Financial Education

Nick Gibb Excerpts

Thursday 15th December 2011 Commons Chamber

[The Minister of State, Department for Education (Mr Nick Gibb)]

May I start by apologising for having been a couple of minutes late to the debate?

It is a pleasure to follow the hon. Member for Darlington (Mrs Chapman). She is right that an investment in knowledge pays the best interest—certainly better than the interest that some of my retired constituents are receiving on their bank balances at the moment. She made an important point, and I hope that the national curriculum review will ensure that our new national curriculum increases the amount of knowledge that children receive.

I congratulate my hon. Friend the Member for North Swindon (Justin Tomlinson) not only on his balanced and passionate speech but on his leadership, along with my hon. Friend the Member for Brigg and Goole (Andrew Percy), of the all-party group on financial education for young people. I thank the all-party group for its report on financial education in the curriculum. Both have been powerful advocates of the cause, and together with Martin Lewis have managed a powerful and effective campaign. I look forward to hearing from my hon. Friend the Member for Brigg and Goole later if he catches your eye, Madam Deputy Speaker.

Martin Lewis is an energetic and highly effective campaigner for financial education in schools, the result of which has been an e-petition with more than 100,000 signatures. From meeting Martin Lewis recently, it is clear to me how passionately he believes in the importance of financial education for young people to help them deal with the complexities and dangers of money and debt management. I know that the all-party group has also been well supported by the Personal Finance Education Group, which has worked for a number of years to promote and develop finance education in schools.

The Government are currently conducting two reviews—that of the national curriculum, which of course includes the core subject of mathematics, which is a cause about which my hon. Friend the Member for South West Norfolk (Elizabeth Truss) is passionate, and that of personal, social, health and economic education, which includes financial capability. The all-party group’s report provides important insights and recommendations to both reviews, and the Government are grateful to it for its thorough and high-quality report. We will examine it very carefully indeed.

I know that we all agree about the importance of good-quality personal finance education and the critical role played by a sound grasp of basic mathematical skills. Support from the finance industry and a range of good resources play their part in supporting schools to teach pupils how to manage their money well.

It is true that young people are growing up in a materialistic world for which they are often not fully prepared. As my hon. Friend the Member for Devizes (Claire Perry) said, the “Got to have it now” culture means that young people have high aspirations for branded or designer goods, often without the means to pay for them. They have unrealistic expectations about the lifestyle that they can afford, which are fuelled by the glittering trappings of celebrity.

My hon. Friend the Member for North Swindon made the important point that our generation—I like to associate myself with his generation—was cushioned from its financial mistakes by rising house prices, which provided equity to pay off consumer debts. That is not available to the current generation.

We all have a job to do in moving young people’s aspirations away from that empty and often destructive perception of what success means. Our determination to raise academic standards in all schools and for all young people, regardless of their background, is about high achievement and stretching aspirations. Developing children’s intellectual capabilities and interests is a direct antidote to materialism. Alongside that, young people must acquire a sense of responsibility. They need to contribute to society as responsible citizens and not take wild risks. They need to learn to live within their means.

[Kevin Brennan]

I understand why the Minister will not today give us the conclusions of the curriculum review that is under way, but does the first key recommendation of the report—that personal financial education should be a compulsory part of every school’s curriculum, which I take to mean all taxpayer-funded schools, including free schools and academies—fall within the terms or the remit of the curriculum review and the review of PSHE?

[Mr Gibb]

We made it very clear when we announced the review of PSHE education in schools that it is not possible for PSHE to become a statutory element of the national curriculum. However, it is in the remit of the review to recommend that elements of PSHE should be compulsory if it believes that strongly.

[Kevin Brennan]

Just to be clear, does that include making those elements compulsory in free schools and academies?

[Mr Gibb]

The national curriculum applies only to maintained schools. The rules that apply to academies go through their funding agreements. The review will consider that issue. The extent to which those elements will apply to academies depends on the funding agreements, which maintains the approach to academies taken by the previous Government.

[Tessa Munt]

Might one solution be to ensure that young people, as they pass through the curriculum stages from primary through to university education, have some form of examination—a module could be included in the examination process—that allows them to show some level of expertise in such life skills, which they will need to take forward? I have a passion for middle schools, so I suggest that that should happen when children are aged from nine to 13. In that way, whatever course they choose after the age of 13, be it vocational or academic, they will at least have proven that they have those life skills.

[Mr Gibb]

My hon. Friend makes an interesting point. Those are the kind of issues that the PSHE review will consider. We want to ensure that the quality of PSHE teaching in our schools improves. That is the key driver of the review.

The hon. Member for Darlington quoted Benjamin Franklin, but I shall quote Mr Micawber from Dickens’s “David Copperfield”:

“Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”

Those aphorisms are as true today as they were in the nineteenth century. Borrowing more than one can afford to repay is one of the most serious social problems facing the UK today. British consumers are considerably more indebted than those in continental Europe. Between 1999 and 2007, household debt increased by 125% while household income increased by only 40%. The Office for National Statistics estimates that around 10% of all households have problem arrears and are unable to make minimum payments in one or more of their financial commitments. The Government are serious about taking action to help people to manage their debts.

We want to ensure that individuals facing financial difficulty can get advice early rather than waiting until their problems become more difficult to resolve. The new Money Advice Service has a statutory function to enhance people’s understanding and knowledge of financial matters and their ability to manage their own financial affairs. It provides free and impartial information and advice. Those consumers who find themselves in high levels of debt will continue to need specialist debt advice, and the Money Advice Service, with its consumer financial education remit and national reach, is well placed to take a role in the co-ordination of debt advice services as part of its existing services.

I have another quote; this time it is from Shakespeare. As Polonius advised his son—

[Kevin Brennan]

Neither a borrower nor a lender be.

[Mr Gibb]

The hon. Gentleman has said it for me.

“Neither a borrower nor a lender be.”

Can he carry on?

“For loan oft loses both itself and friend,

And borrowing dulls the edge of husbandry.”

I will give way to the hon. Gentleman.

[Kevin Brennan]

It is good advice from Polonius, but we must remember that he is widely regarded as an old hypocrite. Perhaps he is not the best person to quote. He was a silly old fool.

[Mr Gibb]

It was good advice to his son.

[Kevin Brennan]

Perhaps Iago might be more appropriate.

“Who steals my purse steals trash; ‘tis something, nothing;

‘Twas mine, ’tis his, and has been slave to thousands;

But he that filches from me my good name

Robs me of that which not enriches him,

And makes me poor indeed.”

[Mr Gibb]

Very good indeed. The green-eyed monster is there as well. The hon. Gentleman also makes the case for rote learning of English literature. That is missing from our schools. The more poems we can recite in our early years, the better. The hon. Gentleman must have learned that passage many years ago.

To be successful and to achieve aspirations, young people need to be able to stand on their own two feet. They must organise themselves, prioritise, manage money and work independently. That needs to start from an early age. Primary schools must lay the foundations by raising standards of arithmetic and securing a confident progression on to secondary schools. I am also mindful of the many reports of young people leaving school without the most basic knowledge of mathematics. We are committed to improving attainment levels in maths and to ensuring that all children leave primary school fluent and confident in arithmetic. We are studying evidence on the most effective ways of teaching arithmetic in primary schools and we have read the reports and listened to the speeches of my hon. Friend the Member for South West Norfolk.

In the current secondary mathematics curriculum, pupils must achieve fluency and confidence in a range of mathematical techniques and processes that can be applied in a wide range of circumstances, including managing money. The kinds of calculations that people should be able to do are set out in the report “Financial Education and the Curriculum” by the all-party parliamentary group. There is a suggested example of a GCSE question. It asks what Sophie should do with £4,300 that was left to her by her grandfather. She has a choice of two accounts. The first pays 3.1% on a monthly basis and the second pays 3.25% annually. The formula on page 41 is “AER=100[(1 + r/100n)ⁿ - 1]”. If one can master that, one knows all one needs to know about how to calculate compound interest.

Young people need to be confident and competent consumers. They need to be able to work out when a supermarket deal is not what it seems. For example, when supermarkets offer a deal on buying two small packs of something, they need to work out whether it is really cheaper per litre or per kilogram than buying one larger pack. In fact, I have found in some supermarkets that it is more expensive to buy one larger pack than to buy two smaller ones.

The Government are currently reviewing the national curriculum, including the curriculum for maths. The all-party report on financial education and the curriculum will feed into the review, and the review will ultimately ensure that the GCSE reflects its conclusions. We will consult widely on the number of maths GCSEs in the light of the review, and will consider evidence from the pilot of the pair of maths GCSEs referred to by my hon. Friend the Member for South West Norfolk. Application of mathematics and methods in mathematics will also inform decisions. We will look carefully at the evaluation of the pilot.

[Kevin Brennan]

What have not been mentioned so far, but have been endorsed by the hon. Member for North Swindon (Justin Tomlinson), are the qualifications in personal finance offered by the Institute for Fiscal Studies. Has the Minister had a chance to examine them and form a view on how suitable they are for pupils?

[Mr Gibb]

We will examine them as part of the curriculum review, but our first priority is to establish what knowledge children need. That will then feed into the qualifications. We have also benefited from Alison Wolf’s review of qualifications in schools. A process is under way to ensure that every qualification offered by schools is of sufficient size and quality, and commands respect in the real world among employers and further and higher education institutions. Those are the factors that will determine whether a qualification continues to be recognised in performance tables.

[Simon Hughes]

The Minister rightly concentrates mostly on primary and secondary schools, for which he is directly responsible, but does he accept that it is also important for young people to receive financial education elsewhere, for instance through the youth services? After all, they spend much more time outside school than at school. Will there be, as it were, a draft proposal for consultation after the Government have formed a view but before they finalise their proposals? I realise that this is controversial, but it seems to me that it would be wise for the Government to say “This is our thinking now that we have taken all the evidence, but before we form a final view there will be a debate in the House and a short time in which the public can respond.”

[Mr Gibb]

My right hon. Friend has made a legitimate point, with which I agree. Our intention is to consult widely on the curriculum review. There is an important set of decisions to be made. We have received nearly 6,000 responses to the call for evidence, and we will report on them shortly. The draft programmes of study will be published during the next year and beyond, and there will be wide consultation on them. Even before they have been published, there will be a great deal of consultation with stakeholders and subject specialists. We want to establish a consensus in the country about what we want children to be taught. However, we must slim down the curriculum and differentiate it from the school curriculum in order to identify a body of knowledge that we want all children to have acquired. How it is taught is a matter for teachers, and will depend on their professionalism.

Financial education is also an important strand of personal, social, health and economic education. We know from the Ofted report “PSHE in Schools”, which was published in July 2010, that provision for financial education is patchy. Some schools have not yet got to grips with the economic well-being and financial capability strand of PSHE, which was introduced in secondary schools in 2008. The aim of the review is to determine how we can help schools to improve the quality of PSHE teaching, while giving teachers enough flexibility to enable them to judge for themselves how best to deliver PSHE. We have finished collecting evidence, and will publish proposals for public consultation next year. The financial education curriculum report will play an important part in helping us to draw conclusions for the purpose of the PSHE review.

Good-quality teaching is also fundamental. If we want an education system that ranks with the best in the world, we need to attract the best people and give them outstanding training. There is strong evidence that links teacher quality, above all other factors, with pupils’ attainment. Our plans for initial teacher training show the Government’s commitment to recruiting the very best graduates into teaching, securing better value for money from ITT and reforming training. There is a focus, then, on the most important elements of being a teacher.

In 2012-13, we will prioritise places on primary ITT courses offering a specialism in mathematics and science, and in 2013-14 we expect to adjust financial incentives to favour trainees on specialist primary courses with a good A-level in mathematics, science or language over those on generalist courses. For serving teachers, the mathematics specialist teacher programme aims to improve the practice of primary maths teaching by improving mathematical subject knowledge and pedagogical approach and by developing teachers’ expertise to provide effective professional development. More than 3,200 teachers are currently on that programme.

The all-party group’s report on financial education and the curriculum is an important report. It is grounded in solid research and data, with practical solutions and a commitment to ensuring that young people receive the education that they need to become confident consumers. Much can be achieved by supporting finance education, working with those in the finance sector, finance education experts and schools. There is huge enthusiasm among teachers and young people, and we will give careful consideration to the report and all its recommendations.