My Lords, I add my thanks to the noble Baroness, Lady Tyler, for her excellent leadership of our committee, and to the staff who supported her.
We sometimes think that financial exclusion is important but that it is a subject like many others. It is not. It is really important, as important as the security of our population or their health and education. Why? Because it concerns every individual in the country —not that they are all excluded but because of their financial capability.
Perhaps it is easier to define financial capability, which is what we are trying to get. The MFO, the Microfinance Opportunities, defined it thus:
“Financial capability is the combination of attitude, knowledge, skills, and self-efficacy needed to make and exercise money management decisions that best fit the circumstances of one’s life, within an enabling environment”.
Not everybody needs to know how to invest in the City of London; we all have our own worlds that we need to know more about.
The Government have made some minor advances and were in a constructive mood during debate on the Financial Guidance and Claims Bill. I am sorry that they were perhaps not so constructive in their response to us, which has not been very positive. They sometimes seem to support our view but do not quite go the whole way into implementing recommendations.
I turn to financial education or, better put, the teaching of financial capability. The MFO defines it as:
“Financial education equips people with knowledge and skills, and strengthens their attitudes and belief in themselves to make and exercise informed, confident and timely money management decisions”,
in their own lives. So it is a lot more than just facts and figures; it is about people’s social belief and their belief in themselves that they can do things.
When we look at the statistics, one or two of which we have heard, we see that one in six struggle to read a simple bank statement, 17 million cannot manage their own budget and only 26% of postgraduates are happy that they can manage their own money. To put it another way, that means that 74% of our most highly educated people in this country do not believe that they are capable of managing their own budget or that they have had the training to do so. It is not surprising that we have a problem.
“England has one of the largest gaps between the highest and lowest performing”,
out of all developed nations. I am very glad to say that England does not include Northern Ireland because we come out higher than that.
If you look at the Daily Mail—which I do because it is in the Library, although some may say you should not—its headline today is “Middle Class Pension Crisis”. Three paragraphs down it says:
“The Department for Work and Pensions says”— so it is not me and it is not even the Daily Mail—
“12 million people are not saving enough – despite more than half of them earning at least £34,500 a year”.
So we are not talking just about those on the minimum wage; we are talking about graduates, well-educated people who have gone into jobs, and there they are.
At the bottom of all this must be financial education, or lack of it. It has to be. We recommended more financial education in school. The noble Lord, Lord Patten, who sat next to me, said that he was not sure that schools could actually do all that. However, it is not me who is saying it; it is the Government who, in response to our questions, are going to justify what they are doing. They will, we can be sure, be quite good at batting it away.
However, the Government had every chance in the Financial Guidance and Claims Bill to put in schools. In relation to the single financial guidance body, Clause 3(9) sets out:
“The strategic function is to develop and co-ordinate a national strategy to improve … the provision of financial education to children and young people”.
There was an amendment to put schools into that. First, I must ask the Minister why they did not allow schools to go into that. Secondly, as they did not allow schools to go into it, where does he believe that financial education is going to take place? Is it going to take place over the weekend when people are going to cinemas? Is it going to take place after hours when they are doing other things? Who is going to do this financial education that they talk about, and where? Therefore, why did they not allow schools to go into it?
On one or two of the recommendations and on recommendation 6, which is all about education, the Government tell us that there is a new mathematics curriculum. As I have just said, the institute of whatever it was definitely does not believe that has had much result and, after all, mathematics must be at the very bottom of financial capability—if you cannot add two and two, you are not going to able to do any of the rest.
The Minister may go to paragraph 5.13 of the Government’s response and say:
“In 2014, for the first time, financial literacy was made statutory”.
We have heard that only 35% of schools come under this curriculum guidance. The response then goes on to justify the Government’s position:
“A number of schools also include the teaching of financial education in their Personal, Social, Health and Economic Education … provision”.
In my speech during the debate on this during the passage of the Bill, I said:
“Financial education lies within PSHE subjects but they are not statutory … Time devoted to PSHE has been reduced by 32% since 2011 because it is non-statutory”.
When people were asked why there was so little time for it, the answer was:
“We only have 20 minutes, and if we don’t do something on sexual exploitation or online safety”,—[Official Report, 24/10/17; col. 914.]
so they cannot do it.
The next thing that the Minister will probably say is that Ofsted really covers all this and is pretty good at it. The Government’s response states:
“Inspectors also look for evidence that, where relevant, English, mathematics and other skills necessary for pupils to function as economically active members of British society”.
However, this is what I said about Ofsted:
“Adrian Lyons said that Ofsted produces a state-of-the-nation education report. Our chairman, the noble Baroness, Lady Tyler, asked … ‘how much was there on financial education in the last one?’ … Mr Lyons’s answer was: …‘I do not know the answer to that, but I would be surprised if there was any, to be honest’”.—[Official Report, 24/10/17; col. 914.]
Ofsted says that it finds it difficult to mark things unless it has marks and there are investigations into it, but it only has to give extra marks if this subject is covered.
I seriously believe that the Government are not coping with this in education. The figures and statistics are outrageous for a country as developed as ours. Quite frankly, the reasons given in the response to our recommendations are simply very inadequate and wishy-washy, and they wander around without getting to the point.