Businesses must back our campaign
BRITAIN faces a huge challenge. Innumeracy and financial illiteracy are rife in this country, in an appalling indictment of years of failed educational policies. Tragically, millions of people are unable to grasp fully even the most basic of financial products, such as mortgages or savings accounts. In an era when self-reliance and financial independence are essential, this is a catastrophe and means that many families don’t have the basic tools to run their lives properly. Millions are unable to work out how much they need to save to retire; others don’t understand the consequences of using finance to buy cars or how much extra they would end up paying. Even the basics, such as the concept of compound interest, are a challenge. There is also a limited understanding of economics or of how to value assets, such as property, making bubbles much more likely. It is a shameful failure.
This lack of understanding – caused by defective state education, a media that is loose with numbers, and insufficient effort from the financial services industry – is one reason why there is so much distrust of the City. For the good of the public, the UK’s future competitiveness and the reputation of financial firms, it is imperative that this disastrous situation be addressed. Encouragingly, Michael Gove, the education secretary, will today outline in an excellent speech ways to begin to tackle this by placing maths and statistics back at the heart of the curriculum. But government action isn’t enough: the City must also step in with extra money.
For a while now, I have been looking for charities for City A.M. to endorse as part of our campaign to bolster financial literacy. There can be no progress in the popular understanding of finance without improvements in mathematics skills, so to boost financial literacy means investing in better and more maths. I would therefore urge readers to support Mathematics in Education and Industry, a brilliant charity which operates the Further Maths Support Programme. This trains teachers in state schools to deliver the advanced maths A-Level qualification, provides tuition directly to students and offers a range of online learning methods. Run by Charlie Stripp (go to www.mei.org.uk and see profile below), it has done wonders with limited funding.
The aim ought to be to double its budget from £1.5m to £3m over the next year. This means raising an extra £1.5m in private donations – readers, please take out your credit cards. Gove will today back our appeal to the City to raise funds for the FMSP. He protected the project in the Spending Review and won’t cut its funding – but in these present austere times, the City must put its hands in its pockets to help it increase the good work it already does.
Financial institutions should see donations as a good way to help rebuild their reputation. In the short-term, donations would deflect from the populist anti-City rage. In the longer-term, better educated consumers would make better decisions, reducing mis-selling or mis-buying scandals; people would be more comfortable with financial products, and finance in general, and therefore less likely to view banks, funds and insurers as inherently evil or corrupt. Most important of all, however, building a more numerate and financially literate society would help millions of people regain control of their lives.
allister.heath@cityam.com
Follow me on Twitter: @allisterheath