Skills: Importance for the UK Economy and Quality of Life

Baroness Sater Excerpts

Thursday 9th May 2024 Lords Chamber

[Baroness Sater (Con)]

I congratulate the noble Lord, Lord Aberdare, on securing this excellent debate. I declare my interest as an officer of the APPG on financial education for young people.

To equip young people with the best opportunity to succeed in future training and jobs after leaving school is to give them essential life skills. These must include financial literacy, among other work-related skills, and their teaching and fostering in schools must start early to ensure young people are ready to enter and thrive in the workplace. Some 79% of teachers surveyed by Teach First in 2022 believe their pupils are less ready today for the world of work compared to previous years. Recent research from Young Enterprise in its Inspiring Futures programme, which delivers applied learning programmes nationwide to pupils in areas of disadvantage, found that the young people they seek to engage consistently assess themselves as significantly below average in crucial personal attributes such as resilience, confidence, managing money and work-readiness.

As many pupils leave school and go straight into the self-employed workplace as sole traders or entrepreneurs and do not have the money, time or employer commitment to increase their skills, they must be able to rely on the skills they learn at school. Furthermore, school leavers that do go on to undertake further skills training would benefit from the underpinning of a sound financial education. Pupils who complete the Inspiring Futures programme have been shown to progress significantly and exceed their previously average skills assessment. This improvement shows how applied learning can enable young people to acquire critical skills for workplace readiness, including financial literacy, which also enable upward social mobility and positive emotional well-being.

However, the skills landscape is constantly changing. In 2023, the World Economic Forum estimated that six in 10 workers will need re-skilling by 2027, showing the importance of fostering and securing confidence and adaptability in young people now, at both primary and secondary curriculum levels. I would be grateful if the Minister indicated any progress made on this pivotal curricular point, which I may have mentioned previously in your Lordships’ House. It is that confidence and adaptability, combined with financial education and numeracy, that makes young people financially literate.

Financial education alone is not enough; the confidence to apply it and make informed decisions in the real world is vital to a young person realising their full economic potential. Moreover, it is not just the individual who wins. The Centre for Economics and Business Research found in 2021 that 11% of UK workers had experienced a fall in productivity over the preceding three years due to their personal financial situation. It is perhaps no surprise, therefore, that research by GoHenry complements this finding: it predicts that an extra £6.98 billion would be added to the UK economy annually by prioritising financial education in schools.

This prediction is further strengthened by the Essential Skills Tracker 23, from the Skills Builder Partnership—together with the CIPD, the Edge Foundation and KPMG—which reveals that the cost to the UK economy of low essential skills in 2022 alone was £22 billion. Again, good education alone will not cut it. The same tracker found that 18% of workers with above-average literacy and numeracy levels have a very low essential skills score, meaning that they cannot properly implement and take advantage of that education. The 13% of the population who experience real social mobility—enjoying a strong income, job satisfaction and life satisfaction—combine their education with these all-important skills and confidence.

I was delighted to be part of the panel judging the recent Devon county final of the Young Enterprise Company Programme, which empowers young people to set up and run a student company under the guidance of a volunteer. Students make all the decisions about their business, including managing the company finances, and gain or embed the essential workplace skills I have mentioned. Putting all the fantastic studies I have cited aside, I saw for myself the terrific impact the Young Enterprise Company Programme can have on the young participants’ abilities to learn, adapt, and earn and manage money, and the boost it gives to their confidence and leadership abilities.

I hope that today, I have managed to highlight just how critical financial literacy and these enabling skills are to our young people right now; that they deserve early prioritisation in both primary and secondary school curricula—including through schemes like the Young Enterprise Company Programme, which I hope the Minister will endorse—and that they have the power to create a society with a confident young workforce supporting a more successful UK economy, not only by managing their own finances, future employment and quality of life successfully, but also our collective financial security.