Select Committee on Treasury Written Evidence


Memorandum submitted by Personal Finance Education Group (pfeg)

FINANCIAL EDUCATION AND ACCESS TO FINANCIAL ADVICE

The need to start financial education in schools

  1.  Schools are unique in having access to, and influence on, all young people across social, economic, ethnic and religious groups. If we can ensure that young people leave school as informed and independent consumers with the confidence to engage with the finance sector, this will provide a firm foundation and prevent many of them from getting into financial difficulties as adults. This will need to be funded. Government departments have indicated that it is unlikely to come through the Department for Education and Skills. There is a case for investment from the financial services sector.

FINANCIAL EDUCATION AND ITS LINK WITH INCLUSION

  2.  Financial capability is a prerequisite to full participation in modern society. All young people need the skills, confidence and knowledge around financial matters regardless of their background or their learning ability. Young people are interested in money matters and understand its relevance to their lives. Taught well it can reach all sections of society even those who may currently feel disaffected and disengaged with school.

FINANCIAL EDUCATION IN SCHOOLS

  3.  At present there is no guarantee that young people will receive quality financial education. Although there are opportunities emerging out of changes in the curriculum, for example, the advent of functional mathematics and other initiatives such as the Child Trust Fund, there is still no statutory requirement to teach personal finance education.

PFEG'S ROLE IN FINANCIAL EDUCATION

  4.  pfeg is the key element in the Schools' strand of the FSA's national strategy. It provides a comprehensive service to support schools and has developed tried and tested approaches to raise the quality and quantity of personal finance education for children and young people.

INTRODUCTION

  5.  pfeg is a registered charity, working across the UK. It is widely recognised as a leading force in the delivery of personal finance education within schools and receives cross sector support from business, FSA, Government and the educational establishment.

  6.  Its mission is for all young people to leave school with the confidence, skills and knowledge they need in financial matters so they can take part fully in society. pfeg takes the view that all young people, regardless of their socio-economic or cultural background or their learning ability, need to be financially capable.

  7.  pfeg has played a key role in the Schools Project strand of the FSA's national strategy on financial capability.

PFEG'S ROLE IN PROMOTING AND SUPPORTING IMPROVED FINANCIAL EDUCATION IN SCHOOLS

  8.  pfeg seeks to provide a comprehensive service to schools to support senior management and classroom teachers to deliver high quality personal finance education. Through its website, www.pfeg.org, it has provided access free of charge to a wide range of engaging and innovative materials, guidance and signposting. Its approach to teaching personal finance education, developed through its innovative pilot Excellence and Access has been accepted as the most effective way to ensure that young people become financially capable. This approach entails working with schools to embed personal finance across a range of curriculum subjects such as personal, social and health education, citizenship, mathematics and work related learning.

  9.  pfeg has been tasked by the FSA's Financial Capability Steering Group to provide specialist support to teachers in England. This will provide a template for action which can be followed in other jurisdictions and generate content that can be used across the UK. At present a business case in being put together to raise the necessary funding for a five year project that would achieve, over time, a step change in the nation's financial capability.

  10.  pfeg has conducted ground breaking work with schools in promoting an inclusion agenda. Examples include:

    —  Production of a pack of 3 case studies demonstrating different cultural experiences of personal finance;

    —  Project with up to 300 young people and 60 teachers based in Pupil Referral units;

    —  Case studies and teaching resource for children with special educational needs;

    —  Cultural diversity bulletins to share good practice and provide ideas for classroom activities

THE CASE FOR STARTING FINANCIAL EDUCATION IN SCHOOLS

  11.  The statutory education system is one of the most important places to start addressing the problem of low financial capability. If we can improve school leavers' levels of financial capability they will have a firm foundation for future progress. Starting financial education in schools will equip young people with the knowledge, confidence and skills they need before it is too late. Schools also have a captive audience and can thus guarantee broad coverage of an entire age group.

LINK WITH THE INCLUSION AGENDA

  12.  Financial capability is a prerequisite to full participation in modern society

  13.  If young people were to receive high quality personal finance education it would help them build their confidence in financial matters and help with their employability. It may help reduce to number of young people not in employment, education and training (9.6% of young people were in this category in 2004).

  14.  Financial issues are a large contributor to the non-completion of university. The Higher Education Statistical Agency predicted that 14.4% of full time students who started their degrees in 2002 would not complete their courses. The effect of not being financially literate is disproportional on different social groups. Money problems and fear of running into debt are among the chief reasons that young people from disadvantaged families are more likely to drop out of university than other students.

CURRENT SITUATION IN SCHOOLS

  15.  Education is a devolved function of government. This submission focuses on England which has over 80% of schools in the UK.

  16.  Currently, personal finance education, if it happens at all, has a low status. It cannot be assumed to be happening in any given school at any time. The voluntary nature of financial education informs the approach needed by organizations, such as pfeg and the FSA, which aim to support both schools and teachers in developing this area further. Such support is very much a matter of influence and persuasion, not diktat.

  17.  New opportunities are emerging. Personal finance education will continue to be part of personal, social and health education and citizenship and to underpin enterprise education. In addition the Department for Education and Skills has asked the Qualifications and Curriculum Authority to consider including financial capability more explicitly in the mathematics curriculum. Examples from personal finance management are one context in which functional mathematics can be taught—there will be initial access to accreditation of functional mathematics schemes through the new diplomas in 2008. The Child Trust Fund provides a useful hook to link into personal finance education, not only for the recipients but also for those about to leave school who will become parents before too many years have passed.

  18.  pfeg has a clear understanding of how to support schools and how to encourage them to raise the quality and quantity of personal finance education provided. FSA research published in May 2004 reported that two thirds of people said that if they had learned more about financial matters at school they would be more confident about dealing with their personal finances. This belief was similar across those with different experiences of personal finance in school and across social classes. Young people themselves want to learn about money management as they can understand the relevance. Teaching personal finance in an engaging and interactive way is an excellent means of reaching those pupils who may be disaffected in schools, in particular under achieving boys.

INVESTMENT BY THE FINANCE SECTOR

  19.  pfeg receives financial support from a number of sources although, in common with most charities, it has no guaranteed income. Although it is relatively easy to attract funding for modest projects that are discrete, branded and time limited, it has proved difficult to acquire the necessary funding to achieve the step change identified by the FSA's national strategy. Reaching all those of school age will mean that the number of informed and independent consumers will be increased by those who had previously been excluded from financial services. The result would be that, as adults, they would buy, not only more sensibly, but also more financial products and services. Investing in education at an early stage by the financial sector should be encouraged.

20.  GOVERNMENT SUPPORT

  Although pfeg's work is supported by the Department for Education and Skills and has been publicly acknowledged and valued by the Treasury and the Department for Work and Pensions, there has been no indication that this would result in funding to support the work in schools necessary to achieve a step change in the financial capability of the next generation.

January 2006





 
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