Financial Education

Oliver Heald Excerpts

Thursday 15th December 2011 Commons Chamber

[Justin Tomlinson]

I thank my hon. Friend for her intervention. I could not agree more. That point is right behind our findings. I will set out the split that explains that. The report states:

“Personal finance elements of maths should be clearly highlighted to emphasise how they relate to real life decisions. If viable, the Government should implement the Smith Report and Maths Review’s recommendation for the twin GCSEs: ‘Application of Mathematics’ and ‘Methods in Mathematics’ to improve financial numeracy and ensure it is examined.”

Crucially, we saw that in the evidence on the factual side, such as calculating the cost of a loan. We set out some examples in the report that covered the cost of standard loans, calculating exchange rates, credit cards, savings, taxation, compound interest rates and APR, which was referred to earlier. Those are factual questions with factual answers that are right or wrong and should be properly examined. We think that that would drive up standards.

[Oliver Heald (North East Hertfordshire) (Con)]

May I say what a fantastic job my hon. Friend and the all-party parliamentary group are doing? Does he agree that these issues also come up with pensions? One of the great concerns with auto-enrolment is that people who have not previously saved will need to understand the products, so this sort of education will be very valuable.

[Justin Tomlinson]

That came through in the evidence. If we go into primary schools and start talking about pensions, we might not necessary engage, but one thing leads to another, and if young people have the basic skills, they can go on to use them later in life.

--- Later in debate ---

[Mrs Chapman]

I am very concerned about that. I am not only concerned about mathematics. My region has seen a drop of about 20% in higher education applications. We are assured that there will be a last-minute surge in applications. If that is not the case, I fear that we will face a serious problem.

[Oliver Heald]

Does the hon. Lady agree that there is also an important issue about an entrepreneurial society? If we do not have enough basic financial information and knowledge in our community, it is a brake on innovation and entrepreneurialism. It also means that people who do set up a business often cannot prepare a decent business case and that their business does not sustain itself. That is important to our economy, as are the matters that she is raising.

[Mrs Chapman]

I do agree with that. There are plenty of examples of entrepreneurs who have done incredibly well with little formal education. I do not know this for sure, but I do not think I am pushing the boat out too much to suggest that Duncan Bannatyne, who has his head office in my constituency, does not have a maths degree. Such exceptions aside, most people would benefit from having this sort of knowledge. I think that it would assist in the way that the hon. Gentleman indicates.

I will conclude because much of what I was going to say has already been said, and probably much more eloquently, by the hon. Member for North Swindon. [Interruption.] I was not expecting a response to that. On the advice of teachers, the all-party group on financial education for young people felt that it was necessary to have a champion for personal finance in each school. I had my doubts about that when the report was drafted, because I was not sure that schools would welcome having that burden loaded on to them. However, it was pointed out to me that teachers had argued strongly for that recommendation to be included. With that in mind, I am happy to support it.

The all-party group also believes that the subject should be examined, and I agree. Ofsted has stated that courses leading to formal accreditation have inspired

“a more coherent curriculum and sharper focus on the learning outcomes students were expected to achieve”.

As one head teacher has explained:

“Unless you test it, it will not happen”.

The introduction of dual mathematics GCSEs would promote the right objective and ensure that the subject is properly examined and taught.

I urge the House to examine the matter closely, take it seriously and include it in what I hope will be a package of measures that will help address the serious problem that we have not just with the lack of financial education but with debt more broadly. I hope that we will consider matters such as advertising, the provision of advice and the regulation of the high-cost lending market.

I wish to conclude with a lovely quotation that I have found, which I could not help but try to give at some point. Benjamin Franklin said:

“An investment in knowledge pays the best interest.”

I think that is quite a nice way to end.