Last week, Bethan
Jenkins AM (Plaid, South Wales West) introduced the fourth backbench
Member's Bill of this Assembly term - the Financial Education &
Inclusion Bill.
Bill here (pdf), explanatory memorandum here (pdf), Member's Research service summary here.
Why do we need "FinEdBill"?
It's worth a recap :
Patchy teaching of financial education in schools – Bethan's office undertook a Freedom of Information survey which revealed that levels of financial education varied in Welsh schools from 270 hours to just 6 hours. There was also preliminary evidence that deprived local authorities provided less financial education than well-off areas. Estyn's Money Matters report from 2011 backs this up, indicating a possible "postcode lottery" in the teaching of money management.
Despite financial education being included as part of the Welsh Government's Literacy and Numeracy framework and within maths and PSE lessons, Bethan says provision of financial education is "dependent upon individual teachers’ enthusiasm". The basic school curriculum is set in law via the Education Act 2002. It's proposed to add financial education to that to ensure it's taught to a minimum level across the country as it's "overlooked and not prioritised amidst other competing priorities".
Increasing personal debt and money management problems – Since the recession and subsequent welfare reforms, bodies that work with people in financial difficulties like Citizens Advice Bureau (CAB) has been inundated with cases. The explanatory memorandum quotes a Samaritans Wales report which says there were more than 160,000 calls in 2013-14 - partly blamed on financial problem - while a Public Policy Institute Wales report said 400,000 people in Wales (16% of the population) were over-indebted. All of this is going to create social and economic pressures, so the need for good financial education to ensure future generations avoid these problems is great.
The introduction of Universal Credit means many welfare payments are combined into a single payment. In principle I don't have a problem with that; I like the idea of a "Citizen's Income". But housing benefit – which used to be paid directly to landlords – is now wrapped up in the Universal Credit, making money management skills and advice available to some of the poorest in society more valuable and important than ever.
Ensuring people in financial problems get the help they need - The explanatory memorandum quotes the National Survey 2012-13 (pdf) which found only 42% of under-65s were able keep up with their bills without difficulty, while 33% of respondents said keeping up with bills and credit card payments were sometimes a struggle. Despite this, only 4% accessed some sort of advice service.
Local authorities – like schools – provide a patchy service in terms of pointing people towards the right help. The Bill places duties on them to ensure people can access the right help and - equally as important - access online help (like the Money Advice Service) on public computers for free.
What does the Financial Education & Inclusion Bill propose?
The Bill itself is mercifully short at
6 pages, but it outlines numerous measures, most of which haven't
changed much from the public consultation.
Financial Education
The Bill :
Bill here (pdf), explanatory memorandum here (pdf), Member's Research service summary here.
Why do we need "FinEdBill"?
 |
| With patchy provision across Wales, this law intends to put financial education on the basic curriculum - ensuring every child will learn how to manage their money. (Pic : Education Scotland) |
Patchy teaching of financial education in schools – Bethan's office undertook a Freedom of Information survey which revealed that levels of financial education varied in Welsh schools from 270 hours to just 6 hours. There was also preliminary evidence that deprived local authorities provided less financial education than well-off areas. Estyn's Money Matters report from 2011 backs this up, indicating a possible "postcode lottery" in the teaching of money management.
Despite financial education being included as part of the Welsh Government's Literacy and Numeracy framework and within maths and PSE lessons, Bethan says provision of financial education is "dependent upon individual teachers’ enthusiasm". The basic school curriculum is set in law via the Education Act 2002. It's proposed to add financial education to that to ensure it's taught to a minimum level across the country as it's "overlooked and not prioritised amidst other competing priorities".
Increasing personal debt and money management problems – Since the recession and subsequent welfare reforms, bodies that work with people in financial difficulties like Citizens Advice Bureau (CAB) has been inundated with cases. The explanatory memorandum quotes a Samaritans Wales report which says there were more than 160,000 calls in 2013-14 - partly blamed on financial problem - while a Public Policy Institute Wales report said 400,000 people in Wales (16% of the population) were over-indebted. All of this is going to create social and economic pressures, so the need for good financial education to ensure future generations avoid these problems is great.
The introduction of Universal Credit means many welfare payments are combined into a single payment. In principle I don't have a problem with that; I like the idea of a "Citizen's Income". But housing benefit – which used to be paid directly to landlords – is now wrapped up in the Universal Credit, making money management skills and advice available to some of the poorest in society more valuable and important than ever.
Ensuring people in financial problems get the help they need - The explanatory memorandum quotes the National Survey 2012-13 (pdf) which found only 42% of under-65s were able keep up with their bills without difficulty, while 33% of respondents said keeping up with bills and credit card payments were sometimes a struggle. Despite this, only 4% accessed some sort of advice service.
Local authorities – like schools – provide a patchy service in terms of pointing people towards the right help. The Bill places duties on them to ensure people can access the right help and - equally as important - access online help (like the Money Advice Service) on public computers for free.
What does the Financial Education & Inclusion Bill propose?
 |
| The Bill (in its current form) will - amongst other things - ensure local authorities provide public access to online financial advice services for free. (Pic : BDP) |
Financial Education
The Bill :
- Defines
- "financial education" as learning about financial management (using financial services and debt)
- "financial services" as savings, credit, mortgages, insurance and money transfers
- "financial inclusion" as accessing "financial services" or "financial education" (as defined above) at a reasonable cost.
- Amends the Education Act 2002 to put financial education on the basic state school curriculum for Key Stages 2, 3 & 4 (ages 7-16) - subject to guidance.
- Places a duty on Welsh Ministers to :
- Consult with "persons who have relative expertise" (i.e debt charities, financial experts) before drafting the financial education component of the National Curriculum.
- Report annually to the National Assembly on the progress of financial education in schools.
- Amends the Social Services & Wellbeing Act 2014 to place a duty on local authorities to ensure looked-after children receive "financial education" from age 7.
- Grants Welsh Ministers the powers to issue guidance on financial education or inclusion.
Financial Inclusion
The Bill :
- Places a duty on local authorities to :
- Prepare and publish a financial inclusion strategy – in consultation with relevant outside organisations.
- Publish a report every financial year into their progress and implementation of said strategy.
- Revise their financial inclusion strategies at least once every five years.
- Outlines that each financial inclusion strategy must set out how the local authority will:
- Promote financial inclusion for residents.
- Encourage residents to gain the right financial management and literacy skills (i.e. dealing with cold-calling, gambling and using credit unions).
- Make it easier for residents to access online financial education materials for free (i.e. library computers)
- Collaborate with outside organisations to improve financial inclusion.
Financial Management Advice
The Bill places a duty on local authorities to :
- Arrange to provide looked-after children who are aged 16-18 and who have left or are about to leave care with financial management advice.
- Provide information on where to receive financial advice on their websites.
- Ensure that further education colleges and universities in their area provide financial management advice.
If the Bill
passes through the Assembly on time, it'll become law in the first
half of 2015.
Costs and Benefits
You would've expected
Bethan and her team to have done their sums (for obvious reasons) –
and they did - though they had apparent problems getting relevant
information from the Welsh Government and it's mostly based off work
done in Westminster.
The eventual costs of putting financial education on the curriculum are said to be partly dependent on the outcome of the ongoing Donaldson review. Based on Scottish and English examples, it's estimated the direct cost to the Welsh Government will be around £175,000. In terms of implementing it in schools (via local authorities), there's estimated to be a £1.1million one-off upfront cost, with an ongoing £3.4million per year. Monitoring it would cost up to £880,000 per year (though it's a high estimate). The total cost to local authorities/ local education authorities ranges from between £4-4.8million per year for four years (with the first year [of five] being used to implement it).
There are two options with regard the annual National Assembly report on financial education. If Estyn does it as part of its inspection regime it'll cost £160,000 - this is the preferred option. If there's a general office-based "thematic report" that falls to £40,000. The cost of the local authority strategies and reports will be around £32,000 per year, while pointing people towards advice and providing information to students is estimated to be a combined ~£12,000 per year.
The total cost of all the measures is estimated to be between £17.9-£18.5million over five years.
So those six sheets of paper run at around £3million per page, but when you consider how many people this might reach then it works out as literally a few pounds per year per person, with Bethan describing it as "preventative spending". Some of the money (i.e teacher training resulting from curriculum changes) is already being spent, so there's a chance this will be cheaper to implement than the provisional figures suggest.
In terms of the potential benefits, figures from a report (pdf) from the Centre of Economic and Business Research (CEBR) suggest that effective financial education could be worth a proportional £162million to Wales (UK £3.5billion). Scottish Government research from 2009 suggests pupils who receive improved financial education are £32,000 better off in middle-age than those who don't. Other quoted Welsh Government figures suggest that for every £1 spent on debt advice, the state saves £2.98.
Because parts of this law are aimed at children, it was also considered whether it complies with the UN Convention on the Rights of Children (UNCRC). In many circumstances it enhances current provisions.
Conclusion : Bang for the buck?
Unlike some "aspirational" laws
that have come from the Welsh Government, this one highlights a
collection of clearly identified problems and aims to correct them –
which is what laws are supposed to do.
Not wanting to repeat myself from last time (again), but everything outlined in the Bill is practical, achievable and has in-built flexibility. It could result in people getting the help they need as well as ensuring future generations leave school knowing that money doesn't grow on trees. It's very – excuse the pun – "bang for the buck".
Time for the objectivity hat.
Both Bethan and Plaid have every reason to be proud of this - even if they might be disappointed it isn't a wide-ranging as they would've liked it to be. That might explain some of the flowery arguments used in relation to the impact this law might have on economic development, or slightly shaky claims of legal "world firsts" (France, Estonia, Germany, Finland, Costa Rica).
Plus, because the Bill's so concise, a very "tight" argument has had to be made in the supporting documents. As a result, I suspect as it goes through committee any slip up will be used to chip away at the proposals. So everyone involved will need to be careful they don't talk themselves into a corner by making grandiose claims that could be difficult to back up.
It's a good enough law for what it is, they've gone about everything the right way, so there's no need to dwell on what it could never be.There's no guarantee this will work as intended - you can provide the best financial education in the world yet it still comes down to individual behaviour - but it's on the right track.It's hard for anyone to disagree with the sentiments; but if this Bill's going to run into any trouble it'll probably boil down to the upfront costs involved (which could, ironically, divert funds from other financial inclusion/education schemes) and the argument over whether this requires primary legislation.
The basic school curriculum is set in legislation – the Education Act 2002. So if you want to absolutely 100% guarantee that financial education is taught in schools, it has to be on statute.There's a risk that if it's left to another Welsh Government-led national strategy, the current patchy provision would continue and let kids down.
Although there've been discussions between Bethan Jenkins and Prof. Graham Donaldson, if the Donaldson review reports back saying every school should provide a minimum level of financial education as part of a revamped National Curriculum, the Welsh Government will have all the excuse they need to gut the Bill, as everything so far hints towards Labour supporting the underlying sentiments but not the law itself. Ultimately, no Bill can pass without some support from the government benches.
I suspect (as said last time) that attitude is because it flags up serious failings in Labour's much-beloved "strategies", which clearly aren't working if there are such big variations between schools. Also, an annual report means this willl be subject to full Assembly scrutiny, instead of being discussed between ministers and the civil service behind closed doors. In short, it would increasingly be out of their control.
We're talking about basic life skills here, so it's important enough to be on the basic curriculum. As I quite clearly explain that requires a change to the law.
It'll be interesting to see how this one develops, but I suspect those 6 sheets of A4 will feel more like Finnegans Wake come September.
Costs and Benefits
 |
| It's surprisingly expensive for such a short Bill - mostly as a result of the curriculum changes. But the potential (stress potential) benefits are significant if it's pulled off. (Pic : ukedchat.co.uk) |
The eventual costs of putting financial education on the curriculum are said to be partly dependent on the outcome of the ongoing Donaldson review. Based on Scottish and English examples, it's estimated the direct cost to the Welsh Government will be around £175,000. In terms of implementing it in schools (via local authorities), there's estimated to be a £1.1million one-off upfront cost, with an ongoing £3.4million per year. Monitoring it would cost up to £880,000 per year (though it's a high estimate). The total cost to local authorities/ local education authorities ranges from between £4-4.8million per year for four years (with the first year [of five] being used to implement it).
There are two options with regard the annual National Assembly report on financial education. If Estyn does it as part of its inspection regime it'll cost £160,000 - this is the preferred option. If there's a general office-based "thematic report" that falls to £40,000. The cost of the local authority strategies and reports will be around £32,000 per year, while pointing people towards advice and providing information to students is estimated to be a combined ~£12,000 per year.
The total cost of all the measures is estimated to be between £17.9-£18.5million over five years.
So those six sheets of paper run at around £3million per page, but when you consider how many people this might reach then it works out as literally a few pounds per year per person, with Bethan describing it as "preventative spending". Some of the money (i.e teacher training resulting from curriculum changes) is already being spent, so there's a chance this will be cheaper to implement than the provisional figures suggest.
In terms of the potential benefits, figures from a report (pdf) from the Centre of Economic and Business Research (CEBR) suggest that effective financial education could be worth a proportional £162million to Wales (UK £3.5billion). Scottish Government research from 2009 suggests pupils who receive improved financial education are £32,000 better off in middle-age than those who don't. Other quoted Welsh Government figures suggest that for every £1 spent on debt advice, the state saves £2.98.
Because parts of this law are aimed at children, it was also considered whether it complies with the UN Convention on the Rights of Children (UNCRC). In many circumstances it enhances current provisions.
Conclusion : Bang for the buck?
 |
| The main arguments against this are likely to boil down to the underlying need for legislation. ....and the only "world first" is it'll be the first time Bethan Jenkins will be desperate for the Queen's autograph. (Pic : ITV Wales) |
Not wanting to repeat myself from last time (again), but everything outlined in the Bill is practical, achievable and has in-built flexibility. It could result in people getting the help they need as well as ensuring future generations leave school knowing that money doesn't grow on trees. It's very – excuse the pun – "bang for the buck".
Time for the objectivity hat.
Both Bethan and Plaid have every reason to be proud of this - even if they might be disappointed it isn't a wide-ranging as they would've liked it to be. That might explain some of the flowery arguments used in relation to the impact this law might have on economic development, or slightly shaky claims of legal "world firsts" (France, Estonia, Germany, Finland, Costa Rica).
Plus, because the Bill's so concise, a very "tight" argument has had to be made in the supporting documents. As a result, I suspect as it goes through committee any slip up will be used to chip away at the proposals. So everyone involved will need to be careful they don't talk themselves into a corner by making grandiose claims that could be difficult to back up.
It's a good enough law for what it is, they've gone about everything the right way, so there's no need to dwell on what it could never be.There's no guarantee this will work as intended - you can provide the best financial education in the world yet it still comes down to individual behaviour - but it's on the right track.It's hard for anyone to disagree with the sentiments; but if this Bill's going to run into any trouble it'll probably boil down to the upfront costs involved (which could, ironically, divert funds from other financial inclusion/education schemes) and the argument over whether this requires primary legislation.
The basic school curriculum is set in legislation – the Education Act 2002. So if you want to absolutely 100% guarantee that financial education is taught in schools, it has to be on statute.There's a risk that if it's left to another Welsh Government-led national strategy, the current patchy provision would continue and let kids down.
Although there've been discussions between Bethan Jenkins and Prof. Graham Donaldson, if the Donaldson review reports back saying every school should provide a minimum level of financial education as part of a revamped National Curriculum, the Welsh Government will have all the excuse they need to gut the Bill, as everything so far hints towards Labour supporting the underlying sentiments but not the law itself. Ultimately, no Bill can pass without some support from the government benches.
I suspect (as said last time) that attitude is because it flags up serious failings in Labour's much-beloved "strategies", which clearly aren't working if there are such big variations between schools. Also, an annual report means this willl be subject to full Assembly scrutiny, instead of being discussed between ministers and the civil service behind closed doors. In short, it would increasingly be out of their control.
We're talking about basic life skills here, so it's important enough to be on the basic curriculum. As I quite clearly explain that requires a change to the law.
It'll be interesting to see how this one develops, but I suspect those 6 sheets of A4 will feel more like Finnegans Wake come September.
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