Select Committee on Treasury Written Evidence


Memorandum submitted by the Department for Education and Skills

INTRODUCTION

  1.  My Department's belief is that all learners, whatever their age, background and circumstances, need good financial capability to enable them to participate in modern society and manage their finances effectively. My Department attaches great importance to improving financial capability and emphasised this in the 14-19 Education and Skills White Paper. As part of our 14-19 reforms, financial capability education will be taught more explicitly in the curriculum by including it in the new functional mathematics component of GCSE mathematics. But we also recognise that a range of other subjects such as, Personal, Social and Health Education (PSHE), Citizenship, Business Studies and Careers Education, offer good opportunities and contexts for exploring and improving young people's understanding of financial issues. The broad range of contexts offered within the different subjects will help ensure that young people develop knowledge and skills that can be applied in real life situations and decision making.

  2.  In addition, responding to the 2002 Howard Davies report, my Department has allocated £60 million a year for the three academic years from September 2005 to support a new focus on enterprise education in all secondary schools in England. We have stated that our definition of enterprise education includes the need to support enterprise capability through teaching of financial capability, and economic and business understanding.

  3.  My Department is also taking steps to strengthen adult financial capability, especially for groups with particular needs. Building on the work of the Skills for Life Strategy in improving adult literacy and numeracy skills, we will embed financial capability into functional mathematics and also encourage local authorities to provide more financial education to parents through Sure Start Children's Centres and locally delivered family numeracy programmes.

THE CURRICULUM AND FINANCIAL CAPABILITY

  4.  A range of subjects such as Mathematics, Personal, Social and Health Education (PSHE), Citizenship, Business Studies and Careers Education, offers good opportunities and contexts for exploring and improving young people's understanding of financial issues.

  5.  Personal finance education, a prerequisite of financial capability, is covered in the curriculum as part of the PSHE framework. PSHE provides for personal finance education to be taught throughout Key Stages 1 to 4. Pupils should be taught:

    —  (5-7 year olds) that money comes from different sources and can be used for different purposes;

    —  (7-11 year olds) to look after their money and realise that future wants and needs may be met through saving;

    —  (11-14 year olds) what influences how we spend or save money, and how to become competent at managing personal money; and

    —  (14-16 year olds) to use a range of financial tools and services, including budgeting and saving, in managing personal money.

  6.  Citizenship—which is compulsory in secondary schools—provides that 14-16 year old pupils should be taught about how the economy functions, including the role of business and financial services.

  7.  New resources for Enterprise Education allow for, amongst other things, up to five days of enterprise activity, such as running a real, or realistic, business, which builds on existing work-related activities like work experience, and which can readily include financial literacy. An enterprise education entitlement will provide all KS4 pupils with the equivalent of five days' activity which develops enterprise capability, encompassing innovation, creativity, risk-management and risk-taking, and financial and business understanding—with financial capability and economic and business understanding. This concept embraces future employees, as well as future entrepreneurs, helping them to develop a can-do attitude and the drive to make ideas happen.

  8.  New functional mathematics, English and ICT skills, announced in the 14-19 Skills White Paper, are scheduled to be fully in place from 2010. My Department has asked QCA to address financial capability more explicitly in the curriculum by incorporating functional mathematics in GCSE mathematics. The revised GCSE will be implemented from September 2010. This will give financial education a more secure place in the school curriculum. The QCA are currently developing standards of functional mathematics for Entry 1 to Level 2 qualifications, and these will include appropriate references to financial capability.

  9.  Functional mathematics will also form part of the core of the new 14-19 specialised Diplomas. In addition, from September 2009, Diplomas in Finance and Business Administration will be taught for the first time. Although the content of these is yet to be devised, as preparation for careers in the financial industry, they are likely to cover financial literacy. The Financial Services Sector Skills Council is to lead the development of these Diplomas.

  10.  The Department will also consider what role the new National Centre for Excellence in the Teaching of Mathematics can play in supporting better teaching of financial capabilities and disseminating good practice to practitioners.

DFES SUPPORT FOR FINANCIAL CAPABILITY IN SCHOOLS

  11.  Teacher guidance—DfES offered guidance in Financial Capability through Personal Financial Education, which was published in July 2000. the Department has also recently worked with the QCA to develop and publish guidance on personal, social and health education at key stages 1 to 4 (5-16 year olds), which includes units exemplifying classroom practice. This was published in November 2005 and includes two units on financial capability for key stages 2 and 3 to help teachers with lesson planning and assessment of pupil progress.

  12.  DfES continues to work with Pfeg (Personal Finance Education Group) a charity that seeks to provide all young people with the confidence, skills and knowledge they need in financial matters. DfES provided financial support for Pfeg to produce a guide on how to use mathematics to improve financial capability.

  13.  The FSA has developed a draft schools strategy for financial capability. The DfES supports the objectives of the strategy and my officials are working directly through the relevant project groups which have been set up by the FSA to take forward the various work streams. We are also working closely to align plans in the FSA's strategy for promoting financial capability to adults with my Department's overall strategy for all learners. For example, through the development of the Adult Financial Capability Framework—a tool which maps the skills and competence of being "financially capable" to the adult literacy and numeracy standards and curriculum. The Financial Secretary and I have agreed in principle to co-hose a seminar later this year to share the outcomes of the FSA's strategy with relevant organisations whose help will be crucial in its long-term success.

SKILLS FOR LIFE STRATEGY: FINANCIAL LITERACY PROJECT

  14.  Since 2001 the Skills for Life Strategy Unit has funded the Basic Skills Agency to take forward a Financial Literacy Project. The project supports the FSA's Financial Capability Strategy and focuses specifically on activities that contribute towards the Skills for Life Strategy—the national strategy to improve adult literacy, language and numeracy skills. The overarching aim of the project is to improve literacy, language and numeracy skills by using finance as a context for learning.

  15.  Work has included producing a variety of teaching and learning materials and other support for Skills for Life teachers and money advisors to address the Skills for Life needs of learners. Testing and mainstreaming innovative approaches to Skills for Life and financial literacy eg through family learning, UFI online packages and working with the Citizens Advice Bureaux.

  16.  Pilot projects are also underway in six different settings, providing Skills for Life programmes in the context of finance. These include a Prison, Sure Start children's centres, an FE College, a workplace through Union Learning Reps, and a community setting. The pilots will explore models of delivery. Lessons from these pilots will also be fed into the FSA's strategy.

January 2006





 
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