Financial Education in Schools

Seema Malhotra Excerpts

Wednesday 6th September 2023 Westminster Hall

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

It is a pleasure to serve under your chairship, Dame Angela. I congratulate the hon. Member for Broadland (Jerome Mayhew) on securing this important debate. I support his calls for greater awareness and more ways to embed financial education in our school curriculums and for the resources to help deliver that. He laid out a strong case in terms of the impact on young people’s lives.

I, too, had no financial education at school. Two parts in my life were instructive. The first was when I opened my first bank account as a child. I remember the Midland bank and the sports bag I was given. Maybe I am old-fashioned, but that was a physical thing, with a pencil case, clipboard and folder in it, and it was symbolic to me of growing up. With that, come new conversations.

The second involved my father, an engineer who became a small businessman. We grew up above our shop, so we had a sense of the transactions within it. My father went on to become an independent financial adviser. He worked from home, and hearing conversations about personal equity plans and ISAs in the home environment does create an awareness of those things. The hon. Member is right, and those of us who have worked cross-party on some of these issues recognise, that that awareness of and contact with such discussions and debates is extremely important from a young age.

The debate comes in the midst of a cost of living crisis, where people are having to consider more than ever their budgeting skills, their use of credit and debt and their savings. In the 2022-23 young persons’ money index, 70% of young people said they were more anxious about money and finances due to the cost of living crisis. That rose to 83% for 17 to 18-year-olds. That is hugely instructive. Alongside the conversations about how much to save at the age of 18—every pound saved at the age of 18 is going to have a much bigger impact on a pension than one saved in later years—we also have to recognise that young people are struggling so much to make ends meet for themselves and their families that some of these conversations can be lost. We have to make sure that we embed skills for life in our education and have policies that make sure people can save from an earlier age.

Helping to build an understanding of financial matters, advice and support, and resilience is exactly what financial education teaches. It is a tool of financial inclusion. I refer to my entry in the Register of Members’ Financial Interests, where I have recorded that I am a commissioner on the Financial Inclusion Commission. We know that, without vital early education, young people are likely to struggle to achieve financial literacy as part of their life skills.

The hon. Member for Broadland referenced the University of Cambridge research, which shows that children establish attitudes to money by the age of seven and behaviours towards money by the age of 14. Even if there is financial education in schools, those attitudes are increasingly important for understanding how much young people will take it on board and choose to engage with it. Headteachers tell me that young people are making choices about the value of their education at a much younger age—even from 11 or 12. We have to think about that when looking at primary schools, and I will reference primary schools in my constituency.

It is important to see the impact of apps such as GoHenry, which my nephew, Karan, uses. I am still a bit old-fashioned—I like to hold physical things. It is, however, impactful and important to have new ways in which young people are thinking about their finances. The Money and Pensions Service has set a national goal to see 2 million more children and young people getting a meaningful financial education by 2030. I would like to see that goal accelerated.

Financial education is hugely significant because it is also part of the social mobility puzzle. The Centre for Financial Capability has found that children with low financial literary scores tend to come from poorer areas, but education can see savings rise significantly. We have made progress, but I would argue that it is not enough. It is important that we find new ways to tackle the challenges to effective delivery of financial education.

Although financial education now has a limited statutory status in secondary schools, a survey of teachers for the all-party parliamentary group on financial education for young people—as the hon. Member for Broadland will know—found that two fifths or so of teachers are unaware of their statutory duty to deliver financial education. Among those who are currently not delivering financial education in schools, training, time and funding were identified as key barriers.

I want to thank some of the providers and campaigners for change, such as Quentin Nason of City Pay It Forward, which partners state schools with finance and business professionals to help make connections for financial education and show what it can mean in terms of the professions that young people might choose later in life. However, charities and the private sector should not be picking up the pieces as a result of Government neglect, and nor should they be addressing the difficulty of implementing financial education for our schools and teachers. There needs to be a bigger plan. Some of the issues raised by other experts have included the experience of teaching in schools being variable; resources being fragmented; teachers not having confidence; and schools still being stuck in covid recovery, which is impacting what they see as extras to the curriculum.

I will share a few bits of feedback that I have had from schools in my constituency. A good example comes from Isleworth & Syon School, which is just outside my constituency, but a lot of my young people will be going there. There is a positive story there about formal, structured units of learning on financial literacy in year 10. Every student receives lessons over eight weeks in year 10, covering topics such as wages, tax, budgeting, debt and borrowing, and ethical consumerism. Sixth-form students receive additional lessons on budgeting before they head off to university or apprenticeships. The importance of the integrating financial education within the wider curriculum is also recognised, including in weekly maths lessons, where it can have an impact, and within economics and business lessons.

Other headteachers, however, have said that although that is important, it does not cover everybody, and we need to have a broader and more consistent view for pupils across our education system. One school told me about the positive impact of Martin Lewis’s donation of class textbooks to every state secondary school about four years ago. They are still being used, because they provide invaluable guidance both for students and for personal, social, health and economic education teachers. I pay tribute to Martin Lewis for his efforts in this regard.

When I asked schools about the impact of financial education on pupils, the response was very interesting. The feedback was that pupils really liked to learn about financial topics; teachers say they know that because the pupils asked many more questions and gave really good feedback at the end of the sessions. However, schools also recognise that it takes highly skilled teachers to teach these topics well, and they struggle to access and afford those teachers.

I was also very interested to hear from Cranford Community College and Logic Studio School in my constituency. Logic Studio School runs an investment club and wants to see all of its pupils becoming financially literate. It says that financial literacy is a non-negotiable skill that we must all acquire, which it believes can be achieved only by making financial literacy a focus in education. It talks about partnerships with charities such as MyBnk and with Quilter asset management to give students a stronger background—but, again, that is piecemeal and based on whatever it can manage within the constraints of the wider school context.

Primary schools are also vital. Southville Primary School shared with me details of how, within its PSHE teaching, it encourages children to explore money and shopping, including where people get their money from and different sources of income. It has also participated in Young Enterprise Week, whereby groups of year 6 students are given a small budget and have to invest it in developing a product or service. I pay tribute to Young Enterprise in its 60th anniversary year. The all-party parliamentary group on entrepreneurship, which I chair, launched a very important report with Young Enterprise on applied learning, with recommendations that I hope the Government will continue to assess.

Financial education must be considered in the context of broader challenges that we cannot ignore. When we talk about the quality of teaching, we must recognise that teacher vacancies have more than doubled under this Government. There are more than 2,000 temporarily filled posts a year, teacher recruitment targets have been missed again and more teachers are leaving our classrooms than entering them. Earlier this summer, teachers in Hounslow told me that there were about 1,100 vacancies for teachers within a 10-mile radius.

It is not just about recruiting teachers. The lack of retention of teachers is also causing huge instability when it comes to important learning in our schools. That is why what Labour has outlined, including using the money from ending private schools’ tax breaks to support recruitment in our schools to plug the skills gaps, is really important for how we deliver education. That has to be part of the context in which the Minister responds.

I am also very proud that Labour has announced that it would urgently commission a full expert-led review of curriculum and assessment, to ensure that every child has a broad curriculum. Under Labour, young people will learn practical life skills of the kind that the hon. Member for Broadland outlined, such as pension planning, understanding credit scores, applying for a mortgage and understanding employment and rental contracts.

Financial literacy is more important than ever. It is not just about numbers; it is about life skills, security and future opportunities. It is also about us, as policymakers, being ambitious for our young people and their future, and about recognising that financial education is a key part of how we close the prosperity gap rather than increasing inequality for future generations. It is vital that we equip our young people, such as those in Feltham and Heston, with the financial education that will stay with them for life.