Financial Education

Damian Hinds Excerpts

Thursday 15th December 2011 Commons Chamber

[Mrs Chapman]

My hon. Friend makes a good point. She tempts me to break a promise that I made to myself when I came into the debate not to have a rant about the economy and make a wider political point, because I thought that that probably would not be what this occasion demanded. However, she makes that point for me and I thank her for it.

Education is the armour against being misled and I believe that advertising is misleading us. I refer the House to my ten-minute rule Bill of about a year ago, which I am sure all hon. Members have followed closely, which would curb some of the advertising on financial products. Financial education provides protection against some of the most traumatic circumstances a person can find themselves in, from paying an additional fee on an unauthorised overdraft because one is not aware of how the charges work, to losing one’s home or having one’s belongings repossessed and being declared bankrupt. Many of us have been able to learn from our mistakes because either the economy has been in a good state or we have been able to rely on family or friends. We have been lucky but young people now, as the hon. Member for North Swindon said, are in danger of financial mismanagement having a much longer-term effect on their lives. On finishing education, young people immediately face tough monetary decisions. At 17, they are already in debt and tied into contracts that they did not fully understand for things such as mobile phones. I take the slack given to me by the hon. Member for Wells (Tessa Munt) who made a good point about gambling. If that is an issue at primary level, which I had not appreciated, it is right that that be included in the curriculum. Therefore, we need to be properly prepared to deal with these decisions. Put simply, an informed borrower is a safer borrower.

[Damian Hinds (East Hampshire) (Con)]

I appreciate the hon. Lady’s point, but does she not agree that if we have a problem with children under the age of 11 gambling, the most important place to start is not the curriculum, but access to online gambling?

[Mrs Chapman]

I agree completely. That goes back to the first point that I made about financial education being one of four strands of the solution, the others being debt advice, advertising and regulation. The hon. Gentleman is right to point that out.

In schools across England, the provision of personal financial education is ad hoc. We saw some good examples when writing this report. I took it upon myself to visit schools in my constituency and I was impressed with what I found. There is little teacher training on personal financial education and there is therefore limited subject knowledge and confidence among some teaching staff. It is stating the obvious to say that schools face significant barriers to teaching financial education, such as curriculum time, the absence of a statutory mandate and the lack of awareness of suitable resources.

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[Kevin Brennan]

I am sure the hon. Lady is right; she thinks deeply about these subjects and makes intelligent contributions. The report, however, states:

“Personal finance education should be a compulsory part of every school’s curriculum.”

If that is going to be delivered, there must be some transmission mechanism. I am afraid that history teaches us, and future events will teach us, that exhortations from Secretaries of State—no matter how talented or eloquent they be—are not sufficient to make things a reality on the ground. As I say, there has to be a mechanism to make it happen.

In thinking about this issue, the Minister will need to clarify what the role of the national curriculum will be in a schools landscape where most institutions will not be required to follow it. How will that fit in with the original vision of a national curriculum to be taught by all schools across the country, as introduced by Kenneth Baker, now Lord Baker, who was the Secretary of State when I was a teacher back in the 1980s? How can the Minister ensure adequate teaching of financial education if most schools will ultimately be free to follow their own path?

[Damian Hinds]

The shadow Minister says that a transmission mechanism is required. Does he agree with me that if practical maths were made part of the GCSE syllabus for each of the main awarding bodies, such a transmission mechanism would exist?

[Kevin Brennan]

That is for 14 to 16-year-olds. If GCSE maths is taken between the ages of 14 and 16, young people would indeed receive some of this provision. The hon. Gentleman is correct about that, but the report goes much further in its recommendations for making financial education compulsory across all ages in the curriculum.

[Damian Hinds]

rose—

[Kevin Brennan]

I will give way again in a moment if the hon. Gentleman is dead keen. All right; I will carry on.

The Government are correct in their desire for people to take responsibility for their finances in order to reduce unaffordable debt, but they have to get the ball rolling, which means that they need to find some way of getting this going in our schools.

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[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—

[Damian Hinds]

Still waiting for it to come on!

[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—

--- Later in debate ---

[Damian Hinds (East Hampshire) (Con)]

As my hon. Friend the Member for Lancaster and Fleetwood (Eric Ollerenshaw) has just said, it is difficult to think of anything original to say at this stage of the proceedings, so I shall be mercifully brief. I must start with the obligatory fawning to my hon. Friends the Members for Brigg and Goole (Andrew Percy) and for North Swindon (Justin Tomlinson) for the genuinely outstanding work they have done on the all-party group. The way that group has grown is not just impressive but phenomenal. In double-quick time it has brought to the British Parliament an issue that matters so much and about which so many people are genuinely bothered. The report and the depth of the analysis and work the group has done are already helping to stimulate debate here and more widely—and will do so further.

Today’s debate is not about approving every line in the report. I would have loved to remind the shadow Minister, if he were here, that the motion does not say that there should be compulsory financial education in free schools and academies or that it should be part of the national curriculum in primary schools. The key phrase in the motion is:

“That this House…believes that the country has a duty to equip its young people properly through education to make informed financial decisions”.

I could not agree more.

I shall not go into examples of the problems that we have all seen when people have come into our surgeries or when we have met people. My hon. Friend the Member for Worcester (Mr Walker) has mentioned that some people, astonishingly, think that a high APR must be better than a low APR because it is a bigger number. These things would be funny if they were not so tragic. When we hear about them, our natural reaction is to say, “If we get them young and educate them, we will sort out all these problems.” There is, of course, as it says in the motion, a great advantage to equipping people with the capability to make smart financial decisions. There can also be a more immediate benefit, to which the hon. Member for Makerfield (Yvonne Fovargue) alluded. If teachers get kids to bring in material—junk mail—that they have received at home, and they discuss it, messages can then get back to home, so there will be a beneficial impact even in the shorter term.

Even better than telling, of course, is doing, through schemes such as junior savers clubs. I was a member of the Abbey National junior savers. It used to have gold, silver and bronze; I only ever made bronze, but there you are. We have savings clubs in schools, and I pay tribute to credit unions in particular, although others do this as well, which run schemes in schools, often with parent volunteers and schoolchildren helping to manage them. That is another great way to pick up experience.

I have an issue with PSHE, however. It sometimes feels as though the answer to any social problem in this country is another module in PSHE. That is true whether the problem is that people are too fat or that people are too thin, or whether it is teenage pregnancy. Whatever it might be, we do it in PSHE. There are limitations to PSHE. When one mentions it to teachers, their response is not one that can be written down because it is just a groan. As a general rule, teachers do not like doing PSHE lessons. Although the report of the all-party group says “only 45%” of teachers in the survey had taught personal financial education, I have to say that that struck me as an extraordinarily large number. Almost half the teaching population has taken on the teaching of that subject. I think it unlikely that they are all experts in that area.

In PSHE in general, and this applies also to financial education, there is naturally a reliance on off-the-shelf—or more likely, these days, off-the-net—lesson plans and on input from third parties. Although I accept that the banks and building societies who take part do so with responsibility and do not use it as a way to ram home their brands, there is an element of indirect marketing. It certainly gets the message out there that there is a massive range of financial products, including ones that can get people into debt.

[Andrew Percy]

My hon. Friend’s points are exactly those that we identified during the inquiry and support the argument for putting financial education into PSHE to support maths and raise the profile of PSHE. He is quite right: a lot of the stuff that is used is photocopied hand-outs. That is not teaching a subject properly. If we link PSHE with maths, we can raise its profile and the standards of the teaching and lesson plans.

[Damian Hinds]

I recognise the point, and the report stimulates such debates, but I do not agree.

People mean different things when they talk about financial education. There is a whole continuum. If we talk about pure financial education, as opposed to a mathematical way of approaching it, there are two key dangers. The first I call the redundancy danger, and the second is the ubiquity danger. None of us did financial education at school, and although some people have great financial problems, not everybody does, and it is perfectly possible for somebody to get through life without the benefit of that education. Had we done financial education, we would have learned about cheques, clearing houses and endowment mortgages, and, spreading it out to the wider economy, the public sector borrowing requirement and sterling M3. None of that would be of particular relevance today. We would not have learned about debit cards and payday loans because, to all intents and purposes, they did not exist at that time. There is a real danger that although we think we are equipping people with skills, by focusing too much on financial services, as opposed to the underpinning principles, that education may become redundant.

[Andrew Percy]

It is true that the world does not stand still, but does my hon. Friend agree that if we give young people the ability to understand what is available now, we give them the skills to be able to understand products as they develop and move on into the future?

[Damian Hinds]

I cannot do geometry in a written speech without slides. I would be more tempted to go for the underlying principles, which could enable people to understand the things that used to be there and the things that will be there tomorrow.

The second danger is ubiquity. Already, on the television and the internet, when kids are at home or out, everywhere there are messages about debt. There is a danger that introducing discussion of specific financial services too early in schools might contribute to that feeling by normalising and legitimising the idea that everyone uses such products.

As I said to my hon. Friend the Member for Brigg and Goole, the key things are the tools, and I think that we agree on that but perhaps differ on how best to use them. To my mind, the key tools and principles that help inform financial decisions are mathematics, but not mathematics on its own. There is also a big element of personal responsibility, common sense and some of the maxims to which my hon. Friend the Member for High Peak (Andrew Bingham) referred. Make no mistake: young people do not learn common sense, wisdom and personal responsibility simply by turning up to PSHE. It is a much wider issue. I would welcome more emphasis on practical mathematics at GCSE, especially at foundation level, although it applies to both levels.

I am pleased to say that I have an original point to make. We also now have an opportunity post-16, because raising the participation age to 18 means that more young people who have perhaps not passed GCSE maths could, if we are to follow the guidance in the Wolf report, be encouraged to keep up maths and English. We need new, innovative, creative and engaging ways of taking on maths, and this would certainly be one of those. I thought that the sample questions that my hon. Friends who constructed the report included in it illustrated very well the practical ways we could use the maths curriculum.

The introduction of these concepts into mathematics is no panacea. The hon. Member for Makerfield and I agree on many things related to debt and personal finance, but I completely disagreed with her today when she implied that there was no element of personal irresponsibility in being over-indebted. There are of course times when it is purely a matter of a change in circumstances and completely unpredictable, but there is also a major issue of responsibility. She was right to say that there are broader concerns about regulation and too-easy access to credit that we must also address. The reason we need to address those concerns, even if we did financial education perfectly, is that in that market, alarmingly, the basic laws of economics, such as the way competition works and the assumption that consumers will be rational, frequently do not apply.

I congratulate the members of the all-party group again on the report that stimulated the debate. My view is that I would say no to adding more to PSHE and specifying exactly how these things should be done at a younger and younger age, but I would say yes on the need to refocus GCSE maths and to find new and creative ways to teach practical maths at 16-plus. I would also say yes to not being afraid to say that people must take responsibility, which is also a good thing to teach in school.