.
When I came of age, there were few temptations for somebody my age to acquire extra funds or credit. In those days, it was the bank or it was nothing. Credit cards were unavailable without a parent or guardian to guarantee it and wages were paid in cash. Consequently, we lived in a pay-as-you-go world—to coin a modern-day phrase. We were not educated in financial matters in school in the 1970s, because there was not the multitude of financial opportunities—and, indeed, pitfalls—available to young people today.
When I refer to young people, I do not refer exclusively to school leavers but to those who left school a few years ago, have built up savings and are now plunging into the world of credit or embarking on the next stage of their life—getting their first mortgage or signing a tenancy agreement—and who require financial knowledge to navigate these potentially treacherous waters.
When people turn on the television today, read the newspaper, surf the internet or look at magazines, they are bombarded with adverts offering them cheap money, easy money and, in some cases, apparently free money. In fact, some claim that it is possible to borrow enough money to get completely out of debt. When we pick up the Sunday newspapers, out drop a multitude of pieces of paper, one of which is usually advertising cheap money.
Borrowing money is inevitable, and we all have to borrow at some point in our lives, whether for a mortgage or whatever, but it is important to do it prudently—a word from the past—and sensibly. To do that, people need to understand what these companies are offering, to read beyond the quick, snappy headline and to make an informed decision. To do all that, they need to understand finance, the methods by which it can be obtained, the cost of that finance, the conditions attached and, more importantly, the short and long-term consequences of failure to adhere to those conditions.
Not only must young people contend with this wealth of advertising and pressure, but they live in a very different world from that of their predecessors in my generation and that of many in the House. As has been alluded to, they have phone contracts, credit cards, payday loans, tuition fees, store cards—the list goes on and on. These are all things that are part of modern-day life but which were either unheard of or unavailable in days gone by. Added to that, there are many alluring ways of paying for luxury goods—televisions, holidays and so on—that appear to be completely free of any credit charge yet are full of pitfalls buried in the small print.
How many people realise, when they buy a television on a buy now, pay later deal, that if they miss the payment date, they are automatically locked into a three-year finance agreement potentially on an annual percentage rate that can be more than 20% and perhaps as much as 30%? Indeed, how many actually understand what APR really is?
And how many people understand the pitfalls when they get older and decide to buy a car? A car might be advertised with low monthly payments—“You can have this car for £159 a month”, the advert might read. However, it might not explain until the small print that at the end of the term the person will not own the car, because a significant final amount will still be outstanding—balloon payments, they are sometimes called—and that, if unpaid, they will have to give the car back and have nothing to show for it.
We live in a world where peer pressure exerts a huge influence, especially on young people, to have the latest mobile phone, trainers or designer clothing. It matters very much to young people and it drives their shopping habits. When that is coupled with the myriad easy ways to pay, we have a cocktail of debt and ensuing misery.
Financial education will not stop that—after all, people will always want to buy goods; the economy depends on it—but I believe that financial education will do several things. First, it will enable people to tell whether a deal is as good as it seems. There is an old adage: “If it looks too good to be true, then it usually is.” Financial education will enable young people to ascertain whether a deal is good or not, and see what the total potential cost is of the iconic item that they feel desperate to own. Being armed with that knowledge might not prevent them from buying that item, but they will I hope make a rational, informed decision and ask themselves whether they need it and whether they can really afford it. In the long term, that will spare people much misery, as well as the further consequences that excessive debt can have for people personally and for their families. As was said earlier—by an hon. Gentleman who is no longer in his place—that knowledge will also enable people to make decisions about savings. This is not all about debt: it is about savings, investments and pensions. On the Select Committee on Work and Pensions, we are looking at auto-enrolment and how to judge one pension against another. That is another story, but having informed financial knowledge and advice could help people to make better decisions about such matters.
Several years ago I produced an e-book, which was designed to plug into a computer. It was called “Living On Your Own” and was aimed at students leaving home to go to university and living away from their families for the first time. It dealt with all the issues that many of us take for granted: council tax, rent, utility bills, registering with a local GP and so on. It even had some easy-cook, healthy recipes. The book also contained an interactive budget planner, in which students could enter all their incomings and outgoings, and which gave a figure for how much money they had left at the end of the week or month. If they were overdrawn, the figure went red. We gave the e-book away to students—I think we gave away 200—and those who got back to me said that the most useful thing in it was the budget planner, because it showed them in simple, stark terms whether they were living within their means or beyond them.
There is a further implication of our young people not having the level of financial literacy they need when they leave education. Those young people are the next generation of our wealth generators, entrepreneurs and business builders. They are the people we will look to in five, 10 or even 20 years to build businesses, create jobs and grow the economy. We cannot expect them to be able to do that successfully if we do not give them the tools they need while they are being educated. Anyone who goes to the bank for an overdraft or business loan has to have a business plan and know how best to make the money work so that their business can survive. If we do not get this right, we will not have those people and we will pay the price later.
When I was at school, we did subjects such as metalwork and woodwork. I can turn on a lathe and wooden lathe—
Andrew Bingham
It is not a question of showing off: my hon. Friend never saw the results. In fact, my mother still has the table lamp that I made at school in woodwork to this very day—
Andrew Bingham
I didn’t do the electrics; I left that to my dad.
Schools have moved on. They now teach subjects such as IT, media, technology—
Andrew Bingham
I wouldn’t go that far.
Education moves to fit the world it provides for. I fully support today’s motion, as education needs to move again to suit the financial jungle that is the world in which we operate today.