Financial Guidance and Claims Bill [HL]

Baroness Kramer Excerpts

Tuesday 24th October 2017 Lords Chamber

[Viscount Brookeborough (CB)]

My Lords, as a member of that committee, I support this amendment. This is different from some of the other amendments that have come under Clause 2(7), because this is really already there as far as schools go, but it just falls short of doing what it should. For instance it talks about the “provision of financial education” and then says,

“working with others in the financial services”.

Your Lordships might sympathise with what Martin Lewis says:

“We do not ask GlaxoSmithKline to pay for chemistry. This is on the national curriculum. Why are we asking banks to pay for it?”.


Why are we asking financial institutions? I am perfectly happy that, as the Minister will say, “Yes, we do ask them and they do something”, but it is really small and does not begin to touch.

Here are just a few statistics to show why we are talking about education. I will not try to bore your Lordships with them all, but they put this into perspective: 40% of the working population have less than £100 in savings; one in six struggle to identify a single bank balance; around a third of the population, 17 million, cannot even manage a budget; and 26% of postgraduates —that is all—are confident in managing their money. The excellent FCA report which came out at the weekend also shows why it is important. I will come to education in schools in a minute, which is fairly horrifying, but the report says:

“Adults with postgraduate degrees are just as likely to feel uncertain about their abilities as those educated to GCSE level”.


So, with all due respect, there is simply nothing going on. Many do not understand the excessive interest rates on unauthorised overdrafts, for example, or revolving credit card balances and the interest rates that are put on those. They do not understand payday loans very much—although it is interesting to note, since we were ready to condemn them, that payday loans are actually cheaper than some of the other loans available, which is quite surprising. That is not because payday loans are cheap but because interest rates on credit cards and unauthorised overdrafts are not only ridiculous but incredibly unfair, as they do not even notify you. At least when you take out a payday loan, you know that you have borrowed £1,000. With most banks, you would not have a clue until you got the bill. So the question is not straightforward. These statistics are all true; they come from evidence that we took and the survey that I just mentioned, showing how very poor the understanding of basic financial matters is in this country. We are way behind others, including, I believe, China.

This whole problem ultimately causes so much unhappiness and stress and will mean a higher cost than otherwise to the welfare state, purely because of the number of people who could have managed but do not because no one told them how. It is all due to a single cause: the lack of financial education in schools. The Bill talks about,

“the provision of financial education to children and young people”.

Where are children and young people, and where are you going to educate them? Even I went to a school, and that is the only place where you have them all in one place. You do not honestly think that on a Saturday, instead of going to the cinema, they will go to a class on financial education. So there is only one place for it: the schoolroom. You have only to add “in school” to the wording and you almost have the amendment as it stands.

Financial education could be introduced into primary schools. However, although we are aware that there is some excellent work in primary schools—the Minister may come back and say, “There are good stories about primary schools because they teach people things”, and they do—in answer to question 179 in our evidence transcript, Adrian Lyons of Ofsted, who was incredibly useful and very nice about it, said of ex-primary schoolchildren,

“but then the children go to secondary school and hit a brick wall”.

That completely sums it up. What a condemnation that is from Ofsted itself.

What of the addition of financial education to the secondary school curriculum in 2014? The first point is that to most sane people a curriculum is what people have to learn. Believe it or not, though, there are actually two curriculums, one non-statutory and the other, the national one, statutory. You have got it in one: this is on the non-statutory curriculum, because it lies within the PSHE programme. It gets worse, as only 35% of state schools come under that so-called curriculum—all the free schools and academies are outside it. We need not say that financial education is being taught in schools as a curriculum subject; clearly it is not, as we would understand it, and it definitely does not go anywhere.

Financial education lies within PSHE subjects but they are not statutory. Guess what happens. Time devoted to PSHE has been reduced by 32% since 2011 because it is non-statutory and there is not enough time for it. Why? One reason for that was suggested by the PSHE representative, who said that schools,

“have so little time for it”,

characterising the situation as follows:

“We only have 20 minutes, and if we don’t do something on sexual exploitation or online safety we’re going to be in trouble over safeguarding”.


To all intents and purposes, that is the end of your secondary school financial education. Adrian Lyons said that Ofsted produces a state-of-the-nation education report. Our chairman, the noble Baroness, Lady Tyler, asked,

“how much was there on financial education in the last one?”.

Mr Lyons’s answer was:

“I do not know the answer to that, but I would be surprised if there was any, to be honest”.


I think we know that it was zero.

Here we have something that is all about life skills. After all, school, at the end of the day, is concerned with life skills. You are not going to survive on geography alone; you are not going to survive on physics or other things alone. We are talking about very basic financial management; we are not talking about pensions. We are saying: if you save one sweet every day until the end of the week, you will get five sweets; and if you want to borrow five sweets from me, you can pay me 10 next week. As a foundation, it is as simple as that, but the inspectorate does not even look at it. This amendment could change all that.

Of course, Ofsted says that you cannot judge something—I seem to think that this is how it puts it—without having exam marks, and there are no exam marks here. Ofsted is about marking schools. It is also about encouraging schools to do the right thing and to teach life skills, so why not initially find a way of saying, “Do you teach financial education? How much do you teach? Okay, we’ll give you 10 points for that”? At least that would be an incentive to do what they should.

When we talked about education in schools, every reason under the sun was given for why they would not or could not do it. We did not have the teachers in front of us. I am terribly sympathetic about teachers’ time, so I am not getting at them. There is no time. Teachers are not confident to teach this subject but, as I have said, we are talking about the basics. Any teacher on a salary is going to know something about saving or spending or not having enough money or whatever. I just do not believe that that is the reason.

The FCA book shows a really poor record on everything, yet schools are the only place where we have young people’s attention. What are we meant to be doing? If we say that schools should not be the place—we have already had several amendments turned down because they were too well defined or because they have added too many lines—where should it be? It is not going to be in church, so I suggest that it should be in schools and that we do something to make sure that it is done; otherwise, it will not be done. When we talk to people about where it might be done, why it is not done and the problems with that, it is somebody else’s problem. No doubt we will be told that it is the education board’s problem, or whatever there is. I am telling noble Lords that that is passing the buck. The sooner we get “schools” written in the Bill, the better.

[Baroness Kramer (LD)]

My Lords, I will add just a brief comment in this area, as the noble Viscount, Lord Brookeborough, has really made the case. A few years ago, when I was dealing much more with banking institutions, one of them very proudly showed me its pack for schools. All that I came away with was that its logo and colours were all over everything. Had this been presented to an adult, they would have regarded it as a sales pitch rather than an educational tool. That was rather worrying. We are moving into an era where there is huge disruption of all the traditional players. On a personal basis, many of the people making decisions to save or borrow will be looking at many of the new disrupters—the challengers, the peer-to-peers, the digital bodies and whatever else. If we are looking towards the handful of major high-street players to be the providers of financial education, particularly to the young, they will not be introducing that world, which they very much regard as threatening. Yet that is the world of the future that our youngsters will have to deal with. The Government have to be very cautious about how they use providers as a delivery instrument for this education.

[Lord McKenzie of Luton]

My Lords, I am grateful to the noble Viscount, Lord Brookeborough, for his contribution to this debate. It is a pity that there were not more people in the Chamber to hear the powerful case that he made.

Actually, I do not think that the Minister has responded yet—my apologies.