Financial Education

Duncan Hames Excerpts

Thursday 15th December 2011 Commons Chamber

[Duncan Hames (Chippenham) (LD)]

I add my congratulations to subscribers to MoneySavingExpert.com on petitioning us for this debate. I also congratulate my hon. Friend the Member for North Swindon (Justin Tomlinson) not just on securing the debate but on his work in steering the all-party group on financial education for young people, on which I am pleased to serve as vice-chair. The group's report is a credit to my hon. Friend the Member for Brigg and Goole (Andrew Percy), who has led the inquiry.

I have been leading a strand of the group looking at financial education in further education, so my remarks will draw on the relevant insights of that inquiry, which will issue its full report in the new year. I have been joined in that inquiry by the hon. Member for Scunthorpe (Nic Dakin) and I extend my thanks and appreciation for his involvement and expertise and that of my hon. Friend the Member for Wyre Forest (Mark Garnier), who also participated in our inquiry.

Like all hon. Members, I am particularly fortunate when my own constituents contribute to my work, and it would be appropriate to make particular mention of two who have been in touch with me about the issue: Caroline Stephens and Trisha Snowling. Caroline is a maths and personal finance teacher who has campaigned tirelessly to promote the cause, not just through her work but by writing to councillors and MPs to alert them to current developments from a practitioner's point of view. Trisha has a breadth of experience in financial careers and has been an articulate correspondent on the issue in recent months. She summarised to me neatly the consequences of a lack of financial literacy for people's ability to spot a bad deal in later life:

“They don’t bother to read the small print on a finance agreement—why would they? It’ll be in a language they didn’t study at school.”

Our inquiry set out to look at the response to the issue in further education to identify what distinguishes the experience in that sector from that in schools. Since there had been little assessment or co-ordination of colleges' approach to personal financial education, the group began by conducting a nationwide survey of current practice in colleges. An overwhelming majority of survey respondents—nearly 97%—thought that financial education should also be provided in further education institutions and 84% of responding colleges believed that students’ inability to manage their finances was a cause of failure to complete their courses, which should worry all of us who want young people to have the best possible chance to equip themselves for working life.

We supplemented the survey with oral evidence sessions to test those initial findings against the experience and expertise of college principals, student service managers and students themselves. An oral evidence session a fortnight ago bore out many of the survey’s emerging conclusions about students’ financial awareness. We welcomed an impressive group of students from two colleges in London to hear their perspective on both the financial education they had received so far and their attitudes to money more generally. The students we met were of course those who have really engaged with this learning opportunity. However, I was most struck by the fact that, although they understood about saving, they themselves identified that they did not know much about borrowing or debt. They also emphasised the importance of their family background and home environment, not necessarily to the specifics that they had learned, but to their underlying attitudes to money and their confidence in dealing with it.

A dominant theme of the inquiry’s evidence so far is that there is good financial education provision in a number of colleges around the country, but that it does not reach anything like the majority of students, even in the colleges that are leading the way. The reduction of entitlement funding, which some colleges were using to deliver their personal financial education through tutorial time, has had an effect on the sector’s ability to deliver such education. However, the evidence that we have received suggests that provision was sporadic even before that funding change. It seems that some colleges may have considered that modest provision within tutorial time as sufficient.

We heard some compelling accounts of quite sophisticated offers of financial education from City college Norwich and New college Swindon. However, even such colleges that are heavily geared towards financial literacy and business education are enticing only some of their students to take up their financial education offer.

What we have seen so far is that financial education is most effectively delivered when it falls naturally within a student’s chosen core curriculum. In further education, there is a wide array of opportunities to provide that. Where that is not the case, there are many challenges in achieving the required coverage of financial education in a student’s programme.

[Mr Sheerman]

I am impressed by what the hon. Gentleman is saying about his research. Has there been any indication of what are the most successful online tools? Just as the Government are keen on using online facilities for careers education, does he think that that would be a good way to learn about debt and credit?

[Duncan Hames]

We were made aware of online resources that students could use to supplement lectures that were available as part of their further education college’s provision. I think that it was at New college Swindon where students could register for an additional qualification to supplement the choices that they were already making and their normal lectures, which was largely learned independently and had testing arrangements which allowed them to study at their own pace. I offer that as one example in answer to the hon. Gentleman’s question.

The inquiry’s forthcoming written report will go into greater detail about the nature of the challenges that we saw in further education and the means that we suggest to address them.

I will end with a few remarks about what the inquiry has told us about financial education in schools. The evidence shows that further education as a sector is defined by choice and provision for a diverse range of student needs, from basic literacy and numeracy to running a business or preparing to attend university. That means that the starting position of college students reveals the results of their previous education, which might not have equipped them with the capability to deal with the challenges that students increasingly face, including their financial responsibilities.

I therefore argue that financial education in schools needs to lay a universal foundation or baseline in financial literacy for every student. Students who go on to further education will be able to build on that by using qualification-based study, which further education colleges are in a good position to deliver in a wide range of curriculum choices. That would allow those who have benefited from financial education in the school curriculum to progress later in their education. It would also limit the extent to which further education colleges have to, in the words of one witness, “play catch-up” and help students to retread what they missed in their school years.

I know that time is short, so I will conclude by encouraging Members to look out for the APPG’s second report in the new year and by urging them to support the motion.