Press release: Financial education is a long-term solution to the national problem of irresponsible borrowing and personal insolvency says report

The All-Party Parliamentary Group (APPG) on Financial Education for Young People today launches its report on Financial Education and the Curriculum.

Chairman of the inquiry into financial education and the curriculum Andrew Percy MP said today: “Credit cards, mortgages, hire purchase agreements, mobile phone contracts, tuition fees and even supermarket offers all require us to apply functional maths skills, such as being able to calculate APR, compound interest and percentages, to real-life situations.

But too many of our school leavers, who can perform complex mathematical equations and Algebra, have no idea what basic financial terms like APR and PPI mean – leaving them without the necessary level of  financial literacy to make decisions in an increasingly complex financial world. These decisions only become more complex with age and as such the country has a duty to equip our young people properly through education to make informed financial decisions.”

He added: “We believe that financial education is a long term solution to the national problem of irresponsible borrowing and personal insolvency. Furthermore, teaching people about budgeting and personal finance will help equip the workforce with the necessary skills to succeed in business and drive forward economic growth.”

Justin Tomlinson MP, Chair of the APPG says: “I have been overwhelmed with the fantastic support for our campaign to get financial education taught in schools. As part of this 8 month long inquiry of Cross Party MPs we have taken written and oral evidence from across the financial and education sectors to try to reveal the true level of finance education in our schools in order to establish a consistent and sustainable model for educating future generations.

“Over 900 teachers and 50 relevant organisations including banks, financial institutions, teaching unions, financial education providers, Financial Services Authority, Money Advice Service and young people have contributed to the report, and it is essential that the Government considers our findings and proposals as part of their review of the curriculum.”

Wendy van den Hende, Chief Executive of pfeg says: “Young people want to learn how to manage their money, and school is an excellent place for this to happen. Teachers clearly want it to be part of the curriculum, so that it is taken seriously and has the support it deserves to be taught effectively.”

Martin Lewis of MoneySavingExpert.com, whose e-petition has now had the magic 100,000 sign it, says: "For once, thankfully, we have a bunch of politicians who aren't pussy-footing around.  They're actually using the C word – compulsory.  We need compulsory financial education in our schools.  Our nation is financially illiterate, for over 20 years we've educated our youth into debt when they go to university, but never about debt. Breaking this cycle will mean less mis-selling, fewer bad debts, better consumers and could save the public coffers a fortune."

The report recommends the Government should promote the provision of high quality financial education in schools in England. It should do this by acting on, or supporting, the following key recommendations:

National

• Personal finance education should be a compulsory part of every school’s curriculum.
• Resources produced by outside organisations and visits of providers to schools should be available and accessible if considered helpful by teachers and quality marked by a trusted body.

Primary Education

• 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.
• 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.

Secondary Education

• 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.
• 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.
• PSHE education should be clearly defined into four separate strands, one of which should be personal finance. Through reworking the PSHE education syllabus, more focused training and assessment can be developed.
• A school coordinator, or ‘Champion’, should be appointed in each school, preferably from the Senior Leadership Team. This ‘Champion’ should be given responsibility for ensuring that outcomes are achieved across maths and PSHE education, ensuring there is a clear link between the elements of personal finance taught in mathematics and PSHE education and for sourcing resources.

Statistics

• A survey carried out by the inquiry found that in schools across England the existing provision of personal finance education is ad hoc, with only 45% of teachers reporting that they have ever taught the subject.
• Research shows that by the time children reach the age of 17 more than half of them are, or have been, in debt and a YouGov survey that found 70% of 18-24 year olds were in debt.
• In an online survey of over 1,000 individuals between the ages of 16-25 years by YouthNet this year, 66% were worried about being in debt.
• Around one in four economically active adults is functionally innumerate.
• A survey by the UK Payments Council has found a notable lack of knowledge around the meaning of some of the most common financial terms, for example, only 36% of people understand that the term APR relates to payments. This falls further to 31% amongst young people aged 18-34.
• Significantly, lack of financial education has cost Brits nearly £250 million in charges and penalties alone, with almost a quarter (24%) having been hit by charges because they don't understand the terms and conditions of financial products, according to research from uSwitch.com.
• Moreover, almost three quarters of Brits (71%) say that a lack of basic personal financial understanding is to blame for debt.

For further information and interviews requests contact:

• Andrew Percy MP – 020 7219 7208
• Justin Tomlinson MP – 020 7219 7167
• pfeg/young people – Andrew Nye, comms@pfeg.org, 07958 923 587
• Martin Lewis – Murray Harkin, murray.harkin@mhapr.co.uk, 07909 902 741

ENDS

1. The inquiry took evidence from numerous expert witnesses, submissions and a survey of 852 teachers, available in full at www.pfeg.org/appginquiryevidence.

2. The inquiry committee is:

• Andrew Percy, MP for Brigg and Goole (Chair)
• Justin Tomlinson, MP for North Swindon (Chair APPG)
• Fiona Bruce, MP for Congleton
• Jenny Chapman, MP for Darlington
• Mark Garnier, MP for Wyre Forest
• Anne-Marie Morris, MP for Newton Abbot
• Eric Ollerenshaw, MP for Lancaster and Fleetwood

3. The All Party Parliamentary Group on Financial Education for Young People is now the largest in parliament with 226 cross party MPs and Peers. Its chair is Justin Tomlinson MP. Its mission statement states: The APPG on Financial Education for Young People's purpose will be to provide a medium through which MPs, Peers and organisations with an interest in financial education can discuss the current provision on financial education in schools; ensure young people are equipped to make informed financial decisions; help make resources and qualifications available to young people in education; support schools in the delivery of financial capability; and encourage the introduction of a requirement on schools to provide financial education. www.pfeg.org/curriculum_and_policy/appg_on_financial_education_for_young_people/index.html

4. pfeg (Personal Finance Education Group) is the UK’s leading finance education organization helping schools to plan and teach financial capability relevant to students’ lives and needs. pfeg provides the secretariat support for the APPG. For information visit www.pfeg.org or follow pfeg on Twitter @pfeg_org.

5. Martin Lewis, Money Saving Expert, is a journalist and consumer campaigner who created www.MoneySavingExpert.com, the UK's biggest money website, which has almost 10 million monthly unique users and over 5 million have opted to receive the weekly e-mail. He's the UK's 2nd most internet searched person, Citizens Advice Consumer Champion of the year, has spearheaded major financial justice campaigns including bank charges reclaiming (over 6m template letters downloaded) and PPI reclaiming (over 1m). He has regular slots as resident expert on Daybreak, Lorraine, Radio 2's Vine, Radio 5's consumer panel and BBC1 Watchdog amongst others.