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Pupils sign up for lessons in finance skills
Debt The new middle class disease Special report by Lizzie Murphy and Joanne Ginley
Charity helps school teaching plans
TWENTY years ago it would have been hard for a teenager to sign up for multiple credit cards.
These days it is a different story and one Yorkshire school is using the classroom to ensure pupils are taught about how to manage a budget and the risks of credit, alongside more traditional subjects such as history, geography and sciences.
Pupils at Lady Lumley's School in Pickering
learn about budgeting and banking, how to write a cheque and other aspects of finance from the age of 11.
The school is working with independent charity the personal finance education group (pfeg), which has been awarded 15m over five years by the Financial Services Authority (FSA) to embed financial understanding into the National Curriculum.
It hopes all secondary school pupils in England will eventually be taught good financial skills under the scheme. A consultant has been working with teachers at Lady Lumley's to help them develop a teaching plan.
Assistant head teacher of Lady Lumley's Lorraine Phippen said: "We want students to be much more financially aware.
"When I was at school I cannot remember doing anything like this.
"I have got nothing to suggest that there are lots of our students in debt but what we are doing is educating them so that as they move into the world of work they can manage their finances to make sure they do not get themselves into debt."
Pupil Tom Brickman, 13, who lives near Scarborough, said he had been looking at taxes, how they were levied and what they paid for.
"I think that you have to be careful with your money. If you did not know much about it. you could get into money trouble," she said.
One pupil, Tom Brickman, said he was in favour of financial education.
"I think it eases your worries because you understand it more and it doesn't seem as scary," he said.
Another pupil, Tessa Knowles, 12, has been learning about how to manage a monthly budget. She has looked at writing cheques and dealing with bills: "We have had opportunities to write cheques in full. I had never written a cheque before, not until the lesson."
Tessa says she keeps an eye on her pocket money but thinks it is important to learn financial skills at an early age to acquire the necessary knowledge to manage money after leaving school.
Regional director of pfeg Pam Eccles says Government guidelines stated the subject should be tackled in a school's curriculum. But she believes some schools do a good job and others don't and her group – with Government backing –is seeking to ensure all teaching is of a high standard.
She said it was important students were taught not just how to budget, but also to understand the risks behind any of their financial decisions, to ensure they reached informed choices.
"It's helping them understand what financial information they need and then how to apply it," Mrs Eccles added.
"If you look what the financial situation looks like for the under-40s it is very different to the way it was some twenty or thirty years ago.
"A young person aged 18 can clock up credit cards at an alarming rate without much reference to their financial situation and
the important thing is
to let people know how to manage their financial situation."
Education in money matters 'so crucial'
POLITICIANS said last night they believed education could be the key to unlocking Britain's debt problems.
Both the Liberal Democrats and Conservatives have called for more debt education for the young and more emphasis on tackling the issue.
Julia Goldsworthy, Liberal Democrat deputy Treasury spokeswoman, said: "Although our calls for more financial education are slowly being implemented, there should be greater focus on tackling this problem before it occurs.
"A genuinely independent financial advice network should be established to help people before financial hardship takes hold."
Vince Cable, Liberal Democrat Treasury spokesman, added: "I would like the Government to be more proactive in preventing people from getting into debt."
He said there was some financial education in secondary schools but it did not explain the context.
He added: "At the moment primary school teachers are being trained in a few basic principles to teach children. It's all very late and small and scattered."
Shadow Chancellor George Osborne recently unveiled a new blueprint to tackle debt and financial exclusion. He suggested all schoolchildren should be taught how to handle money and financial matters between the ages of 11 and 18, which will now be specifically examined by the Conservatives with various organisations.
Mr Osborne said: "For the Conservative Party, tackling personal indebtedness and financial exclusion is an issue of social responsibility. We need government, organisations and individuals to work together."
A spokeswoman the Department for Education and Skills (DfES) said personal finance education had been covered in the National Curriculum since 2000. She said efforts were also being made to design a new functional maths qualification, which would include a financial literacy element.
MP urges credit unions as solution for poor
AS THE debt mountain grows, more credit unions could be the solution, according to one Yorkshire MP.
Leeds West MP John Battle believes they both help the poor and are an ethical, local option for those who want to invest.
He said: "I am a member of two credit unions. They are a form of community banking that supports the local community and it's not just banking for those that have money difficulties but banking for anyone.
"They regenerate local economies – some credit unions are lending money to set up local businesses."
Mr Battle chose to invest because they are local and help people in communities he represents. He has been an avid campaigner against rogue doorstep lenders who often charge extortionate rates to the poor.
In 2005 figures from the Financial Services Authority (FSA) show there were 45 registered credit unions in Yorkshire and the Humber including unions in Wakefield, Sheffield and Hull. The latest figures from the FSA show over 600,000 adults and children are now saving with credit unions.
The 2005 figures revealed adult membership of 535,881 and total junior savers of 77,299. In 1995, there were 161,500 adult members of credit unions; this means that membership has grown by over 330 per cent in a 10-year period.
A credit union is a financial co-operative, owned by its members and run by them for their mutual benefit, as a means of saving and providing low-cost loans.
Each credit union has a "common bond" which determines who can join. The common bond may be people who live or work in the same area or people who belong to a church or trade union.
The Leeds City Credit Union is one of the largest in the country. It started life as a scheme for a group of employees at Leeds City Council, and next year celebrates its 20th anniversary.
It currently has more than 18,000 members and offers a range of services from savings accounts to loans to a Christmas club.
Pensioners struggling as all generations turn to borrowing
MANY pensioners on fixed incomes are now struggling with debt as all generations increasingly use credit.
Debt counselling charities are reporting seeing an increase in people aged 53 and over who are seeking help – with one 56-year-old racking up a balance of 412,000 on 57 credit cards.
Over a million pensioners have an average debt of 15,500 and 70,000 retired people have debt between 50,000 and 75,000, according to insurer Prudential.
The Consumer Credit Counselling Service (CCCS) has seen a rise in the number of those over 53 seeking help for credit card arrears.
A spokeswoman for the charity said: "Between 2003 and 2006, the proportion of clients aged 53 and over seeking financial advice from CCCS has grown from 19 per cent to 23 per cent of all clients counselled."
People aged 53-59 who seek help from the charity have the highest outstanding credit card debt, owing on average 17,697 on credit cards, in comparison to those in their mid- to early 30s, who owe on average 7,706. Those 60-plus owe 15,686.
The charity said anyone who faced large debts later in life often had to take extreme measures to get back on track, with clients cashing in assets or filing for bankruptcy to get out of their financial black hole.
The first plastic payment cards were issued to a million selected customers in 1966. When the cards were introduced, only half of Britons had a bank account.
Experts say debts are set to soar because each new generation is more and more comfortable using credit to pay for goods and services.
Mark Allen, a personal insolvency specialist with Grant Thornton, said there was also another growing trend. Traditionally, families or people who did not have money to pay for cars or a new kitchen went without because borrowing money carried a social stigma.
But there was growing evidence that generations that would once have gone without were being seduced by the lure of credit in their 50s and 60s to pay for luxury holidays that they would once have dismissed as being unaffordable. They were also helping pay for their children's education or help them onto the property ladder. "The biggest growth (in debt) is in the 45-60 range and my concern is that more older people are taking on debt but also younger people are going to be more comfortable about taking on debt so problems in that age range will continue to grow."
Angus MacIver, Prudential UK director, said: "It's worrying to think that such a large number of retirees have debt over 50,000, of which the interest charges will be eating into their well- earned retirement funds."
He added: "Retirement is about enjoying life, taking up hobbies, going on holidays, not being restrained by your bank to ensure you keep up repayments on your debt."
Affluent snared in trap of credit
nFrom Page 1
credit card users are still paying off their bill from last year's festivities, according to MoneyExpert.com.
There are increasing signs that consumer debt levels are becoming overstretched, as latest Government figures showed a record number of people in England and Wales became insolvent between July and September.
Forty four per cent of bankrupts are women, and the figure is expected to break the 50 per cent barrier by 2009.
Mr Allen added: "Many home-owners are teetering on the edge of a financial black hole.
"I have no doubt for any quarter of a per cent that you put on interest rates there is going to be an increase in bankruptcies."
MPs say the Government must do more to tackle the crisis.
Liberal Democrat economy spokesman Vince Cable said: "The Government has shown alarming complacency on this issue. It has failed to provide independent financial advice and financial education is poor."
The Tories have put forward a series of proposals for dealing with debt, including a debt action plan; clearer information from credit card providers about the cost of credit card debt; and a seven-day cooling off period for store cards. This would mean that a new store card could not be used until seven days have passed.
Bankruptcies hit new record in Yorkshire
THE number of people declaring themselves bankrupt in Yorkshire has reached a record high.
Nationally 15,416 people went bankrupt between July and September this year – a jump of almost 27 per cent on the same period a year ago – the county accounting for more than 1,500 casualties.
Statistics from the Government's Insolvency Service show that in Yorkshire 1,547 people were declared bankrupt in the period – 621 in West Yorkshire, 468 in North Yorkshire and the Humber region, and 458 in South Yorkshire.
It is a leap from the same period a year ago. In North Yorkshire and the Humber region 391 people were declared bankrupt in the same period in 2005, 488 in West Yorkshire and 352 in South Yorkshire.
The figures reinforce national predictions that the number of people going insolvent in 2006 will exceed 100,000 for the first time.
Bradford West MP Marsha Singh said: "Every day I get a letter of some sort through the door asking to sign up to a credit card. I know debt is a huge problem and it is increasing and extremely worrying."
The director of the Debt Advice Bureau, Stephen Rose, said there were a number of reasons behind the high figures. Home-owners were remortgaging to the hilt, while consumers were using credit cards and loans to supplement a lifestyle they simply could not afford, he said.
The number of women going bankrupt is also increasing. Forty four per cent of bankrupts are now women, up two per cent in the last year.
Accountants Wilkins Kennedy suggested the root of the problem was that women's financial independence had grown but their salaries had failed to grow at the same rate. Another significant factor is the rise in the number of single women supporting children on their own, often with little financial assistance.
There is also a growing number of divorced men with second families who are expected to provide a certain lifestyle for their families with less money.
In another worrying development the number of people taking out Individual Voluntary Arrangements (IVAs) has more than doubled to 12,228 nationally – an increase of 118 per cent on the corresponding quarter for 2005. IVAs allow a debtor to come to a formal agreement with creditors over the repayment of outstanding money without going through bankruptcy.
Debt charities have criticised IVA providers for marketing them to people who would be better off going bankrupt or coming to an informal arrangement with creditors. KPMG's Steve Treharne said: "The increase in the number of people entering IVAs is causing concern. Several leading institutions have raised concerns at these record levels and have commented on the limited extent to which the advice sector is regulated."
According to the Consumer Credit Counselling Service counsellors, bankruptcy is the best solution for about 15 per cent of their clients and IVAs are the recommended choice for just three per cent. But Jon Bartman, of IVA specialist Money Debt and Credit, denied IVAs were being over-sold. He blamed financial institutions.
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What to do if you need help
Don't ignore the problem: it won't go away and the longer you leave it, the worse it gets.
Free advice is available.
Contact your creditors and explain you are having difficulties. It is better to see if those you owe money to will accept a small amount.
Only agree to pay off
debts at a rate you can afford.
Get advice before borrowing to pay off your debts – a loan could be secured against your home and you may lose your home.
If struggling with store or credit cards stop using them.
If you have lost your job, or are off work because of illness, check whether your repayments are covered by payment protection insurance.
Check you are claiming all the benefits and tax credits you can.
Make sure you tackle your priority debts first – for example,those which could mean losing your home.
Where to go for help:
National Debtline: Free telephone helpline: 0808 808 4000 or visit www.nationaldebtline.co.uk
Citizens' Advice Bureau: details in local telephone directories or visit www.citizensadvice.org.uk
Consumer Credit Counselling Service provides free debt counselling. Call 0800 138 1111 or visit www.cccs.co.uk
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Friday 10 February 2012
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