Financial Education

Elizabeth Truss Excerpts

Thursday 15th December 2011 Commons Chamber

[Justin Tomlinson]

I thank my hon. Friend for that important intervention. A number of members of the all-party group, including several who took part in the inquiry, visited local schools to see at first hand the enjoyment and fulfilment of young children who had such an opportunity. If we ask them whether they are interested in mobile phone contracts, the cost of driving lessons or the fact that ultimately they will have access to credit cards and loans, we see that they are enthused by money and buy into financial education.

The report recommends that:

“Primary teachers should build upon their teaching of basic money and mathematics skills from an early age across the curriculum in preparation for secondary education.”

On that point, I welcome the Minister’s decision to restrict the use of calculators in primary schools, because it is clear that the ability to do mental arithmetic makes a huge difference when it come to providing the building blocks of the good mathematical skills that are essential to become an informed and savvy consumer. My hon. Friend the Member for South West Norfolk (Elizabeth Truss) championed that in a Westminster Hall debate in which I had the pleasure of offering my support. I know from my experience of learning maths in school, and being reasonably savvy when it comes to financial matters, that such skills are built on the ability to do mental arithmetic.

The report continues:

“We welcome the Government’s current proposal to increase the minimum requirement of mathematics GCSE to grade B for primary school teachers and encourage that it should be adopted. It would be advantageous to use the opportunity of training days to refresh the mathematics skills of primary school teachers, although we respect the right of the schools to provide training in a way they feel is appropriate.”

On secondary schools, the report recommends:

“Personal finance education should be taught cross-curricular in mathematics and Personal, Social, Health and Economic (PSHE) education with the financial numeracy aspect of personal finance education situated in mathematics and subjective aspects taught in PSHE education. It should be packaged in an obvious and clear way to young people.”

[Elizabeth Truss (South West Norfolk) (Con)]

I congratulate my hon. Friend on securing the debate and on all the work he has done on this subject. Does he agree that financial education needs to be embedded in mathematics rigorously and that it should be seen as one of the forms of applied mathematics in the way that mechanics has been historically? We should see finance as another means of doing that as well. Does he agree that it is particularly concerning that girls perform worse in GCSE maths than boys, despite the fact that they do much better in other subjects?

[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.

--- Later in debate ---

[Mrs Chapman]

I agree completely. That goes back to the first point that I made about financial education being one of four strands of the solution, the others being debt advice, advertising and regulation. The hon. Gentleman is right to point that out.

In schools across England, the provision of personal financial education is ad hoc. We saw some good examples when writing this report. I took it upon myself to visit schools in my constituency and I was impressed with what I found. There is little teacher training on personal financial education and there is therefore limited subject knowledge and confidence among some teaching staff. It is stating the obvious to say that schools face significant barriers to teaching financial education, such as curriculum time, the absence of a statutory mandate and the lack of awareness of suitable resources.

[Elizabeth Truss]

Does the hon. Lady agree that the current requirement of a grade C in mathematics to teach in primary schools may need to be amended? Is she concerned, as I am, that we have the smallest proportion of students studying maths from 16 to 18 of any country in the OECD? We therefore do not necessarily have people moving through the system with the right mathematical understanding.

[Mrs Chapman]

I agree with that to a point. I have A-level maths and I am very glad that I studied that. One does not have to be a maths expert to deliver good financial education, but one does need to have confidence in the subject, have a good grasp of the knowledge and be a good teacher. A good teacher who can get the ideas across can probably teach the things that we discuss in the report quite well.

--- Later in debate ---

[Kevin Brennan (Cardiff West) (Lab)]

May I first apologise to House as I may need to leave before the debate’s conclusion, depending on how long we run on for?

I congratulate the all-party group on financial education for young people on producing its report, and I pay tribute to the hon. Members for North Swindon (Justin Tomlinson) and for Brigg and Goole (Andrew Percy) and my hon. Friend the Member for Darlington (Mrs Chapman) for the work that they put into it. [Interruption.] Did I miss somebody out? I beg the pardon of the hon. Member for Wyre Forest (Mark Garnier). Does anyone else want a mention while I am on my feet? I pay tribute to everyone who has been involved in the report. It is very thorough and much work went into taking the evidence. It is of the standard of a Select Committee report—perhaps even better than some Select Committee reports.

I also congratulate Members on getting Martin Lewis to help with the report, although it sounded as though that was not too difficult for the hon. Member for North Swindon, and on getting 100,000 people to petition for today’s debate. More broadly, I pay tribute to the role that Martin Lewis has played in improving public awareness of finance issues through his website and other media. When I was a Minister with responsibility for consumer issues, he was very supportive of a reform that I introduced and from which I hope some Members here might have benefited. I refer to the measure on 0% credit card offers under which repayments by consumers henceforth went on the most expensive debt first—exactly the opposite of what used to happen, when credit card companies would pay off the 0% debt first and leave people with a very high rate of interest on any remaining balances. That is the kind of understanding that consumers need to have when taking up so-called 0% credit card offers, including on arrangement fees.

Knowing how to manage money and be a savvy consumer are vital life skills in an increasingly complex world, but why do more young people not start learning this at school? That is the question at the heart of today’s report. As a former head of economics in a Cardiff comprehensive school, I am well aware that this issue has been on the agenda for many decades. I can remember some of the earlier initiatives on improving financial education in schools, including the early days of school banks, when young people were encouraged to make deposits in the school bank, often supported by the local branch of their bank or building society.

Education is about giving young people the skills and knowledge that they need to get on in life, which is why every child should learn not only the three R’s at school but about pensions, saving, borrowing and mortgages. As the report shows, despite many of these initiatives down the years, the provision of financial education across the country is still extremely patchy, as the Minister acknowledged when he referred to the Ofsted report. That is why we would have had compulsory financial education in every school last September, through personal, social and health education, under plans that the previous Government set in train in the then Department for Children, Schools and Families before the last general election, again with the help and support of Martin Lewis from MoneySavingExpert.com.

We said that financial education should be a compulsory part of the curriculum, as part of PSHE, with improved training and tools to give teachers the confidence to teach it. The law to make that happen was going through Parliament when the general election was called last year. However, as we heard earlier, those on the Conservative Front Bench, including the current Schools Minister, refused to support it—probably for other reasons, to do with their objection to the sex education provision in PHSE—and so the plans were scrapped.

There have been 18 months in which no progress has been made, which is why the report is so welcome. It gives us an opportunity to try to find a way forward, and perhaps a cross-party consensus, on a vital issue for the long-term good of our country. I am therefore pleased that the e-petition calling for financial education to become a compulsory part of the curriculum has been a success and that it has sparked today’s debate. The report is also timely, as there is a review of the curriculum under way, as the Minister said, which gives the Government a perfect opportunity to listen to the thousands of people who are backing the campaign. As I said, every child should learn how to manage their money. It will set them up for the rest of their lives, and financial education lessons might also enable them to teach their parents a thing or two.

Indeed, my hon. Friend the Member for Makerfield (Yvonne Fovargue)—who is on the Front Bench, in the Whips’ corner—sent me an e-mail yesterday after we talked about this issue. Hon. Members will be aware that the Prime Minister praised her yesterday for her work with citizens advice bureaux. She said:

“One of the side effects of the project I managed delivering to schools/colleges was a rise in demand for debt advice from the parents…They talked to their children and realised there was a problem.”

She continued:

“There has to be sufficient quality free debt advice available to cope with this demand in the local area—and the signposting needs to be sensitive and appropriate too. Teachers need to think about how they would deal with the issue—perhaps a session from the local CAB?”

To which she adds:

“if it’s still around that is!"

This is therefore a timely moment for a debate on financial education, with the review of the curriculum under way. We in the Opposition will be looking carefully at what the Government come up with when they conclude their review.

However, I think there is a paradox and perhaps some confusion at the centre of the Government about the curriculum. As I understand it, the Schools Minister and the Secretary of State are driven in their review of the curriculum in part by a desire to give more freedom to teachers, head teachers and schools to teach as they think appropriate for their local communities, with more autonomy for schools and head teachers. However, at the same time, Ministers—driven perhaps by the desire to generate the right kind of headlines—continually demand a specific approach to teaching all sorts of subjects, including history, as favoured by the Schools Minister and the Secretary of State. At the same time, there is a big push, backed by money, for more and more schools to convert to academy status or become free schools, thereby no longer being required to teach the national curriculum. On the one hand, therefore, the Government’s policy seems to be to exempt most schools over time—if their current plans continue—from teaching the national curriculum, while on the other hand they are revising the national curriculum to ensure that schools teach more closely what they want them to teach. At some point, some genius in the Department for Education will have to square that circle and explain how those two things will be delivered.

It is paradoxical, and perhaps even absurd, that if the Government get their way, we will have a national curriculum that the vast majority of schools will not have to teach. It will not matter what anyone recommends in a report should be made compulsory: it will not be deliverable unless there is some stick in the system. The Government cannot decentralise and at the same time dictate from the top, because ultimately the whole project will collapse in on itself.

[Elizabeth Truss]

rose—

[Kevin Brennan]

I can see that the hon. Lady is itching to intervene.

[Elizabeth Truss]

Is it not about leadership, as the reality is that many academies and, indeed, private schools follow or tack along with the national curriculum? It is the role of the Education Secretary and the Department to indicate what kind of things students should know when they leave school.

[Kevin Brennan]

I am sure the hon. Lady is right; she thinks deeply about these subjects and makes intelligent contributions. The report, however, states:

“Personal finance education should be a compulsory part of every school’s curriculum.”

If that is going to be delivered, there must be some transmission mechanism. I am afraid that history teaches us, and future events will teach us, that exhortations from Secretaries of State—no matter how talented or eloquent they be—are not sufficient to make things a reality on the ground. As I say, there has to be a mechanism to make it happen.

In thinking about this issue, the Minister will need to clarify what the role of the national curriculum will be in a schools landscape where most institutions will not be required to follow it. How will that fit in with the original vision of a national curriculum to be taught by all schools across the country, as introduced by Kenneth Baker, now Lord Baker, who was the Secretary of State when I was a teacher back in the 1980s? How can the Minister ensure adequate teaching of financial education if most schools will ultimately be free to follow their own path?