Tuesday, 8 April 2014

"FinEdBill" : The price of weak financial education

It's the form of maths we use everyday, but isn't being taken as seriously in Welsh schools as it should be. As covered last November, a proposed Member's Bill in the National Assembly aims to rectify this.

Bethan Jenkins AM's (Plaid, South Wales West) Financial Education & Inclusion Bill was recently sent out for public consultation. The full consultation document is available here (pdf), and the consultation ends on April 28th.

The Case for a Law

The results of a Freedom of Information investigation show that many pupils are
perhaps more likely to learn about money from Monopoly  than school lessons.
(Pic : ironworksforum.com)
Financial education is integrated into the school curriculum through Personal and Social Education (PSE/PHSE), as well as subjects like maths and work-related activities. Unfortunately, PSE is treated as a doss subject, and despite a 2010 Assembly Committee inquiry calling for changes, teaching financial education, "is not a legal requirement for schools to follow and is therefore (taught) at their discretion".

No strict guidance is set down as to how much and how often it should be taught, though general guidance on financial education is available. Meanwhile, a specialist Financial Education Unit set up by the Welsh Government to provide resources to teach it was closed last year.

Bethan and her staff undertook a freedom of information sweep of Welsh secondary schools in order to find out the number of hours spent teaching financial education. The results varied wildly, revealing a possible "postcode lottery".

The average across all responses was said to be 24 hours in maths and 15 hours in PSE (across Years 7-11) - working out at around 8 lessons per year.

At the best-placed school, a pupil would receive 270 hours of financial education across Years 7-11 : 240 hours in maths lessons and 30 hours in PSE. The worst-placed school didn't teach any financial education in maths lessons and only provided 6 hours in PSE.
What's more significant is that it's said preliminary evidence suggests more deprived local education authorities have the weakest provision.

It's fair to point out problems in interpreting these results.

Financial education is, ultimately, basic mathematical concepts put in an everyday context – like PISA exams. It's unclear if the FOI request defined "financial education"  as strictly meaning money management skills (I presume it did), or whether it includes broader skills allied to it (percentages, decimals etc.). Schools reporting low levels might have underestimated how much they actually teach, likewise the opposite.

Worries about "red tape"? Or red faces?

This is about as advanced as financial education gets in Welsh schools judging by the teaching
material. Don't expect lessons on mortgages, pensions or consumer credit - but saving to buy a new bike.
(Pic : via ebay.co.uk)
In a recent Click on Wales article, Bethan said she was disappointed with ministers' reaction to her proposed law, as ministers believe current measures (like curriculum changes and the future introduction of a numeracy GCSE) are good enough.

If you want examples of what's being done, the new Literacy & Numeracy Framework includes financial education material under the "Managing Money" module (here) - but it seems rather basic, bordering on patronising. There's also a WJEC GCSE short course in PSE, its past papers having included questions on payday loans (pdf).

Ministers also argue that legislation would create "more bureaucracy" for teachers. When you consider the weight of statutory guidance and frameworks handed down to teachers by the Welsh Government over the years, that's a silly argument - although that's not to dismiss it out of hand. The Welsh Government are right, but for the wrong reasons.

Back in November, I said laws like this could lead to the creation of a "curriculum by statute". That would be undesirable because it would make the school curriculum inflexible. Having said that, as long as AMs don't go overboard with "literacy laws", and it doesn't strictly prescribe what should or shouldn't be taught, there needn't be a problem.

Financial education is stuck in a purgatory of not being a core subject in itself, but still an important cross-curricular concept that has to be taught regardless of whether it's statutory or not. A financial education law would, therefore, be no different to a law that makes teaching something like personal safety or healthy living compulsory.

The FOI findings are also tentative proof the current measures aren't good enough, requiring legislation to ensure consistency across Wales above anything else. So I'll put it starker terms.

Nobody would tolerate children leaving school unable to read or write. We'd scream from the rooftops for new laws if that happened on a routine basis. Yet thousands are leaving school without the most basic maths they need to get by in life being put in its rightful context : how to manage their money or, indeed, someone else's - possibly yours one day.

So in a backhanded way the Welsh Government are right. We shouldn't need a law.

The fact a law has been deemed a necessity to ensure children are taught basic life skills should embarrass them.

The consultation outlines what Bethan wants to put in the law – subject to change. On financial education, proposals include :
  • Making financial education a compulsory part of the National Curriculum from Key Stage 2 (Year 3) onwards, with schools to determine for themselves how to deliver it.
  • Welsh Ministers and LEAs will be legally-obliged to ensure it's part of the curriculum and that it's delivered across all subjects where possible. They'll also have a duty to consult with experts when developing the new financial education curriculum.
  • Effective monitoring by the Welsh Government and an annual Assembly report on financial education.
More help for those who need it
Bethan Jenkins proposes that local authorities reinforce their existing obligations when
it comes to promoting financial inclusion, in order to help those already struggling.
(Pic : dghp.org.uk)
The second part of the proposed law covers advice and services for those in financial difficulties; whether due to austerity and welfare changes, because they're a particularly vulnerable group, or as a result of personal financial problems caused by the likes of payday lenders. The Welsh Government know all about that, don't they?

The consultation document cites figures which state :
  • 70% of 18-24 year olds were in debt (2008 YouGov survey) - presumably due, in part, to things like student loans.
  • 24% of the UK population have paid charges and penalties because they didn't understand the terms and conditions of financial products – to the tune of £250million (2011).
  • 84% of people seeking help from Citizens Advice Bureau (CAB) during 2012-13 had financial issues.
  • 4% of Welsh adults (94,000) have taken out a payday loan, while CAB have seen a fivefold increase in the number of referrals from people having problems with payday lenders.

All this can lead to serious problems; like struggling to pay bills, falls in income and being chased up due to arrears. Then there's the unseen strain this puts on households.

Local authorities can play a key role, because they have powers over things like trading standards (to deal with scams), debt and benefit advice, as well as powers to create things like no cold-calling zones.

The problem's that there's no statutory obligation to provide some of these services, just general duties under government strategies like those to reduce child poverty. Also, different local authorities might place different priorities on financial inclusion in the same way as schools do with financial education.

Ultimately, they're both linked. Good financial education prevents people getting into difficulties, while improving access to good financial advice will help those who've already fallen through the net or are at risk of doing so.

So on financial inclusion, Bethan proposes measures which might include :
  • Placing a duty on local authorities to produce a financial inclusion strategy, and annual report, outlining how the authority :
    • regulates street-trading under their existing powers
    • takes steps to deal with doorstep cold-calling, including the creation of no cold-calling zones
    • engages with credit unions
    • takes financial inclusion of residents into account when they procure goods and services
  • Banning local authorities from charging for internet access in libraries. This would close a possible loophole in current laws which might allow them to, affecting those on state benefits like Universal Credit which have shifted to online management.
  • Placing a duty on local authorities to ensure children who've left care are given financial management advice.
  • Placing a duty on local authorities to inform residents where they can get financial advice.
  • Placing duties on universities and FE colleges to inform students about financial advice if they request it or need it.

Of course, it's all subject to change based on the consultation.

The proposals, as they are, seem pragmatic, achievable and could open the door to practical help for lots of people - albeit limited by what can be done under the Assembly's powers. I'd guess if she had the option, Bethan (and other AMs) would want to go further on payday lending websites, planning consents for things like betting and pawn shops, as well as cold-calling zones.

I'm sure many readers share my cynicism of all things "public consultation", and won't want to respond to the full document's 25 questions - its use of bullet points and bold text making me look like an amateur. Don't let me stop you.

Although - in what might be a welcome first for Welsh legislation - there's a shorter survey which only takes 5-10 minutes and is far less intimidating. It's available here.

It's definitely worth younger readers or parents/guardians/grandparents of primary-age children having a go as the proposed law would help you most of all. Just a reminder that responses need to be in by April 28th.


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