Financial Education

Fiona Bruce Excerpts

Thursday 15th December 2011 Commons Chamber

[Fiona Bruce (Congleton) (Con)]

I apologise to you, Mr Deputy Speaker, and to the Minister if it turns out to be necessary for me to leave the Chamber before the end of the debate.

It is almost a year to the day since I spoke in this Chamber about the need for better financial education in schools. I talked about the patchy or non-existent current provision in so many schools and about the sad results of the lack of financial capability, which I witnessed over many years in my community law firm. It was apparent not only in the levels of debt but in the breakdown of relationships and health. There is a huge cost to society of providing debt advice—essential though it is. Currently, citizens advice bureaux receive around £27 million, much of which is for debt advice.

The main thrust of my argument then was that better financial education is necessary because prevention is better than cure. Shortly after I spoke, the all-party parliamentary group on financial education for young people was founded. I am sure that I speak for all my colleagues who have served on the parliamentary inquiry into the need for better financial education for young people in schools when I say that it has been a real privilege to serve on that inquiry. It has been one of the most fulfilling roles that I have undertaken in my short time in this House. I pay tribute to the chairman of the group, my hon. Friend the Member for North Swindon (Justin Tomlinson), and to the chairman of the inquiry, my hon. Friend the Member for Brigg and Goole (Andrew Percy), for their vigour in leading this work and for the fact that this week, a substantial report on financial education and the curriculum has been published. I have to say also that they have stolen all of my good lines.

During the course of the inquiry, we took evidence from dozens of witnesses. I pay particular tribute to two witnesses from my constituency. David Black, who has recently retired, was head teacher of Alsager high school. He has spent years co-ordinating volunteer educators who advise young people in schools in Cheshire and train teachers to deliver financial education under the banner of “debt cred”. Will Spendilow of New Life church, Congleton, was one of those volunteer educators. Last year in Cheshire, 7,000 pupils benefited from this “debt cred” advice. Those pupils are fortunate, but what of the many across the country who receive no such advice? Even more worrying is the fact that many teachers do not feel up to the task of teaching financial education.

Our inquiry found that the whole area of financial capability urgently needs addressing. Some 70% of 18 to 25-year-olds are in debt. People in their 20s are the least capable age group in making ends meet, choosing financial products and balancing a budget. This lack of financial capability has cost Britain nearly £250 million in bank charges and penalties alone, and 71% of people say that a lack of basic financial understanding is to blame for debt.

While young people are faced with a financial world of baffling complexity, they are vigorously targeted at an early age by retailers and lenders and assaulted by a consumer culture that raises for them unrealistic lifestyle expectations. Our report found that two thirds of people in the UK feel too confused to make the right choices about their money and more than a third say that they do not have the right skills to manage cash.

In the 12 months to the third quarter of 2011, approximately one in 361 people became insolvent, which is significantly higher than the annual average of one in 1,655 people over the past 25 years. It was clear to us that without fundamental changes to the way in which individuals manage their money, the problem would continue to grow. Financial education is a long-term investment and a solution to what is now a widespread national problem. Teaching people about budgeting in their personal lives is also an essential basic component to equip the work force with the necessary skills to succeed in business and drive forward economic growth.

Where will young people improve their financial literacy, the costs of which are clearly set out in our report, if not in school? It is not from their parents; our inquiry found that a third of teenagers’ parents had never talked to their children about budgeting. They will not learn it from the banks; the era of the trusted family bank manager who knew people and took a personal interest in their financial welfare has long gone, although many banks do provide support for financial education in schools, which is valuable. It would be wrong to rely on voluntary organisations to give advice, although many do provide excellent advice; Christians against Poverty, which was originally founded to help those in debt, has now moved into the proactive area of providing courses on personal financial management, and I commend it for that. However, such organisations should not be relied on to provide financial education, particularly in schools. That void makes it essential for financial education to be taught in schools to all young people before they enter the world of work and are faced with some of the financial challenges to which I have referred.

Let me now comment on the recommendations. The first is that personal financial education should be a compulsory part of every school’s curriculum, and that it should be assessed. David Black, whom I mentioned earlier, has said:

“Unless you test, it will not happen.”

I recall an amusing exchange at one of the inquiry’s evidence sessions. I said, “As a mother of two teenagers, I know that nothing focuses a pupil’s mind like an exam.” One witness responded, “And nothing focuses a teacher’s mind like an exam.” We also found that in 20 countries across the globe financial education is already compulsory, and has been for many years. It would be interesting to see whether they share our nation’s debt problems.

[Kevin Brennan]

The report says, and the hon. Lady has just said as well, that personal financial education should be a compulsory part of every school’s curriculum. Does the hon. Lady mean that the Government should make it a compulsory part of every school’s curriculum, or was that merely an exhortation that she thinks should be out there in the ether?

[Fiona Bruce]

I believe that it is such an important issue that space should be made for it in both the PSHE and the maths curriculums. Another of the recommendations makes that very suggestion: that financial education should be cross-curricular, overlapping with maths and PSHE. Pupils made it clear to us that they enjoyed financial education. One said:

“I thought it was really interesting because, personally, I learnt a lot and a lot of my peers said they learnt lots too.”

We all know that we learn more when we enjoy a subject, and it seems that including financial education in the maths curriculum could well aid maths learning overall, which would be an important added-value benefit.

Again and again, teachers told the inquiry of their sense of inadequacy when it came to teaching financial education. It was almost a refrain. They talked of significant barriers to teaching it well, particularly their own lack of confidence in their knowledge of the subject, as well as a lack of awareness of suitable resources. One of the most important recommendations in the report is to establish a quality kite mark from a trusted body, which would assure teachers that if the subject took up valuable curriculum time, that time—if Members will pardon the pun—would be well spent.

The last recommendation that I would like to mention—by no means the least important—is that there should be a financial education champion in every school. Another head teacher giving evidence to the inquiry said:

“if you asked me for the number one thing, and that is to have a senior member of staff responsible for it as the champion, who has enough resources or enough clout to draw people to work at it. Then you will find it will come together.”

It is vital to ensure that members of the next generation are better equipped than those of the present generation to make informed financial decisions, for the sake of their well-being and that of our whole society. That applies to a host of areas: mental and physical health, relationships and family life, career prospects and entrepreneurialism. I believe that, over time, investment in financial education will reap exponential benefits for our society, and I urge the Minister to give constructive support to the recommendations in the report that was published this week. Let us work towards prevention rather than cure.

--- Later in debate ---

[Eric Ollerenshaw (Lancaster and Fleetwood) (Con)]

It is nice to speak at this point in the debate, when everybody has said everything.

May I begin my adding my plaudits to those already heaped on my hon. Friends the Members for Brigg and Goole (Andrew Percy) and for North Swindon (Justin Tomlinson)? I was a mere foot soldier in their regiment as they steamrollered this through and I must say what an efficient manner—[Interruption.] I was sometimes cannon fodder, yes.

If I were a little younger, I could have had when I was at university the e-book that my hon. Friend the Member for High Peak (Andrew Bingham) had and it might have saved me from being part of that generation that got one credit card to pay off another before I realised that I was not gaining very much by it.

I cannot remember ever being taught financial education at any time in my history at school. People from the Post Office came in once in the 1950s and I think I still have a Post Office account with 10 shillings in. If anyone finds the book, I would be grateful for that. I spent 27 years as a teacher in secondary education and I never saw financial education taught; indeed, one of the surveys in the report shows that 45% of teachers have never seen it taught in school. The only time I touched on it—it is a pity the shadow Minister is not here—was when I taught American history in the 1920s and 1930s, with the Wall street crash, the depression, and banking and shares. I was going to say to the shadow Minister that it takes a good history teacher to teach decent economics.

In my constituency, I came across a scheme run by two guys from Fleetwood, Paul Freeman and Martin Hull. They are community support officers and they noticed that in the areas where there were problems, kids did not understand the idea of saving. This goes back to what my hon. Friend the Member for Congleton (Fiona Bruce) said: they wanted instant money. A scheme was developed in conjunction with a primary school and pupils were rewarded with school pounds, but the school had to take part in various business exercises to earn the prizes that the kids had to save up for. The scheme has been developed through other schools and it is now working with a primary school outside my constituency, with the involvement of a secondary school in my constituency, Rossall school—I mention it for a reason—whose lower sixth has already set up its own businesses and it is running them as a practical demonstration. Rossall school is a public school and the primary school that it is helping is a state school. The example is double edged: the private sector is helping the state sector and we have the involvement of one of those schools about which the shadow Minister kept talking. They do not use the national curriculum but, because they are good schools, they are already way down the line in financial education.

One thing that we in the all-party group have been trying to do is help state schools to catch up. Having said that, none of us underestimates the problem and I am grateful for the Minister’s generosity in taking our proposals on board. Perhaps this debate is timely, given that a review of the national curriculum is coming forward, but none of us who has been a teacher underestimates what we are asking teachers to do. The hon. Member for Makerfield (Yvonne Fovargue) and others have said that we need confident teachers with really good back-up to do this.

[Fiona Bruce]

Does my hon. Friend agree that we ought to consider including this subject as an element of teacher training in colleges?

[Eric Ollerenshaw]

I think we need to deal with this in all kinds of ways.

On the remarks we have heard about maths teachers and the lack of maths, if we want this kind of revolution to begin, teachers need to be utterly behind it—not just theoretically but practically, and with that confidence. As my hon. Friend the Member for Brigg and Goole has said, we had a debate in the all-party group about personal, social and health education and maths. I still warm to the applied maths idea, partly because I would have been like my hon. Friend the Member for Worcester (Mr Walker). I scraped through maths because I had to, but then forgot most of it, as was obvious in my subsequent financial career. So I veer more towards the latter approach. My hon. Friend the Member for Brigg and Goole commented on how PSHE is regarded in some schools.

There is also the issue of back-up and time. The Personal Finance Education Group has given us a lot of support. Given the financial support that it has had from some banks, perhaps it would be apposite for the Minister to challenge the banking and financial institutions of this country, which have suffered somewhat in the public’s estimation, to provide the back-up that is needed to deliver financial education in a substantial way. I take on board what my hon. Friend the Member for Congleton said about training and suggest that financial support could involve the provision of money to release teachers to train or to provide materials for schools. We are asking for a huge turnaround in schools if such education is to be provided properly and is not just to be drip-fed, with some good schools doing it but more schools just paying lip service and trying to get by. Is this subject as fundamental as hon. Members from all parties have said it is? I am not underestimating its importance.

Time is running out and all my best lines have been taken my hon. Friends who have expressed the points far better than I could have. I think the hon. Member for Darlington (Mrs Chapman) ended on a quote and I should like to end on a quote from an article in The Independent today by Andreas Whittam Smith, who said that

“the real explanation of the fall of RBS was the incompetence of the British ruling and managerial classes…without having the foggiest idea of how business worked.”

I am not suggesting that if we carry out these recommendations, we will end boom and bust tomorrow, but it might be a start.