What I told MPs they need to know about financial education and why we must SPEND some money…

What I told MPs they need to know about financial education and why we must SPEND some money…

I’ve been campaigning for financial education in schools for nearly five years now. Two years ago we had a huge victory in getting it on the national curriculum. The big question now is, has it been done well enough?

To answer that, the All Party Parliamentary Group on Financial Education for Young People, a group I was involved in setting up, is conducting an inquiry. I gave evidence to it a couple of weeks ago, and have now received the transcript of the session. The MPs who give their time to this do it because they support the principle of Fin Ed – so in some ways it is preaching to the converted. Yet, I thought it was worth putting on public record what I said and their response…

Please remember this is a transcript as opposed to written evidence, so it can be a bit difficult to follow at times and has somewhat imprecise phrasing; please see the big picture rather than picking phrases apart.

MINUTES OF PROCEEDINGS at a PARLIAMENTARY HEARING held in Committee Room 9, Houses of Parliament, London SW1A 0PW on Tuesday 22 March 2016

(From the Shorthand Notes of:  W B GURNEY & SONS LLP)

Before:  

Ms Suella Fernandes MP, in the Chair
Mr Richard Arkless MP
Mr Alex Chalk MP
Mr Mark Garnier MP
Mr Julian Knight MP
Mr Huw Merriman MP
Ms Michelle Thomson MP
Mr Tom Tugendhat MP
Mr Craig Williams MP

Witness: MARTIN LEWIS OBE, Executive Chairman, Money Saving Expert.

CHAIRMAN:  I am going to start and other colleagues will join us. I am pleased to open the fourth and final evidence session of our inquiry into financial education in schools.  I am Suella Fernandes and I have been chairing the inquiry.  We have had a great array of witnesses from all sectors, from the education sector, the financial institutions sector, the money advice and enterprise and the financial education sector.  It has been very enlightening for all of us.  We are hoping to bring it to report and we hope to report in May.  There are other panellists.  I will introduce those who are present with me.  There is Julian Knight, Conservative MP for Solihull, and Huw Merriman, Conservative MP for Bexhill and Battle.  I am anticipating other parties to be here.

The theme of today’s evidence session is to focus on the strategic approach and financial capability.  Although financial education was included as a statutory requirement in the national curriculum in 2014, we want to assess the effectiveness of that inclusion, what the current needs are and what the challenges are to fully implementing the objective of increasing financial capability among our young people.

I am pleased to introduce Martin Lewis OBE as our first witness today.  He is a money saving expert.  He is Chief Executive and Chairman of Money Saving Expert, which is the UK’s biggest money website, founded in 2004.  He also hosts his own prime time ITV programme.  We are very grateful for your support of the APPG in the past and also of this inquiry.

Martin, my first question to you as Chairman is: how far have we come and what is your assessment of the current situation?

MARTIN LEWIS:  It is a very difficult question specifically for me as the guy who has been the big gob behind all this for a long time, in that publicly I am always very bullish about where we are with financial education and how important it was to get it on the curriculum but privately I am somewhat disappointed, and I need to be honest.

I thought long and hard before coming here about whether I would say that because I do not particularly want that to be a message that gets out to wider audiences, but it is important to have that message coming across to you.

We need financial education in the UK.  We are one of the world’s most competitive consumer economies and that means we have an awfully large amount of choices to make.  The people who have financial education tend to be better engaged, better informed and better able, and more rounded citizens and better employees if they get jobs, so it is important.

What we did in some ways was open the door to financial education, but the way it has been put in many schools, and of course there are the centres of excellence so let us ignore those, to be really honest, because I think we have to look at what has happened in practice, has been somewhat disappointing.

When I ask them most parents do not know their kids have financial education.  Many of the children do not know they are having financial education.  I am particularly disappointed in how it has been incorporated into the maths curriculum.

I sat with Liz Truss when she was Minister on this in the final negotiations about whether it would go on the curriculum or not, and one of my red lines if I could use some political language, was the idea had been that it would be put into the maths curriculum as examples of financial numeracy and the point I made at the time, which was agreed to, was it cannot be just a few financial questions.  You need to tell the pupils, “This is financial numeracy, this is financial education”, and you need to be using bespoke, contemporaneous examples.

If you are doing credit card APRs, you need a credit card leaflet from the bank that morning and actually be saying to them, “Unlike three men digging a hole and it takes them how many days, this is real, and when we say that your minimum repayment will take you 30 years and we have just worked out the maths that proves it, this is real”.  I do not believe that is happening in the vast majority of schools.  I believe what maths teachers are doing is using money examples but without giving any context as to what they really mean, without making them on a contemporary basis, and, ultimately, all that does is aid people in working out percentages and working out the maths.

One of the great benefits to financial education from a lot of the research we did is that it helps engage pupils in mathematics who would not otherwise have been engaged in it, and that is a lovely thing.  However, we also want to educate them about finance.  We could take the first year but I do not see any force or movement to change that.  Of course teachers are struggling with resources and we put a lot of different pressures on them, but if we are going to have financial education within mathematics, it needs to be done properly.

I will just read you from someone who teaches financial education and employability in schools when we asked for feedback.  She was ecstatic when we got it on the national curriculum but says in reality it is not happening in schools.  She is echoing what I have just said.

“One of most frustrating things for me is that it is part of the maths curriculum and is being taught by maths teachers but many are just looking at the numbers and the mathematical equations of finance.  They are not teaching the fundamentals about financial products, the emotions, the services, the long?term and short?term financial capability skills that are required.  Yes, that is also part of the citizenship curriculum, but again and again it is hit and miss in most schools”. 

I think we have, in truth, in many schools ticked the financial education box without genuinely ticking financial education.

You asked for a round-up summary of where I am.  Of course as someone who has campaigned on this issue for a very long time, when I hear in the Budget that all schools are to be turned into academy schools, which means they no longer need to follow the national curriculum by 2020, that makes me think was the whole thing a Pyrrhic victory.

What do we actually have to do now?  Do we have to go round to every head teacher in every single school and try to persuade them individually on a lobbying campaign that they must put financial education in?  I know some follow the national curriculum but the resources and backup are not there. It is arguable that in some ways getting it on the national curriculum was damaging because many people saw it as a job done instead of a job beginning.  We are only at the beginning of this.  I do not mean to do a depressing summary because lots of people, including myself, have worked very hard and put a lot of effort into this, but we must not be complacent because we are nowhere near in the place we should be.

CHAIRMAN:  That is really useful.  No need to apologise.  This is the whole purpose of this inquiry.  I should like to welcome Alex Chalk and Craig Williams.  What are the barriers then and what support is needed? 

MARTIN LEWIS:  I think the barriers are that we put it on the curriculum without selling it to teachers.  You need to win hearts and minds to get this done.  We could have done that and we have not done it well enough.  We have put it on the curriculum without providing proper resources.

Pfeg has done a good job, but it is a relatively small charity and a lot of its funding disappeared when it moved into Young Enterprise.  They have done the best that they can with those scenarios but there has been no proper government funding of this new tough thing that goes on the curriculum.  I have never been invited to speak at a conference in front of 10,000 teachers to tell them why this is the most important thing since sliced bread.  I would be delighted to do it and I would not charge them a penny – I’d even pay my own train fare!

These are things that should have been done when you launch a new subject.  We should have had discussions about best practice and, yes, we have centres of excellence but how do we spread those across the country.  Now with the challenge of the freeing up away from the national curriculum we really need to do the hearts and minds very quickly.  I am not going to go into what practical resources are and are not available.  You will have done that with people who know far more than me.

What I am good at is judging a mood and judging a moment.  Parents do not think their kids are getting financial education and it certainly seems that teachers and many maths teachers are doing financial education.  It is not a criticism of them.  We cannot expect them to do it without resources and selling it and knowing why it is important.  They are just doing some numbers and financial examples within the maths.

I think there is a real job to take this on a step further, explain to people why it is important and start to educate about how we should do it, why we should do it and what we really want, and make it really easy.  I cannot tell you the rights and wrongs of whether [teachers] lives are easy with lots of holidays, as some people say, or really difficult with lots of pressures and working all hours and never having any time off and having kids who are not paying attention.  I suspect the truth is somewhere in between.

The honest thing is if you want something new such as this that they were not taught at teacher training schools (which they are not) then we have to work a hell of a lot harder to get them to teach it properly and we have to give them more resources and more accessibility to get them to do so.

JULIAN KNIGHT:  If I could follow up on that.  An obvious suggestion is that teachers themselves are confident in financial education and that is a societal issue.  How do we remedy that? 

MARTIN LEWIS:  A small anecdote.  I once did an ITV show where I went into a school and taught kids how to save money.  It is what got me involved in this in the first place.  Then we sent them home to save their families as much as they could.  The biggest saving in the class came from the teacher (because I had to have a teacher with me dealing with kids) who saved £2,300 a year, which is evidence that there is always stuff to learn.

JULIAN KNIGHT:  Presumably on a mortgage? 

MARTIN LEWIS:  Exactly, and she sat there taking notes and listening.  What we have done is say let us put this on the curriculum, and people who do not necessarily have any experience have been asked to engage in it, and we all know in the first year we are lucky if they are one page ahead of the children.  Again, I will just point out that of course there are some wonderful teachers out there who are fantastic and who are miles ahead.

Teachers often feel that things are forced upon them, and that is a response I have had, so how do we get them to enthuse and engage in it?  We ticked a box.  I go back to what I said earlier.  We said we had financial education and told them to go and teach it.  They were never taught how to do it.  We did not put the resources out there.  We did not put resources into a national conference and video resources, explaining why it was important and what the really key points are and what we want the children to know.  We just said, “Go teach it”, and you cannot do that; it does not work.

HUW MERRIMAN:  Building on that, do you believe that part of the problem is that in maths it has been taught almost as examples rather than as a stand-alone subject?  In the same way that sometimes the BBC is accused of delivering religious programming by putting on a comedy rev and not having anything specific on religion, is there the same problem here, that maths is being taught and examples are being used from financial education but it is not specific and it is financial education in the maths class, as it were? 

MARTIN LEWIS:  I think we should have a financial education element of mathematics and we should say to the children when it starts, “We are now about to do financial education”.  You should say, “Everything that we are teaching you today is based on real?life examples that are happening today.  I am using debt as an example but it is totemic as opposed to specific.  “This is a leaflet from Barclaycard.  Here’s its APR.  Here are its minimum repayments.  I want you to calculate if you have got £3,000 on it and you pay in the minimum repayments, how long it will take you before you are clear of the debts”.

Then you discuss afterwards when they say it is 30 years, why is it 30 years, what are they doing, what do we have to understand?  It is the fact that as your debt reduces your repayments reduce so you are only ever covering the interest.  That is the lesson in maths but, actually, it is a pretty complex sum.  You need a spreadsheet in reality and it is more difficult than you think, as are many things in finance.

They are very good at understanding how to do it on a maths basis as well as a financial basis, but I think there is are old-school maths teachers out there who believe in the purity of mathematics as a theoretical subject.

I would stress again the research we have shows that by doing financial education properly, you increase engagement in mathematics as well as increasing knowledge of finance.  It is the two married.  Yes, it should be in a ghetto; it should be a subject; let us talk about financial numeracy.  We need that for employability right across the economy.  Look at the levels of mis-selling in this country and poor products.

We have spent £20 billion on PPI.  Had we had better financial education maybe it would only have been £10 billion.  That would have been a good start.  If you start to think of those numbers – and know I am preaching to the choir ? the amount of waste, the amount of consumer detriment, the amount of enormous debt problems we have in the country, the fact that we could not be bothered to put a few million quid into teaching it properly in schools when we launched it is really quite shameful.

CRAIG WILLIAMS:  Martin, you will understand better than most about the devolved nations and the skills and education.  We have four different education services in terms of governments around this.  Are there any examples across those four where you feel they have got it right there or do you think this is a UK?wide problem within those four? 

MARTIN LEWIS:  I do not think anybody has got it right, but I am not going to pretend I have studied the devolved system accurately.  Of course, we are going into a devolvement of 20,000 as opposed to four in future, and that again is a big concern.  That is an education point as opposed to a financial education point.

No, I do not think anybody has quite managed to nail it anywhere if we are really honest.  Some of the pfeg centres of excellence do it particularly well but they are specialists who go in.  Some of the ideas we had originally, if you go back to the last APPG report, you had a personal finance co?ordinator or a financial education co?ordinator in schools who would be there for marrying up the maths and the citizenship curriculum.  That is not happening.  We need someone in a school who cares.  I do not care whether they care because they care or they care because it is their job to care, but we need somebody who does care, and we need to enthuse and encourage them to do so.

CHAIRMAN:  What do you say to the challenge from teachers that if they are offering the national curriculum, there is already a really full working day and week, and that is even before they complete all their requirements?  They have PHSE and accountability and the Prevent duty, where they have to stop children looking at terror sites, and lots of other things, and then this is another one of these add?on duties.  As a campaign how do you think we overcome the workload issue or increased pressure on teachers? 

MARTIN LEWIS:  I hope this does not sound patronising so forgive me.  It is very nice to see new faces on this inquiry from the one that we did last time, but I need to revert to what the thinking was last time and the way it was structured.  The thinking last time was: how do we start getting this done with as little intrusion on teacher time as possible.  That is why it was an element within the maths curriculum and within citizenship as opposed to having financial education lessons.  Of course that is what I would like but I am a single-subject campaigner sitting before you now, and I would say that you prioritise what is important, and of course I am going to say this one is important.

Other people will sit here and tell you that nutrition skills and first aid are important too and they are.  I cannot answer that, but I can say that what we did is try to structure it in a way that minimises the impact and difficulty on teachers.  Again, it all goes back to some form of resourcing, some form of training, making sure it is in the teacher training schools.

It needs better information out there; better class examples; and decent budgets for the organisations such as pfeg and others who are doing it, rather than relying on people like me to fund them, to be absolutely honest.  I have very deep pockets but not as deep as the Treasury’s.  We have to look at how that works.  That is the honest answer.  You could do this if you enthused teachers, and especially maths teachers, to do this and they could see the importance and we gave them help – give it to them on a page or two of exactly how it can be done.

Would it really take so much if someone actually emails them the webpages they need to use of the contemporaneous examples that change every two weeks?  For organisations that is pretty easy to do and have those structures set up if there are budgets out there.  In economic terms we are talking pennies not pounds.

We are talking a few million here and there.  We are not talking hundreds of millions or anything bigger than that.  That is how I would make it easier.  Put it on a plate.  That is the answer.  Put it on a plate for them.  You can do that in this because it is quite homogenised in some ways.  The examples are the same.

MICHELLE THOMSON:  I am sorry I was a little late.  A couple of questions.  First, do you see any difference in the type and nature of schools that are providing this to a certain extent in some kind of education, albeit on an ad hoc basis?  I wonder whether there is a whole group of society that almost imagines that this kind of understanding is not for them.  Perhaps they might say, “I’m never going to have any money?” Do you see any distinction between that? 

MARTIN LEWIS:  I certainly do not really see a distinction in schools.  I will tell you one of the problems.  I am sorry I sound like I am beeping the same horn every time.  We do not know.  Trying to do studies of what is going on in schools is incredibly difficult.  I tried to pay for a survey a year ago and we could not get schools to partake in it and we could not even work out which schools were teaching it and which schools were not.  We are doing this in a lacuna of information about what is going on in schools.

I know you have a survey here in front of you, but we are not even close to knowing what is being taught everywhere; who, what, where and why.  In terms of the public perception of this, there is monumental public support for financial education.  When we have polled on it, it is 98% in favour.  There are a couple of per cent of people who think it is the parents’ job.  My answer to that is a very rigorous one.  This is about breaking the cycle of bad financial education and all that will mean is have the children of parents who do not get money not getting money.  How do we rely on it when it is a new subject, it is a new competitive economy and the parents never had it?

My daughter is going to have a great financial education, but I do not think that is an argument for not giving it to other children.  The answer is that, attitudinally, parents are very much in favour and, funnily enough – actually, it is not funny, it is quite right – the parents who have had the worst experiences with money, who are the most pro it, the sentence that comes up most when you talk to people about this, whether in social media or in person, is “I just wish they’d had it when I was at school”.  It is often the people who have very substantial debts who say that.

I think you are going to have the same problems if we put this in a bubble and say we are talking to the mainstream bubble of those who approve of education.  Once you start to get into those who are struggling with basic literacy and numeracy and who have come from somewhere where they are not even encouraged to learn at that sort of basic reading and doing numbers level, yes, you are going to have problems with financial education as well, but I do not think it is symptomatic of the issue of financial education; it is symptomatic of the attitudes to education in itself.

Above that, I certainly never see, apart from “the parents should teach it” argument (and I get why people say it but I fundamentally disagree) we just see parents who are very keen, and who write to their schools and go and tell their head teachers, “Why are we doing it? Why aren’t we doing it?”  They do not know what goes on in the classroom.  Of course there are all the lines, “Why on earth did we learn algebra?  Why did we learn geometry but we didn’t learn how much my credit card is costing me or about my bank statement.”  There is a bit of fairness to that.  I love algebra and geometry, but this is another element that we should be taught.  Two hundred years ago you were taught algebra and geometry because you were going to be an engineer.  In our service?based economy, understanding how credit and debt works is another skill that we should be giving pupils before they leave school.

MICHELLE THOMSON:  Just to follow on from that, a lot of examples as you have already used when we are talking about the difference between so?called good debt and bad debt, if you like ???

MARTIN LEWIS:  But that is citizenship not mathematics and that is part of the problem with this splitting of the curriculum.

MICHELLE THOMSON: The cumulative effect of bad debt.  If I said to my grandparents, for example, “Should it be taught?” I think even if they had not done it as a subject, in a sense everybody knew at their level at that age that there were tremendous risks around debt and almost a fear.  How much is that linked?  We know we have huge and really significant issues with rising consumer debt and yet we still have this gap.

MARTIN LEWIS: Grandparents are very dangerous beings indeed because what they say is, “Neither a borrower nor a lender be”, and that is not suitable for 21st century Britain for an 18 year?old because you will never own a home and you will never go to university, because we have what we call a student loan.  I do not believe it is a loan but we call it one.

If we listen to grandparents, we will try to avoid all borrowing, but if we go to university and what we have not said is that a student loan is the best form of debt, a zero per cent overdraft is acceptable but be careful and credit cards and payday loans are a nightmare, do not touch them, we just have a prohibition on all forms of borrowing.  Grandparents give very poor financial education, although they are very well meaning.  That is when we talk about parents.  That is what parents teach.  They say, “It is very simple: never borrow”.  That is just not right.  If we go around that room, there will be very few people in here who will not have some form of debt, even very savvy, intelligent general people such as yourselves, I am sure.  When we go on that basis that is why we need to have this in schools because we need to talk about it theoretically.  We need to talk about good debt, bad debt, that is absolutely right, but it is not no debt.

JULIAN KNIGHT:  I just wonder what you make of the involvement of the financial services sector within education and schools?  Do you think it is making a significant contribution?  Do you think it is tokenistic?  Do you think the financial services sector has a bit of a vested interest in keeping people dumbed down? 

MARTIN LEWIS:  Let me answer in reverse.  I do not think they have a vested interest in keeping people dumbed down.  I think the opposite: you sell more products to people who understand them.  I think they have a vested interest in making sure people are educated.  They do not necessarily have a vested interest in making them super savvy.  There are boundaries within that.  You want people who know what the products are and you want them to know they need to have a pension.  Those things are important.  Just to go back to the numbers on this.  We have just had the lifetime ISA launched and I have just been doing my analysis of lifetime ISA versus pension in the past two days.  That is not easy.  It is quite complex.  People are going to have to make those decisions and pensions is one of the biggest costs we have as government and we are not educating at any point how pensions work, only when you need to get them – and again budgets need to be thrown into this.

Going in reverse, I have always been very worried about financial services companies in schools, not the practitioners themselves, many of whom are very good and very well meaning, but with branding.  I struggle with branded banks inside schools which get children to set up accounts and then lock in their custom for 40 years.  I have a real problem with that.

Equally, since we got financial education on the national curriculum a lot of the funding from banks has been reduced, which has been a real hurt.  All the funding has disappeared from every resource.  You have probably heard this from other people.  That is since we got it on the national curriculum, which is why I say again it is Pyrrhic victory because they feel it should be funded by the state, and they are right, but the state is not funding it.  I am not averse to financial services in schools.  Declaration of interest is always good.  It does not work for a five year-old, I admit, but it does work for a 15 year?old in saying, “I work for a bank and our job is to do this.  I am in here and of course I would like you to use our products”.  I would far prefer to see five banks going into a school and doing a day where they are all competing to get custom.  That would be good financial education from my perspective.

Where we are at the moment, I do not want to put financial service companies off from going into schools, but I think there needs to be a level, certainly if they are using documentation of quality marking, independence and a discussion about what level of branding is appropriate and what level is not, because we need to be very careful that it is not just a sell tool.  I do not want anyone to take away that I am saying that is the main reason that they do it because I think most of them are trying to do good, but I think it is very tempting to have brand creepage going into this.  There needs to be guidance and rules and independent quality assurance if we are having big financial services players going into schools.  They should not be setting the agenda; they should be reflecting the agenda that is set impartially and independently.

HUW MERRIMAN:   Looking at there being only so many hours in the day with the curriculum, do you think that this subject should be prioritised above, say, religious education and citizenship?  That is my first question.  Secondly, you touched on forced academisation by 2020.  Do you fear that in terms of this subject or is that an entrepreneurial culture shift?

MARTIN LEWIS:  I will do it in reverse because I will think about the difficult one and what I am going to say on that one later.  What was the phrase, you verbed it: academisation.

I really feel that financial education is a universal good and there are very few children who should not be learning about this for any reason.  We start to get down to priorities being decided by people based on budget and resources and if I were a head teacher of a school, and I wanted an easy life, and I did not have anyone who was particularly good at teaching financial education because they have never been taught it in teacher training academies, or anywhere else and no one had a passion about and they were not good with their money, I would not do it because it is easier not to do it, not necessarily because I do not think it should be done, but we know life is difficult, and there are certain things that we should really try and promote.  I get that a school might want an engineering or sciences bent or to focus on arts and drama.  That is fine and there is parental choice within that.  This is a universal life skill, and I am one of those people who is very strongly in favour of life skills being taught in schools, primarily the life skills that parents will not teach and you will not learn externally, and especially in an area such as this where the most financial education kids get is in the three?minute ad breaks they see on the television channels, and that is pretty horrendous, so we have a lot of messaging to counter.

Where it fits with religious studies and citizenship, we currently have it as part of citizenship and I think it is a good element.  I am not sure I like the name “citizenship” for it but it is a catch?all.  You could call it life skills if you wanted because that is what we are really talking about.  I think it fits well within life skills to an extent.  Certainly the attitudinal skills to money fit well there: good debt versus bad debt as opposed to how you calculate the debt and would it not be nice that the two go together.  Do I really have to answer where it fits with religious studies?

[Craig Williams MP shook his head]

HUW MERRIMAN:  The reason I ask it is teachers say they have to pack so much into a day —

MARTIN LEWIS:  Craig said no and I am going with him!

HUW MERRIMAN: If you think of things as ancillary perhaps, which ones would you knock out?

MARTIN LEWIS:  Let me answer it in a different way.  I think if you did a poll of parents, 85% to 95% of parents would put financial education above religious studies.

HUW MERRIMAN:  Thank you for answering that.

MARTIN LEWIS:  If you would like me to, I will ask them.

HUW MERRIMAN:  I am grateful.

MARTIN LEWIS:  What I am saying is I can do that poll.  I could do it on Twitter as soon as I leave here and get 5,000 answers.  Would that not be fun?

[In a twitter poll done afterwards the results were…]

Would you prioritise financial education or religious studies on the Curriculum?
Financial Education 75%
Religious Studies 3%
Don’t do either 1%
Both are important 21%
Total votes: 9,358

 

HUW MERRIMAN:  It is certainly a topical point about how you fit these things in.

CRAIG WILLIAMS:  We are doing a study on the Work and Pensions Committee about intergenerational fairness and one of the things that is coming out of in fact every Committee report in Work and Pensions is financial education, and it is across the ages.  I know we are focusing on how we can fix this problem by getting in very early, but financial education needs to be a lot more holistic than just in schools because we have failed a couple of generations now. 

We are seeing that and you talked about some of the recent banking scandals and perhaps they would not have happened if we had greater financial education.  How do we do it more broadly?  Of course we have to focus on schools and get it right for the next generation, but we now have a couple of generations, or my generation. 

MARTIN LEWIS:  I always start with the schools because fixing people when they are older because they are not professionals at learning; the children are professionals at learning.  It is interesting.  I would not necessarily teach pensions too much in schools.  Financial education is more about teaching questions than answers, if we get it right.  It is about teaching you how to think about money so you know the right questions to ask and where to get the answers, not necessarily telling you what the answers are when you are 16, because pensions will not be the same at 16 as when you 40.

If we did nothing else, it is teaching them that whenever you do anything, buy anything or sign up for anything, go and do your reading, and say here is how to understand the numbers and here is how you understand how it works.  That is the core skill that we need them to leave school with.  Yes, it would be nice if they got a bit of car insurance and student finance which is more directly practical

For example, auto enrolment, I would not go into pensions too much.  My pension lesson for a 16 year-old is, “When you start work, if you put money into a pension which is saving money for when you are older, the company has to put it in as well, so while that means you will get a little less in your pay packet, you are actually getting a pay rise so if you say no, you are foregoing your pay rise”. There is your financial education lesson on pensions.  You do not need much more than to get that type of thing in the mind.

Once you start doing it for people who are older and once you start cutting across, the difficulty is you have no vehicle to force them to listen, which is why it is so important when you are younger.  Something that is really fascinating, whenever we ask people on Money Saving Expert what subjects people would like us to cover more and give more detail, it is pensions, and whenever we do anything on pensions nobody reads it.  I have had this with ITV as well, which wanted me to do an hour?long pension programme because they thought it was something that was missing.  I said, “I am very happy to do it but I want you to guarantee you will not judge me on ratings because I know it will be the lowest rating show I will do in a year.”  Everybody says they want to listen about pensions but they do not want to listen about pensions.  They say, “It is a bit boring”.  Your pension is a manana thing, even thinking about it.

CRAIG WILLIAMS:  Which is why we have auto enrolment.

MARTIN LEWIS:  Which I support.

CRAIG WILLIAMS: Do we have a potential here when you are rolling out things such as auto enrolment and instead of just going to schools talking to the parents as well. 

MARTIN LEWIS:  Schools have a good passion for community.  One of the dangers is always the man in the pub.  You can do it now.  When I headed the task force on student finance information, and just to put it in context, our budget was £50,000 to educate the next two years of people who were going to go to university, which was subsidised by my own money because I thought I could not do it, so there we go.  When we did that, we focused on those people who would be going to the next year and their parents and thought, “Forget everybody else; it is too big a job”.  We told them to ignore the man in the pub, and for those people we got the message across about how it actually works. That is very important and we managed to educate them properly on a non?partisan basis, thinking about the practical finances.

I think we need to do some of that in pensions.  There are many bad issues with pensions.  I know it is not what we are here to do, but the word “pension” is a bad issue to start with.  It is my theory that we should have called them pension endowments, like mortgage endowments.  When the mortgage endowment went wrong, nobody blamed the mortgages, but everyone blamed pensions and the reputation of pensions died, which is why the lifetime ISA (even though you are probably better off putting your money in a pension unless you are a self?employed, basic rate taxpayer) may well succeed because it does not have the name “pension” attached to it.

You have all those difficult historical legacy issues to overcome which is what makes pension education particularly difficult.  I think education is needed and there needs to be a campaign to get it out there, but I think there is also a look of who does the education.  I have had this in other areas.  Banks really are not trusted.  Governments are only marginally more trusted than banks. There is an issue, if you are going to do it, about who does it and how you do it and how you get the message across.

MICHELLE THOMSON:  Just touching on that, the good news is that the Scottish Government is currently one of the highest trusted governments, so a wee plug there.  Picking up on something there about skills, which you touched on, and behaviours.  I would appreciate your further thoughts.  You have been saying that people should be almost challenging everything, asking the questions and doing their own research.  Do you see something structured equally between actual skills – how to work out compound interest using APR – and behaviours as well? 

MARTIN LEWIS:  If you take a very simple lesson, first of all, you work out how much it is going to cost you and then you spend 20 minutes challenging the kids to find the cheapest that is on the market right now.  That is a classic behavioural example of what should be done in financial education.  That is what I did when I taught it myself in my experiment: always make it practical.  Kids love the challenge that goes on there.

Behaviour is crucially important.  None of us is a perfect consumer and we all get it wrong.  If you had spoken to me when I started in 2002?03, I would have said we live in an adversarial consumer society: our company’s job is to screw us and our job is to screw them back.  That is what you would have got from me 14 or 15 years ago. I do not say that any more. First of all, I do not say “screw” any more.  And what I say now is a company’s job is to make money from us – there is nothing wrong with that ? our job is to try and keep it in our pockets.  I also understand there is a good sector of society which is not capable always of doing that, whether due to mental capacity, temporary mental health issues or simply because they have not slept enough last night because their baby was crying.  We have to be reasonable about the way people behave.  It is far more about pointing people in the right direction and understanding that the market is competitive, which is another element that should go in there.

Yes, we always need to change behaviour because most people do not behave rationally when it comes to money, and none of us ever will.  In the City they still have confirmation bias going on in their trading and, as Mark will know, these are some of the most highly skilled people in finance out there.  At the basic level, the misunderstandings, and I probably should not say this, politicians have some blame to bear for this because policies are put out that play on public misunderstandings. That is certainly true in the student finance arena.

I am going to take an example of Labour but it is not a party political point.  When you see a policy that talks about dropping tuition fees from £9.000 to £6,000 to help lower-earning graduates when the only people who benefit are higher?earning graduates, it is based on a fundamental misassumption of how the situation works.  All parties are guilty of it because parties will play to the lack of education on finance out there.  I understand why, because it is easy, but it should not be done and maybe a better educated populous would enable you to give us better policies that were not based on knee?jerk reactions.

MARK GARNIER:  My apologies for being late.  This is a very, very general question.  You were very involved in the last report the APPG on Financial Education published and you gave a lot of evidence.  Do you think we are anywhere near where we should be of what you envisaged?

MARTIN LEWIS:  I have answered that already so I will do a summary.  “No” is my answer.  Not even close to what we thought was going to happen.  The biggest issue is we have not won the hearts and minds of teachers and we have not done that because we have never tried to win them.  We have just put it in a tick?box.

MARK GARNIER:  How do you do that? 

MARTIN LEWIS: First of all, you do a campaign to teachers.  You go out there and talk to them all, by whatever medium you can, whether it is at a big conference, teacher training colleges, whether it is videos, live video streaming, and you tell them why it is important and you try to win them and persuade them.  It is a sell job.

The second thing you do is give them resources and you put it on a plate for them so it is easy.  Teachers are overburdened, or certainly they say they are, and I tend to believe them, but the fact they perceive they are, then they are anyway in terms of a problem in getting extra things done.  You do not make them do so much hard work.  You put it all out there on a plate.  We put something on the national curriculum but we did not provide any resources for it from the state education budget.  I do not understand how that works and that is a problem; we have not resourced it.  To put something on the curriculum and then try to rely on what is effectively third sector and private sector resources to make it work does not seem a sensible way to do it for me, especially when you look at the cost benefits of doing it.  The amount we are talking about is trivial.  I would think you could do an amazing job for £25 million or £30 million a year.  I am making that number up but I think it would be something of that ilk as a guide.

MARK GARNIER:  The benefit will be?

MARTIN LEWIS:  The benefit will be nothing for a decade, and that is important to understand, but after that there will be better educated consumers who have fewer bad debts, less mis-selling, who are more engaged, with better employability.  I go back to that point I made earlier.  In the 18th and 19th centuries when we were an engineering nation across the world, geometry and algebra were very important, and they still are in the science and programing world going forward, but in the service economy we are moving towards so is money and finance, both in the employability and competitiveness stakes.  We have this stress on enterprise education in the UK.

There is no problem with that, but one of the best ways to be an entrepreneur is to understand how consumers work, and we need to focus on making us good consumers.  Good consumers and good entrepreneurs build a good economy.  Good entrepreneurs and poor consumers build a one?sided economy that leads to unfairness and starts to mean we have to have lots of regulation and protection mechanisms for the people who are not clever enough to do what they want.

MARK GARNIER:  Do you think consumers are following advice?

MARTIN LEWIS: If you put £20 billion of mis-sold PPI in the context of £25 million a year, and that is one subject.  Those are the type of levers we are talking about.  I would say it would be a good gamble and I think I could certainly persuade taxpayers of 2 pence a year, or whatever it is, for everybody to up their taxes to go towards it.  This is not a threat, it is a promise, because I am here and we are working together, but you have to put it in those terms and the fact we did not do it is very disappointing to me.

MICHELLE THOMSON:  A final question: what are other countries doing that you are aware of?  Who is the furthest ahead, for example? 

MARTIN LEWIS:  I will leave that one to pfeg, if I may.  It is not what I study.  I am very UK-focused.

CHAIRMAN:  Martin, thank you very much for your time.  It has been really informative and I think we have all had a great opportunity to quiz you and thank you for allowing us to share your wisdom with us.  I am sure it will feed into the report.  Thank you very much for your time and we hope to see you at the launch or in the future.

MARTIN LEWIS: Of course.  Thank you.