Bill Jamieson: Ministers in dunce’s caps on financial schooling
Five years after the global financial crash and its dramatic warning on the dangers of debt, we are little nearer to stepping up basic financial education where it matters – in schools and classrooms across the country.
There are, on authoritative measures, 4.3 million over-indebted households in the UK. Of this total, 2.1 million will actively seek debt advice. A large chunk of those who do not do so run the risk of having their lives blighted for years by worries that their finances are out of control.
It would be comforting to think that effective action has been taken to educate young people on debt and that these gruesome totals are at least not increasing. Unfortunately, survey results released last week suggests no such improvement.
Scottish university undergraduates expect to graduate with £12,500 in debt on average – nearly half the UK average of £23,700 despite Scottish students attending the nation’s universities not having to pay tuition fees. The research, conducted by YouGov on behalf of the Money Advice Service, reveals that close to seven in ten have taken out at least one student loan and almost a third are accumulating overdrafts. And despite the common use of loans and credit, 47 per cent of students are worried about the levels of debt they will run up by the time they leave university.
The problem, of course, is much more widespread than university students struggling to make ends meet. But it illustrates the extent of the gap in basic financial education and the compelling case for more education in schools to help all school-leavers to cope with their finances.
There is no formal place in Scotland’s school curriculum for basic financial education – How are basic interest rates calculated? What is an APR? What are the basics of weekly budgeting? We accept sex education as an important part of the education system’s responsibility for preparing young people for adult life. Yet we offer no such help on the financial facts of life.
Helping to fill this gap in recent years has been the Stewart Ivory Foundation Finance for Sixth Formers Project. The main subjects covered include budgeting, savings and debt, together with some long-term issues such as pensions. I caught up last week with the Stewart Ivory programme chairman Hamish Buchan and project manager Paul Heward. Despite positive testimonials from schools, they continue to find it difficult to win Scottish Government support for their work – all of which is financed by private donations.
The progress report for the 2011-12 financial year is impressive. The programme’s financial education officers – previously employed in teaching or financial services but now self-employed and independent – delivered the equivalent of 710 “standard” sessions to 190 schools and four universities or further education colleges, making a total of 194. The 2011-12 school visits included 17 schools in Aberdeenshire and four in Morayshire, as well as ten in Inverness and the Highlands. Feedback continues to be excellent.
The total expense of the programme came to just £141,600, the bulk of this being fees and travel costs for the officers. Administration costs came to just £17,268. Based on coverage of an estimated 15,000 students, this comes to a cost of less than £10 per student and under £200 per session delivered. This strikes me as being outstanding value for money and certainly very hard for the formal education system to beat were it to be taken in-house.
Heward says: “It does seem odd that we plough on with courses on trigonometry and calculus, but 100 per cent of the population need numeracy skills and basic ‘everyday arithmetic’.
“Our work is funded entirely through charitable donations. But this should not be a charitable function; it is part and parcel of basic education.”
The programme would like to reach all of Scotland’s schools rather than just 190, but to do so it would require matched funding from the government – and so far there is no sign. Some in Holyrood may be tempted to look to the government-funded Money Advice Service (MAS). But the problem here, says Heward, is that they tend to be retrospective. “They are at the tail-end of what we are trying to do – and that’s to stop people getting into financial trouble in the first place.”
Others have questioned whether the troubled quango’s budget is being spent as effectively as it could. Two months ago its £350,000-a-year chief executive Tony Hobman resigned following criticism from Lord Turner, chairman of the Financial Services Authority, that his salary was “somewhat too high”.
The MAS has spent an astonishing £20 million on promoting the organisation, yet it has little public recognition. It also developed an expensive website which the Independent newspaper has bluntly criticised as “breathtaking in its patronising nature”.
All this would seem to make the Stewart Ivory case for matched funding a slam-dunk. It is low cost. It has attracted glowing testimonials. And its work is more critically important than ever. I certainly do hope Holyrood will think again on this.
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