Financial Services Bill — Report (2nd Day) (Continued)

Part of the debate – in the House of Lords at 7:20 pm on 12 November 2012.

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Photo of Lord Flight Lord Flight Conservative 7:20, 12 November 2012

My Lords, I return with an amendment relating to the teaching of financial literacy in schools essentially because when I raised the matter in Committee, understandably, the Minister referred me to the Department for Education. I took up the issue with the Chief Secretary and I am afraid there was yet a further sort of ducking motion and eventually I received a kind letter from the Minister David Laws to the effect that this was really about teaching mathematics and that perhaps I should take it up with a different Minister.

It seems to me that we have a lot of academic debate about how to deal with appropriate consumer protection, whereas, for the long term, the biggest thing that we can do is achieve a situation where at least the next generation understands finance-not in all its intricacies but the fundamental concepts. What is a mortgage? What is a pension? What is debt? What is equity? What is a student loan? What is compound interest? With the greatest respect to the Department for Education, I think the mathematics bit is way down the line. I suggest that the first bit is teaching people the concepts.

I may have made this comment before, but both of my parents were at London grammar schools in the 1920s when a standard part of the general certificate was the teaching of the concepts of finance and basic accountancy. Unfortunately, that was got rid of at the time of war, when I think it was regarded rather as a dirty subject to teach children. I well remember that my mother was pretty much equipped for the rest of her life with what she learnt in her teens at her school.

There is widespread agreement across all parties that this is something worthy to achieve, but there is a lack of ability to grasp it and to make it happen. The experiment with PFEG did not work particularly well because PFEG's role was to try to teach existing teachers to teach financial literacy and few teachers felt confident enough to do that, often because they did not understand the subject themselves. Interestingly, the more successful courses have been put in by RBS, where the teachers are provided directly, but that does not extend to all schools by a long chalk. I think the majority of schools are still relatively uncomfortable with the territory and pupils are not being taught financial literacy.

PFEG has lost much of its funding. It has gone to an alternative body which I hope will use it more constructively. As we presently stand, the biggest single problem in the whole area of consumer protection is that people do not understand what they are investing in. Not only do they not understand the complexities but very frequently they do not understand the basic concepts and how they operate. I would hope that this amendment, which deliberately ties in with the consumer protection objective, might see the light of day in some form and see a commitment to make the teaching of financial literacy happen. It has been on the agenda since the FSA was established back in 1999-2000 and the progress to date is disappointing. To put it bluntly, unless the Department for Education and the Treasury get together, work out what is wanted and implement it with some constructive work from the FCA, nothing much will happen for quite some time to come. I beg to move.