Clause 42 - The consumer financial education body

Financial Services Bill – in a Public Bill Committee at 3:00 pm on 15th March 2012.

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Question proposed, That the clause stand part of the Bill.

Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury)

The clause is about the consumer financial education body. We will discuss the specific issues concerning the money advice service of the consumer financial education body in considering schedule 15, but I want to take this opportunity to regret that the clause does not contain provisions to extend financial education to the compulsory part of the national curriculum. That subject has been widely debated in recent times and it would have been ideal, if we are discussing the creation of and legislative arrangements around a consumer financial education body, to have taken the opportunity to think about how the school curriculum should properly give an opportunity for young people to learn about basic money management and basic savings and borrowing arrangements in society. After all, those will be some of the biggest decisions they will take later in their lives.

To establish a consumer financial education body as though it will singly have the capability to educate the public more widely, simply through the auspices of that organisation, misses a massive opportunity to use our school system and our educational system more broadly. The Minister will know that Martin Lewis of “Money Saving Expert” fame has an e-petition on the Downing street website with more than 118,000 signatures. The  issue has been debated on the Floor of the House and the point ought to have been accepted by the Government by now.

Photo of Mark Garnier Mark Garnier Conservative, Wyre Forest

The hon. Gentleman will be well aware that I am acutely interested in the point he is making, because I am vice-chairman of the all-party group on financial education for young people. Can he think of a precedent whereby a Bill unrelated to education, such as a financial regulation Bill, contains references to the education curriculum?

Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury)

I do not think it would be impossible for the Bill to cover the Treasury’s part in this terrain. Perhaps the Minister could have had a provision broadly to review the work of the Treasury with other Departments in promulgating wider financial education. That would have been a welcome addition to the clause. The hon. Member for Wyre Forest may have a point about education legislation, but it does not preclude amending other Acts. This Bill amends five or six Acts of Parliament, so it would not have been impossible to frame it in that way.

If we step back from the process, our constituents will see that we are debating a Financial Services Bill, and I am sure they would anticipate our discussing the extent to which we can educate future consumers so that they are savvy and literate and can properly grasp what charges will fall on their shoulders if they engage in financial transactions. It is always astonishing—many of the financial and debt advice organisations constantly find this—to discover the phenomenal amount of ignorance among sections of the public about pensions, mortgages and savings products. We urgently need to get a grip of that issue.

Photo of Mark Garnier Mark Garnier Conservative, Wyre Forest

The hon. Gentleman will be grateful on that basis to learn that the all-party parliamentary group has done a great deal of work on this area and is making a lot of progress towards achieving the goals he is after, without amending this Bill.

Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury)

Indeed, that is one way of making a change. I commend the fantastic work the hon. Gentleman’s all-party group is doing. It is one of the biggest—if not the biggest—all-party groups in Parliament. Given that the Chancellor of the Exchequer said before the election that he supports financial education in schools, it does not fall entirely without the ambit of the Treasury’s responsibilities. The hon. Gentleman will know that Departments that want to make changes often come up against the resistance of certain Treasury Ministers who, let’s face it, have a habit of saying no to even the simplest and most unobjectionable suggestions. I want the Minister to put on the record where we stand in the continuum of progressing with financial education.

Photo of Fabian Hamilton Fabian Hamilton Labour, Leeds North East

While paying tribute to the excellent work of the hon. Member for Wyre Forest in the field of financial education, does my hon. Friend agree that we sometimes tend to over-compartmentalise when considering legislation? His points on ensuring that future consumers are far better educated in financial matters are borne out by the “Financial Education & the Curriculum” inquiry of September 2011, in which 90% of teachers agreed that financial education should be integrated into the curriculum.

Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury)

Absolutely. That is the most important point. Schools are not precluded from covering some of these issues, but they have any number of obligations placed upon them. Members of Parliament have been surveyed on this issue in recent times, during Backbench Business Committee discussions and elsewhere, and financial education is the sort of thing that ought to have happened. The previous Administration proposed to change the curriculum arrangements in law just before the last general election, but I understand that the current Education Secretary did not want to adopt the proposal, so the matter was dropped in the wash-up. We hope it will be resuscitated.

Photo of David Rutley David Rutley Conservative, Macclesfield

Notwithstanding the comments of the hon. Member for Leeds North East and the general support on both sides of the House for financial education, does the hon. Member for Nottingham East not see that the Bill has to be about addressing financial service regulation? That is its purpose. Throughout our discussion of many of the issues raised by Opposition Members, there has been a tendency to widen out the Bill more and more and to get away from its obvious focus.

Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury)

I understand the hon. Gentleman’s point, but we have not tabled an amendment on this clause. The discussion is about creating a consumer financial education body, and I do not think it sufficient to vest the serious task of broadening awareness of financial products in that one body. A properly framed clause on consumer financial education ought to make some reference to schooling and the wider curriculum. Some 90% of teenagers worry about cash daily, and 25% of teenagers think that an overdraft is an easy way to spend more than they earn. As my hon. Friend the Member for Leeds North East alluded to, not only teachers, but two thirds of the public think that financial lessons would have helped them to address today’s financial challenges.

There is wide consensus on this issue, and I want to press the Minister. When will there be progress on financial education? When will legislative proposals be introduced? When will he properly respond to the excellent work of the all-party group? We want some dates and timelines, please.

Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury

The hon. Gentleman is from a tradition that sees the imperial reach of the Treasury everywhere. He thinks we should intervene in the fine detail of other Departments’ policies, but financial education is a matter for the Department for Education, which has responsibility for setting the curriculum in England. The Secretary of State for Education, my right hon. Friend the Member for Surrey Heath (Michael Gove) and the Minister of State, Department for Education, my hon. Friend the Member for Bognor Regis and Littlehampton (Mr Gibb) have responsibility for those areas.

There are currently many financial education initiatives in schools, sponsored partly by the Personal Finance Education Group and partly by individual institutions. We have asked the Money Advice Service to take a strategic overview of the initiatives in schools and colleges so that we can ensure best value for money. Some support is in place for such provision. The area is not covered directly by the Bill, but the Money Advice Service has taken it on in the context of strategic overview, which I welcome. However, the matter is properly for my right hon. and hon. Friends.

Mark Durkan rose—

Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury

The hon. Member for Foyle seeks to intervene—this is, of course, a devolved matter. I am happy to give way.

Photo of Mark Durkan Mark Durkan Shadow SDLP Spokesperson (International Development), Shadow SDLP Spokesperson (Work and Pensions), Shadow SDLP Spokesperson (Foreign and Commonwealth Affairs), Shadow SDLP Spokesperson (Home Affairs), Shadow SDLP Spokesperson (Justice), Shadow SDLP Spokesperson (Treasury) 3:15 pm, 15th March 2012

I thank the Minister giving way and for sharply pre-empting my point. It would not be appropriate to have curriculum reference in the provision for precisely that reason, but that does not make the issue any less important. Bearing in mind his comments, does he agree that financial education at curriculum level could be usefully taken forward by the British-Irish Council, which covers eight jurisdictions in these islands, all of which have a different experience of and involvement in consumer finance?

Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury

That strays beyond the narrow confines of even this Bill. I am sure the hon. Gentleman will find ways of promoting that agenda. As I said, we asked the Money Advice Service to provide co-ordination and strategic oversight of what is happening in schools, which is helpful.

We need to tackle literacy and numeracy issues. According to an FSA survey, 50% of people do not understand what 50% means, Mr Leigh.

Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury

It means half, to my mind. That survey demonstrates that by tackling some of the literacy and numeracy issues we face, we would open the way not only to financial education but to a range of educational matters.

Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury)

I am sorry if the Minister is slightly frustrated by my gentle asking of a question. I specifically want to extract from him the current Government policy on financial education in the curriculum. Following our debates, where are we with the proposal? When will the change be made? Can he give us a timeline? When are we likely to see reform?

Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury

As I often say in these debates, the matter is under review. My frustration is not caused by not wishing to answer the hon. Gentleman’s questions, but we need to make progress on what is a helpful part of the Bill, and I am sure he will want to discuss the next schedule too. I have said as much as I can on the topic, and I shall write to him only if I have any more to add.

Question put and agreed to.

Clause 42 accordingly ordered to stand part of the Bill.