Tackling UK's Debt Crisis

StephenMilne Mon Jan 08, 2007 at 03:05:06 PM GMT Print-friendly version Facebook

With Britain's personal debt levels at over a trillion pounds is it time to put a financial literacy GCSE on the national curriculum?



While this might sound like a peripheral area of policy for these pages, it is currently the subject of fierce wrangling between the financial services sector, the Treasury and the Department for Education and Skills.

Let's not be coy about this, there is something inherently fitting in the vision of an incoming Prime Minister Brown announcing that there will be a new, obligatory GCSE in "prudence". Can you imagine what a feat of social engineering it would be to create a whole generation of mini-Browns, all referencing sustainable borrowing rules whenever cadging a tenner from their parents?

However, this is not a Brownian conspiracy to propagate the understanding and popularity of neo-classical endogenous growth theory. The IFS School of Finance is funding research by the University of Manchester into an AS level in personal finance being run across the country. While research is still at an early stage, Dr Pauline Davis and Dr Sue Ralph report that students on this one-year course develop a significant improvement in "self-efficacy", which, unlike general confidence, is an indicator of a student's faith in their own ability to perform specific tasks, such as calculating compound interest rates, choosing a mortgage or credit card or keeping track of their bank balances.

Yet, if it's such a good idea to have a financial literacy GCSE, why hasn't it been implemented? The Financial Services Authority has indicated it doesn't believe financial literacy merits an entire GCSE, instead pressing for a seven and a half hour module in the maths curriculum, though this is not thought to be a reaction to the prospect of an army of teenage "gonzo" financial advisers hitting the streets. Having to balance both a tight budget and an already-packed 14-16 curriculum, DfES seems warm to this option.

However, the IFS School of Finance remains committed to a GCSE. Chief executive Gavin Shreeve told me, "It doesn't matter what you do in life today, you need to know how to manage money. Like English or numeracy, financial literacy is a core skill". I asked Lawrence Gold, independent financial adviser and presenter of BBC's "Your Money or Your Wife" what he thought of the idea and he put it more prosaically, "It should be taught in schools and it should be compulsory. It's not like art or geography - how do they really help anyone in later life?"


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Tackling UK's Debt Crisis | 4 comments (4 topical)

Re: Tackling UK's Debt Crisis (#1)

by Simon Morley on Mon Jan 08, 2007 at 04:23:45 PM GMT

This is well overdue I would say. Although, I would suggest a somewhat different detailed structure. I'm no expert in secondary education, but know something about the content and HE, so don't be too critical if I'm a little bit off track!

It seems to me there should be a citizenship GCSE. My understanding is that although this is in the national curriculum it is somewhat of a 'cinderella' subject - because it is not examined. Finance should be a key part, as should politics and law.

This would then be a natural route into A levels in finance, politics and law, as well as GNVQs around business, public services and legal executives. I think politics and law already exist, though I'm not sure how widely taught the are, but not finance. This would work somewhat like physics, in the the GCSE is more conceptual, while the A level introduces calculations. What is effectively a huge  new science has developed over the past 20 or 30 years, on which the city is now based, but mainstream education has largely failed to keep up. This is a least in part why there are so many more financial products available than there were even 20 years ago. Also it seems to me this is at least in part why law, politics and finance professions are dominated by people who are privately educated, or have well educated parents, because there is so little exposure to them in the educational system. This may have changed now, but it was certainly the case when I was at school in the 80s.


Re: Tackling UK's Debt Crisis (#4)

by mt999 on Wed Jan 17, 2007 at 03:14:09 PM GMT

I think in order to tackle the debt crisis you have to have an economy which doesn't benefit the indebted so much. We have low rates, very high house prices/rents and easy availability of credit.

With housing so expensive people inevitibly get into more debt.


[ Parent ]

Re: Tackling UK's Debt Crisis (#2)

by alexhilton on Tue Jan 09, 2007 at 11:15:39 AM GMT

Hmmm - this looks familiar...

...I presume the posting was deliberate.    :)


Re: Tackling UK's Debt Crisis (#3)

by Simon Morley on Tue Jan 09, 2007 at 06:25:39 PM GMT

I guess it probably gets more exposure here though? Who reads "comment is free"?


[ Parent ]

Tackling UK's Debt Crisis | 4 comments (4 topical)