27
Examination of witnesses
Peter Tutton, Stephen Handley, Aimée Allam and Michaela Kirsop.
Q72 The Chair: Welcome to the Numeracy for Life Committee, and welcome to our witnesses today. I am going to open the batting with my question. Each of our colleagues on the committee will then have their own questions, and there will probably be some supplementary ones.
I am going to open my question to Peter first. To what extent is low numeracy a factor in the problems on which your clients seek advice? In what way does it interact with other factors that your clients are dealing with? Has this changed over the last five years or so?
Peter Tutton: I will start by saying that this is quite a complex relationship between numeracy and, if you broaden that out, what we might call financial capability. I come from StepChange, which is a debt charity. We advise people on debt, so that is my main interest.
There is a relationship between financial vulnerability, numeracy and financial capability, but lots of things go into that. It is not a one-to-one relationship. Financial literacy and numeracy are really important. When we think about some of the reasons why people get into debt, there is vulnerability to debt, which is often about things such as low wage, insecure incomes and high living costs. Then there are trigger events such as people losing their jobs or falling ill, et cetera. That is about financial resilience and how well you are able to cope with those things.
Those things are not dependent on numeracy or financial capability, but that is an input in terms of your ability to be confident with numbers and to understand financial things and credit agreements. Bits of our research show that things such as credit agreements and their complexity can make it hard for people to understand, and can play a role in making people’s debt problems worse. Probably more important there is people knowing how and when to get help, which is also a numeracy question.
The deeper bit where numeracy plays a role is that there is quite an established body of research on links between low numeracy, low educational attainment and low wages. Low wages and low income are some of the big drivers of problem debt. There is a bit there about attention to numeracy and people who are in low-paid work. Work by the National Numeracy campaign, which you will probably be talking to, shows that, if you can get people’s confidence with money and with numbers up, it helps job progression. Job progression means wage progression, and that reduces debt vulnerability.
Just as an overview, it is an important part of the picture. Lots of things lead to debt vulnerability. In terms of close things about how people deal with credit and with the complexities of finance, it is one of many things, but there are some deep themes in there as well around underlying causes, which relate to things such as inequality and social mobility.
Michaela Kirsop: I am in agreement with a lot of that. We have no doubt that numeracy is a key building block to good financial capability. We know that, and we have evidence to support that. As the gentleman said, it is just part of a few other important and interconnected building blocks, which all interact with each other, so the picture is a bit complex.
We know that attitudes towards money and confidence play a really important role in being financially capable. You can imagine that, if you are overconfident but do not have the skills to back it up, that is going to be an issue and, vice versa, if you are underconfident, you may have problems opening those bills and feeling confident to make decisions about them. They all play a role.
The Money and Pensions Service’s role in this space certainly focuses on that broader picture of financial capability. Primarily, this is about adults. It would be remiss of me not to say that one of the things that we really focus on, and that we know is important, is how attitudes and confidence in numeracy develop at an early age. We do work in that space. We look at where young people are. They are in the home, they are in the wider community, and they are at school. Numeracy in those spaces and within the education system, alongside good financial capability, and the development of healthy attitudes and good behaviours, really does start early, so it would be remiss of me if I did not say that.
In terms of adults, it is important that the information that we provide is accessible. I certainly have a few things around that that will probably come out in the course of the questions. It is not just about them having all of those skills. We have to assume that many of them do not. The accessibility and the ease with which we provide the information is really important as well.
Lastly, we have a role in looking across the wider ecosystem in terms of where people are going to receive that information. We know that it is not just MaPS. People are getting financial guidance wherever they are accessing services, really. We also have a role, and it is important to make sure that those organisations and practitioners are also equipped to be able to deliver that money guidance effectively and easily for that person sitting in front of them.
Aimée Allam: I agree largely with what has been said, and I will be really brief. I want to highlight a specific issue around confidence, which is that it disproportionately affects women. Women show up less financially literate across life stages, across the world, but, when you remove the “don’t know” option from key financial literacy questions, they perform 33% better, so we need to think about that intersection there when we already know that they are facing other headwinds.
There has recently been an increase in the complexity of the maths required for some parts of the population when it comes to casualised and precarious labour. If financial literacy and education is built for, let us face it, one man and one salary every month, and an increasing proportion of the world is operating by working perhaps some salaried work, topping it up by working for platforms, and experiencing chunky, lumpy incomes, that requires a higher level of numeracy to navigate. It requires bespoke, modern financial literacy tools, which we have perhaps failed to offer so far. I will just throw that out there.
The Chair: That is a very good point. Thank you.
Stephen Handley: A lot of what I wanted to say today is probably going to be based off my role as a helpline adviser, as well as one of the managers there—but also a personal experience of debt, if I can share that.
Low numeracy means low confidence when dealing with money. You are more likely to ignore things. You are more likely to ignore letters and make poor choices. With social media, as well, and also online adverts, it is targeted adverts. If you do not understand the basics of your own budget, you are going to make poor decisions.
What I would love to see are ways in which people can increase their own confidence by starting with simple budgeting techniques and also better interactions with their creditors if they fall into problem debt. That, in turn, builds confidence. From personal experience, if I was to speak to a bank many years ago, it would always result in a bad experience, and then I would just completely shut off.
Have big banks and creditors identifying people maybe with poor numeracy skills, and then appropriately signposting to places such as the Money and Pensions Service, MoneyHelper or GOV.UK. I do not think that that is identified at any early stage when it comes to poor numeracy or low numeracy skills.
Q73 Viscount Stansgate: Good morning to everybody. I would like to address my question to Stephen first, if I may, and then the others can come in afterwards. What impact do low numeracy skills have on the way in which you offer and communicate advice, support and information to those who are seeking information or are in financial difficulty? Can you describe how you might have adapted that advice to different clients over the years? I hope that makes sense.
Stephen Handley: Initially, it was to try to find out what their numeracy skills are, and that usually comes throughout the course of us obtaining information from them—asking about their incomings and outgoings and who they have debts with. We always ask them if they have any vulnerabilities that they would like to share, but not many people feel open to that at an early stage.
The poor numeracy or low numeracy skills will become evident as the process goes on. We will ask questions such as, “How much are your gas or electric bills?” People often do not know. They even struggle with their income, and then that enables us to identify that maybe their numeracy skills are low, so then we would adapt our advice and the way we go about things by breaking it down as easily as we can and doing it in stages.
Again, to highlight what everyone else is saying, it is about building the confidence of that person to deal with their debts. Someone in debt is just looking for that off-ramp at every opportunity to disengage, because it is an uncomfortable process to go through at times, especially if you have had a bad experience in the past.
It is about building the confidence and doing it in stages. You do not want to overwhelm someone with, “I need this, this, this and this bill. Off you go and ring them”. It is often done in stages, and that is completely different from what it was maybe five or six years ago. We have seen a massive uptake in people who you would say have low numeracy skills presenting themselves to us.
Peter Tutton: I would very much agree with that. Also, there is a thing here about understanding barriers to seeking help. One of the problems that we have, according to one of our stats, is that half of our clients have been worrying about their debts for a year or more before they seek debt advice. That period is when harm really builds, because people are trying to cope through different means, often by using credit that is unsustainable and unaffordable, their mental and physical health problems deteriorate, and their relationships and their work concentration and ability get worse.
There are real benefits to dealing with those barriers to get people help earlier in terms of a high reduction in social costs. One of those barriers, as Stephen pointed out, is the fear of creditors. People are scared to reach out because they do not know what is going to happen. There is a part here of numeracy as well as practical knowledge in terms of knowing that it is okay to reach out.
This thing about confidence is really important. People worry about their credit scores and things like that as a barrier. If you go and talk to your creditors and say, “I am in debt”, you will end up getting defaulted at some point. If you pay reduced amounts, that affects your credit score. People worry about that, so there is a bit there about barriers that is important.
Once people get to us, it is important that they can use the advice that we give them, and that what we give them is intelligible and usable, and they can act on it. Debt advice produces a lot of complicated information, as you might imagine. There are all sorts of different debt solutions that we have to provide information on and so on and so forth, and lots of numbers involved, such as budgets, et cetera.
There are two things that we do on that. We audit our comms. We audit all the information we give. We audited the language in the written communication. We found that we had stuff that we were giving to people that you needed a PhD to be able to understand. We got that down to a reading age of 11, which is something that everyone can understand.
Also, we have some Plain Numbers practitioners. You will know Plain Numbers. It trains practitioners, and we have some practitioners. We are looking at the comms and how we interact with clients to understand what this is for, who the audience is, and what the objective of this communication is, putting ourselves in the reader’s shoes and auditing the way that we present numbers in a way that makes them as intelligible as possible.
Things that help in doing that include having focus groups with our clients, so a bit of co-design, and talking to people who are going to be the audience and the users of our advice. Can they understand it? What would make it more intelligible? It is not perfect, but it really helps. It means that people are much more likely to be able to understand. If they can understand what we are telling them, they can use it. If they can understand the principles of budgeting and the numbers in it, they can use it. The step from advice to building your practical money skills starts with the advice being intelligible and acted upon.
The key thing there is whether that works across, for instance, the entire financial services industry, and the extent to which financial services are doing similar processes, particularly for goods and services aimed at lower-income, more vulnerable, lower-numeracy and lower-skilled consumers. How well are firms offering those services, auditing their comms and looking at the way their products work to make sure that people can understand them?
Aimée Allam: Can I speak more to the financial education side of things? At FLIC, we do not offer regulated debt advice. We have recently published 67 bite-sized adult learning videos. It was a gnarly and laborious process. Simplifying language without redacting the information that is in there or patronising people is hard, but it is possible. We did it with the help of the journalists at the Financial Times, but also with regulated financial advisers. It is possible to write a script that explains complex mathematics in a way that people can consume.
There are multiple facets to that. It is important to make sure that you have the accessibility requirements when it comes to even just text on screen that reinforces the idea of making sure that that is legible to people with the most widely diagnosed learning difficulties, which then intersect with low numeracy.
The videos are bite-sized. They are in simple English. We have guided, verbally explained, step-by-step calculations only where it is necessary. We do not throw in maths for no reason. We put it in where it is really a powerful piece of information to understand.
I will try not to talk too long, but one of the most powerful calculations that I certainly wish I had seen when I was younger is one that we talk learners through on video, with an approachable talking head who says, “If you are on £1,500 a month in your job, and you forgo £36 of cash in your pocket, this is what that looks like with government tax relief when put into your pension”, and we work on the average auto-enrolment figures. Then we show them what that might look like compounded over 30 years, and that, to me, is where maths can be really powerful on the education front.
It is possible to explain it step by step, with visuals on screen. When we talk to people about how to prioritise their debts, and you are talking about snowball or avalanche methods, where you are asking people to compare interest rates after they have done the urgency and the, “What are the priority debts?” part, you can show that with the right-sized bubbles. You can show how things compound.
There are ways to reiterate mathematics in a way that is much more consumable to ordinary people. Part of that is making sure that they do not have to sit through a half-hour lecture. It is three to five minutes, and then you give them a break and the opportunity to come back.
Viscount Stansgate: Where are the videos available?
Aimée Allam: They are available on our website, which is ftflic.com. It is the adult learning hub, but we have partnerships to distribute them with the National Health Service and with the Armed Forces, and we are doing a specialist project for gig workers—those people in precarious employment and casualised work—separately.
Michaela Kirsop: I would echo and agree with everything that people have said so far. At MaPS, our job is to provide people with up-to-date, easily accessible money guidance that they can action. Our services all take those things into consideration. We work with Plain Numbers, and I absolutely agree with everything that people have said there. Using real-world information really helps people to access, digest and use the information that they are getting.
Just picking up on a couple of things that may not have been said, something that we know is incredibly important is moments that matter, so making sure that you reach people at the right time and in the right place. We organise our information around life events such as having a baby or getting a divorce, or problems with housing. Whatever the life event may be, we organise information around those things because we know, from research and evidence that we have, that that really matters.
As I mentioned briefly, we also work across the wider system. One of the things that the others have mentioned is the importance of the practitioner. If it is a practitioner sitting in front of a person who needs guidance, understanding their abilities, their cognitive function and their numeracy skills are all critical.
We also know that that trusted intermediary relationship is critical to people receiving advice and being able to act on it. One of the things that we do is work with practitioners and organisations to help them deliver good money guidance and increase the quality of it, no matter what sector they are in. It might not be their main bread and butter. They might be working in mental health services, in the NHS or in food banks, so we just give that help and support for the money bit, which is also critical.
The Chair: I ask you all to be as succinct as you can, because we have quite a lot to get through. Lord Hannett?
Q74 Lord Hannett of Everton: Good morning. There are two aspects to this question. They overlap with the point about barriers, and I want to drill in a bit more on that. Could you expand a bit more on what the key barriers are to gaining financial literacy and improving financial well-being? That could go in many directions, and I would be interested in that. Going forward, what support in terms of maths, numeracy or financial education might have helped people avoid the problem that they face?
Aimée Allam: Again, I can speak to the financial education side of it. In terms of barriers to accessing, knowing who to trust is a key part of this. You want to remove friction. Put simply, there are a great deal of charlatans out there offering paid-for courses to help you improve your money, to build wealth and to learn to invest, so providing free, bite-sized learning is really important.
I am a huge advocate of video-based learning. Financial literacy information of an incredible quality is available in lots of places, but it is written down and requires both literacy and numeracy, so trusted video content is really important.
We need to go and meet learners where they are. They are on TikTok, on Instagram and on Facebook, amid a range of really bad actors, and it is incumbent on us not to shy away from it. You can develop a protocol for working in these spaces with content creators. To broaden Michaela’s definition of trusted intermediaries, there are some online. There are people who share authentic experiences.
We worked with StepChange on a debt awareness financial education campaign. We worked with individuals who shared just honest lifestyle content and had never done anything to promote crypto tokens or all of the things that the FCA is rightly clamping down on. They are in no way finfluencers, as they are referred to. You can shoehorn financial education into feeds and into spaces where young people and young adults—and older adults as well—are consuming information when they are relaxed and receptive before crises hit, in a way that is preventative and needs a more co-ordinated, large-scale effort across lots of our organisations.
Stephen Handley: The key barriers to gaining financial literacy from my point of view are, to drill back into it, that you have to, first, understand what you have coming in and what you have going out. Everything these days, when it comes to bills, is per calendar month.
One huge barrier is those who receive benefits. Universal credit is paid calendar monthly, but it is usually paid mid-month. Most people’s bills are at the end of or beginning of the month. State pension is paid either weekly or four-weekly. ESA is fortnightly or four-weekly. Child benefit is weekly or four-weekly. All the different benefits that people have are paid at different frequencies. It is really hard for someone who struggles with numeracy or maths to even get a grip of what needs to be paid when they need to pay it, because their pay dates do not fall in line with when the bills are. To me, that is a huge barrier.
I do not know why it cannot be changed so that the pay frequency is in line with how people’s daily lives are. It is really difficult for someone to get on that ladder of being financially illiterate when there is a huge obstacle already in front of them, which is not being able to work out when they have their income coming in, with all their bills coming out on different dates.
Peter Tutton: I will come at it from the other end of the telescope and start with financial well-being. We sample and survey clients at three, nine and 15 months after advice, and track a number of measures of financial well-being. That tells us that interventions such as debt advice can really make a difference. We will find that, three months after advice, people have gone from being at crisis debt to saying, “My debts are now under control”, with a huge increase in well-being, but the picture is mixed.
There is another group of people who tend to be lower-income; we call them negative budget debt clients. It is much harder for them to move forward, and their well-being stays really low. Financial well-being is really what it is all about at the end of the day. It is about how the tools and skills that people have available to them enable them to get from a difficult place to a place of well-being and financial health. It is difficult and there are constraints. That is the first thing to say.
To Stephen’s point, practical things to help people manage, such as when payments happen, and adaptability from firms, are really important. For some of our clients and their budgets, they are £1, £2 or £10 a month, either way, from being able to pay for stuff or not. Small things can make a very big difference, and that is worth focusing on, both in terms of how people understand things but also how firms interact with their customers and take an approach of, “People may need help to do things, and we may need to make sure that their payments work”.
In terms of financial knowledge and numeracy, a really important thing is how people know where they are. One of the barriers to getting debt advice is people not realising, until they are really in trouble, that they are getting into trouble. They think that their situation will be easier to deal with than it will be, or that they are in a better position than they are.
The first thing is about how we put people in a situation where they can get tips or alerts that they might be getting into the red here before they do, because it is hard for people to know where they are.
Secondly, what does healthy look like? To Michaela’s point about things such savings and so on, once we get people for advice, 15 months after advice, about 80% of our clients say, “It is really important that I manage to build up savings, so that, if something like my cooker or my fridge breaks down, I can replace it”. The process that they have gone through helps them to understand better what healthy looks like and, if we could do that earlier, it may give people different options and choices to deal with things that happen to them.
For instance, if people build up savings, and their cooker breaks down, rather than using, say, high-cost credit that starts a process of debt that gets bigger and bigger, you can manage it in a different way and it solves a lot of harm. That is really important as a framework to put this in, in terms of those key things of knowing where you are and what healthy looks like.
The other bit of that is that people know that savings are important. We found that, 15 months after advice, something like 60% of people we surveyed said that they were starting to put money away for a rainy day, which is good. When we asked the question, “Have you saved enough to replace a cooker or fridge?”—£300 or so—only 9% of people had managed to do that, so there is another point here about policy support.
We are big fans of things such as the help to save scheme, and of the work that Nest Insight has been doing on encouraging workplace savings. A bit of this is about helping people understand where they are and giving them tools, skills and confidence. A bit of it is about how service providers, employers and policymakers also give some help to understanding that it is hard for some people to build up healthy things such as saving, and they need a bit of an extra helping hand to do that.
Michaela Kirsop: I am going to be really concise. I boiled it down to three things. In terms of barriers—and there are barriers around all of these things—you need to know that you need help in the first place. It sounds really obvious, but that involves having that awareness, education and healthy attitudes. You need to know in the first place.
Secondly, you need to know where to get that advice or guidance, and that you are able to trust it. There are quite a few things that we can do about that.
Thirdly, you need to be able to act on it, which we have covered a little bit in earlier questions. It is that point around accessibility—the snippets, the case studies, and all of those kinds of things.
I am going to keep it really concise. There is quite a lot in those three things that involve, as I say, that wider ecosystem, but those are the key barriers that we need to overcome.
Q75 Lord Blackwell: I would like to ask a bit more about what these sources of information and support that are available are. I will start with Michaela. We have heard from Aimée that FLIC has a number of videos available. There are lots of other opportunities to get information and support. If you are somebody with low numeracy skills, how easy is it to understand and navigate these, and to get support? Is the support normally one-off to help somebody in a particular situation, as opposed to building skills that will carry them through other situations?
As a further point, to the extent that these people with low numeracy skills will need tailored support and advice, to what extent are the regulatory risks around providing advice a barrier to helping people?
Michaela Kirsop: First, as you were saying, the challenge is certainly not a lack of information. There is lots of information out there. It is about whether people can find and trust that information when they need it the most. As I was talking about earlier, people being able to access at the right time and in the right place is really important. The skilling-up of that wider cross-sector system of all of those practitioners is really important.
It is a complex information landscape, and so that trusted and impartial guidance is increasingly important. As Aimée touched on earlier, it is a growing and complex marketplace. If we think about the so-called finfluencers, it is certainly an area that we are supporting the FCA, and really watching and trying to understand how that market is emerging and developing. We are trying to support and evolve how we help people navigate that complex market of information, but there is certainly not a lack of information.
One of the important things, which Stephen touched on earlier, is having some core principles. We all use organisations such as Plain Numbers. We all think about the reading age of the information that we are giving and how people receive it. If you had a whole ecosystem doing those things, that landscape would be much easier to navigate for people.
Lord Blackwell: If you had to tell people what the best sources to go to were, are there some that stand out?
Michaela Kirsop: I am bound to say ours; we are an arm’s-length body. MoneyHelper is the government-backed guidance service to help people with money across the UK.
Aimée Allam: Money happens to people whether or not they engage with it. You have a financial life whether you grasp the nettle or not. There is the question of, “How do people find information?” but high-quality information providers should find people as well. This is something that we do, and something that technology offers us the possibility of doing in an ever more granular, evidence-led way.
I mentioned our social media campaign. We have made our videos, but it is not about building them and hoping they will come. Using digital advertising, we are actively finding people who want this information. You may well be aware that it is now possible to find specific search terms that people are looking for, and even ones as simple as “make money quick”, “cannot pay my bills this month” or “investment to make £4,000”. Whatever it is, you can find those people and target advertising with high-quality information at them, just as the bad actors are targeting them with bad information. We need to go and find people. Everybody has a financial life, and we can give them good-quality information.
You inquired about tailored advice. I do not have a fully formed solution here by any means, but I want to alert you all to the fact that one of the most powerful ways to get seemingly tailored advice is using AI. In terms of FT FLIC’s strategy for financial education, AI literacy—understanding what it can and cannot do and what its limitations are—is forming a big part of the financial education that we want to offer adults.
If you go to something that scrapes the internet and asks it, “What should you do with spiralling problem debt?”, it is going to give you the results based on profit-making IVA companies that have skin in the game. You are going to get skewed results; worse, it is going to sound compelling. It is also soon going to use your first name when responding to you. We need to be aware that this is a big part of the shifting trends in the future for where people go to for information.
Lord Blackwell: Is that outside the regulated process if it is AI?
Aimée Allam: It is not regulated financial advice. Some of them will have caveats that will say, “This is not financial advice”, but lots will sound very compelling about what you should do. Perplexity or Claude has launched a product that is available only in the US. You can plug in your account details and it will give you personalised financial information, and plans and budgets, and all of the things that we think might be quite useful. In the wrong hands, if you do not know what you do not know, they are quite powerful.
Peter Tutton: On the regulated point and the FCA, there is the Mills review at the moment, which will, I hope, be picking up some of these questions around AI and the regulation of financial services. It is a really good point. This is something where AI could be a massively helpful tool that reduces costs. Hardly anyone goes for advice because of the costs of it; it could reduce those costs. It could also do some things that change the market and cause exclusion rather than inclusion, with people using AI in a way that is not structured, such as bad actors. At a certain point, some of the AI tools that are embedded in things such as search engines may start to get monetised. How do you make sure that that does not create biases?
There is a really big problem about how people tell good information from bad information. There are good actors and bad actors out there. We are constantly plagued on search engines and social media by people pretending to be StepChange and luring them into stuff that is poor advice and poor solutions. It is a really good point, and there is some work going on that going on.
In terms of the support piece, we are seeing more and more people with complicated needs. Times are tough at the moment and we are seeing more people struggling with basic bills and very limited money, and who are quite hard to treat. We refer about 20% of people who come to us to other organisations for support on things such as mental health, benefits maximisation, and a whole bunch of other needs.
Michaela talked about the ecosystem. There is something there about charities loving to work with each other, but it is sometimes hard to do because of things such as funding and having capital to build and connect our IT together. We would look to Government to help us work together more closely so that, if people come to one place for help, it is very easy for them to be directed to other places for help in a way that means they have a good chance of getting there.
As a final point, you were talking about tailored help. You are seeing the FCA initiative on targeted support, which is this idea of getting people to invest more. They are looking at pensions and investment products. There is a really interesting thing there if we think about pensions. Because of auto-enrolment, we have a whole bunch of low-income, low-numeracy pension savers who are probably coming up towards deaccumulation. I am of that age myself, so I have seen how complicated the choices are. How on earth are they going to make the right decisions without financial advice?
There is a thing there about targeted support and the frameworks that firms are setting up to help people make good choices. How well will that framework take account of the needs of lower-income and lower financial numeracy and less financially experienced consumers? That is a really good question. There is an opportunity there and it should not be missed.
Stephen Handley: To mirror what Michaela said in terms of whether there is sufficient information out there, there is tons of information out there on debt and financial difficulty, but it is whether, when you search on Google for debt help, those first few sponsored links are trustworthy and whether they are unbiased or free. That needs to change. I am sure there was an agreement several years ago where, if you type in “debt help”, the first response is the GOV.UK page or the MoneyHelper page, but now it just seems to be filled with sponsored links to what we would call lead generators, which are only in it for one thing, which is to sell an IVA, to the detriment of the client.
Someone with poor or low numeracy will click on that first link because they think it is trusted. They will call whatever this organisation is, if it is an untrustworthy one, and they will be coerced into something that is completely unaffordable, as we see day in, day out.
There is a better mechanism than just having the first result being GOV.UK or MoneyHelper or whoever it may be. When someone calls who maybe has fallen behind, there is a referral process in place already that MaPS does, called the Money Adviser Network, which organisations have signed up to. It then feeds clients into a pool. Those calls are arranged and directed to different trusted debt organisations. That is a great entry point into debt advice. It should be looked at in greater detail and more organisations put on it.
I do not want to speak for them, but one of the reasons why it is not taken up so widely is because they do not want to overwhelm the service. I might be wrong on that and Michaela might be able to give more information on it, but the Money Adviser Network is brilliant as an entry point into debt advice. Like I said, when you fall behind on your electricity bill, you will agree to anything, and there are not really enough questions asked at that point in terms of, “Are you facing financial hardship or are you struggling with money?” It should be an automatic referral to seek some proper debt advice. At least you would know that your payments are affordable.
Q76 Baroness Garden of Frognal: I realise you have probably partly answered the question I was going to ask, but we are conscious that charities and organisations supporting people are often addressing the immediate crisis and concerns. Many years ago, I worked for the Citizens Advice Bureau for many years, and people would walk in off the street with absolutely any query that they had. The normal policy was that they saw the next adviser, but we had specialist debt advisers because we realised that continuity was really important for that.
Presumably, if people come to you, you treat yourselves as being their first port of call, but do you ever signpost people to any other financial organisations? Are there resources that are particularly useful in that respect?
Peter Tutton: As I said before, we signpost people out for all sorts of needs. I have worked in the Citizens Advice service, and StepChange works with Citizens Advice very closely. There is that need to get good referrals. There are some things that we are well equipped to do and some that local Citizens Advice is better equipped to do. Some people might need help for both, so how this stacks up is quite complicated.
The point on resources is a good one. We may see a big demand for people seeking help with debts because of the global situation that we are in now. Can we scale up quickly because of that? Do we have the resources to scale up? No. There is a question there. With the focus on more complicated needs, as we are seeing people in more difficult situations, it takes longer and is more difficult to solve those things.
You are right that there are some questions there about resources and how charities can be helped to link together effectively. If we have someone where we are dealing with one bit of their case, and they need to get to Citizens Advice or another support agency for a different need altogether, how do we make sure that we can do that without them having to tell the same story again and again, and that there is a good, maybe digital referral, if they can do that? It is all about how we build our infrastructure.
Aimée Allam: We do not offer regulated debt advice, so we spend a lot of time signposting. What would be really nice is a no-wrong-door approach for all services, and to be able to make cost-efficient warm introductions, so that people are not repeating themselves. My interest in signposting is that advice and education are generally treated separately. When we are offering the education, it is obvious that, when people need advice, we refer them onwards, but I want that return journey. You might be talking with somebody about budgeting, but you do not have the time to sit and go through the minutiae of their budget or how that might change and flex as they are facing variable incomes. That is the type of thing that other organisations may be able to help with, so it is about making a systemic connection between the two.
Stephen Handley: Signposting for financial education is often really difficult because it all depends on what is in their local area. Not all councils offer free-to-attend courses. There are organisations such as CAP—Christians Against Poverty. That has budgeting and financial management classes, but that is very area-specific. We could have a client who would be great for financial education or maybe just a quick course, but you are searching that local area and there is absolutely nothing.
At that point, you would be asking them to go and speak to someone more local with a bit more knowledge of that area. For a national advice charity such as ours, it is sometimes really hard to find that local support that is there. Every area is different, but there should certainly be more out there. Whether it is council-run or something such as that, it definitely would be useful so that we could signpost people to places like that, but we do struggle with things like that.
Baroness Bull: Chair, can I just really quickly pick up on a tiny thing from Stephen? You seem to emphasise the importance of face-to-face. Online, of course, is nationally available. Can I just pick up, very much focused on what is available person-to-person? Is that because that is a more effective training and upskilling method?
Stephen Handley: Where numeracy is a problem, we tend to find that people prefer face-to-face. It is just more comfortable. Online courses are great, but, when it is face-to-face, whoever is giving the course can certainly see if that person is understanding it. You could do 50 courses and not get a bean from it, because you are just not getting whatever they are trying to get across. That is why.
Baroness Bull: Thank you. Sorry for interrupting.
Baroness Garden of Frognal: Michaela?
Michaela Kirsop: I will just pick up on a couple of points. We recognise that guidance and advice need to work hand in hand. Financial education and guidance is all in the non-regulated space. We found that the mixture and the lack of training and resources for practitioners and organisations out there was absolutely huge and there was no framework. Where you are getting regulated advice, it is regulated, there is a really clear framework. People are giving guidance and education in a way that is not necessarily supported.
A good few years ago now, we created the money guidance competency framework, which is really key in all of this. It looks at the entirety and the breadth and depth of money guidance in any area that you could deliver it, whoever the practitioner may be. If you are talking to somebody about money, it shows you the competencies that you would need in that space, so that is quite significant here.
Thinking about signposting, there are some foundations that everybody needs, one of which is good signposting. It forms the basis for the foundations of our competency framework. It is adopted by, something like 20,000 practitioners and 300 organisations across the UK, and it forms a really important part of that guidance that they are giving people. It makes a really big difference.
Just picking up on something that Stephen was saying, as I said a bit earlier, we run a programme called Money Guiders, which is about that help for practitioners and organisations, and connecting them. We see that local networking and an understanding of local services in your area that can be tailored to the needs of your specific audiences are really critical. We have developed a community of practice as part of that programme. We run over 100 events a year for practitioners to get together and share information, and for people to come in and understand the local services that are available, which is a really critical part of the support for this system.
Q77 Lord Hampton: I have been struck by how many services, campaigns, schemes, strategies and organisations there are in this area. We have talked some more today. Michaela, you were talking about people getting financial advice where they are accessing services. Aimée, you talked about ftflic.com talking in partnership with the NHS and the Armed Forces. Peter, you were talking about Citizens Advice. Michaela, you talked a bit about a competency framework and money guidance. How do you work with organisations to share your learning and, particularly, best practice in this area?
Michaela Kirsop: As I just touched on, we run a whole series of online and in-person events exactly for that, to get people together to share best practice and information about services that are in their local area, and all of that kind of stuff.
We also have an evidence and insights hub. We do a lot of thinking about what works in this space, where there are gaps, and where we know that something is really effective. We have a role to do those pieces of research, to commission them, and to analyse other people’s bits of evidence, so that we can inform other parts of that system, be it financial services, the charity sector or whoever. Creating that evidence and research is a really important part of our role.
One of the strands of our strategic plan is to have a real focus on making sure that, when we are gathering that information and evidence, we are proactively going out and sharing it, and trying to influence others to do what works effectively. It is a really important part of what MaPS does.
Lord Hampton: Is that all available in one place?
Michaela Kirsop: We are developing our evidence hub at the moment. We do have an evidence hub, but it needs a bit of work, so that is one of the things that we are going to be focusing on this financial year.
The influence thing is not in one place, if you see what I mean. It depends. We might be working with UK Finance, for example, because there is a lot of funding in financial education from the EFS sector. We go along to its meetings to share that evidence and things like that, so it tends to be bespoke, if you see what I mean.
Aimée Allam: As a charity, generally, we do our best. I am very lucky to have the FT behind us. We are quite good at the convening side of things. We do it thematically. When we were running a campaign for Carers Week, we convened a number of charities, and debt awareness similarly. We did a big one for pensions as well.
We do it to inform all of our content production. We want the experts who do the most work in this area to tell us what they think the key learning points are for people. It is part of our co-production in as much as talking and centring the beneficiaries and the learners that we are trying to reach.
It is piecemeal and it is where funding and bandwidth allow. There are loads of charities that are very stretched to deliver their mandated work. This is a nice-to-have, but it is not possible, so I would really welcome a more strategic and more centralised approach to how we collaborate. I look forward to the evidence.
Stephen Handley: From an adviser perspective, we have something called the Money Advice Liaison Group, which is a collaboration of people from different advice agencies, regulators, enforcement companies and creditors. They all get together probably once a month and just share best practice, common themes, case law, and all sorts of things. It really is quite useful. Our advisers attend it regularly. Information is shared across that video call.
We also have something called the Institute of Money Advisers, which has online discussion forums for advisers, again to share common trends, problem cases and best practice. There are quite a lot of resources out there from an adviser perspective to share stuff such as that.
Lord Hampton: Where is that held?
Stephen Handley: The IMA is just a website.
Lord Hampton: Do you feed your learning into that as well?
Stephen Handley: The Institute of Money Advisers gives certification for advisers—a qualification for them to work through. A lot of the training that we have is done through them. In terms of the online resources and training platform that it has, advisers really do get involved. There is a lot of collaboration across different organisations that is really quite hard to get if it is just a meeting or something like that. This is something that they do in between calls and other things.
Peter Tutton: The first thing is that debt is a very broad waterfront. We cover a lot of issues and a lot of markets and frameworks. We talk to a lot of people who provide knowledge to us. It is not all in one place because there are different experts on different things. We have trainers. We have internal comms. We have ways of embedding that and putting it into our work, so it is necessarily quite complicated because debt spans quite a lot of stuff.
I have two other thoughts. One is about materials that help us and our clients understand known needs that can be done in a better way, which is good, which tend to be a bit more top-down. We are then constantly finding new needs and challenges, and that tends to be a bit more bottom-up. An example of an emerging need is people who have experienced economic abuse as part of domestic abuse, and have coerced debt. That need is becoming known, and how we learn how to deal with that is coming up now. Often, there will be a lead goose—someone who is most expert in it—who will help us all.
It is a variety of strategies, depending on what the issue is, and whether it is something that is known and that we can improve practice on, or whether it is something that is emerging.
Lord Hampton: Are you sharing that outside the organisation?
Peter Tutton: We will share things outside—for example, what good practice is in dealing with people with energy debt, and particularly vulnerable clients. We have conversations. We did some research with the University of Bristol. We had a bunch of roundtables with energy companies, and Ofgem was involved as well, which was all about sharing best practice. We have an internal vulnerability specialist who will talk to people in other firms about what we see, and about our approaches and theirs.
A whole part of the activity of charities is very much doing this. There are people who are specialists in different needs, talking to people in other charities, in Government and in other firms, et cetera, so spreading that knowledge and trying to build a sense of good practice that we understand, and good client journeys. If you are in an energy company thinking about how to deal with people’s energy debt, you know when and how to refer them to debt advice.
Q78 Baroness Bull: I am interested in the regulatory and the policy framework and how well it supports vulnerable people. I want to come at this from two angles. First, are the existing policy frameworks such as the inclusion strategy and the new consumer duty providing the protections that vulnerable people need? I am particularly interested in whether the duty relating to customer understanding is perceived to simply mean simplifying what you put out or upskilling the people we deal with. It could be interpreted either way, and I am interested in what the general feel on that is.
The second part—and we have touched on this slightly—is about the regulation of debt advertising services. In the online world, as we know, it seems that that falls between the FCA, the ASA, trading standards and the ICO. Of course, when you have that many regulators, you have loopholes that could be exploited by bad actors. Do you think there a problem with this, and do you have any advice for Government on how they could tighten up that mishmash of a regulatory framework for online debt advice in ways that would support consumers? You are nodding frantically, so I am going to go to Peter first and then see what others have to add.
Peter Tutton: If you want to seek debt advice, as we mentioned earlier, you will get a bunch of stuff back from different people. You do not know who they are. You do not know what their regulatory status is. You do not know what your consumer rights are if they give you poor advice. I mentioned before that people impersonate us and other charities. We have a guy who spends a lot of his time finding these things on social media or via search engines that are impersonating us, or misleading advertising, and it is a constant process of whack-a-mole.
You are absolutely right. Regulators are working together on it, which is good, and we are making progress, but there are some gaps there that can be closed. For instance, a lot of the lead generators that Stephen talked about are still unregulated. The act of introducing someone to debt advice and being a lead generator is not a regulated activity. Introducing people to credit is. The act of introducing is regulated, but not debt advice, so that is something that Treasury could do quite quickly.
Secondly, there are different actors and regulatory regimes around debt advice. There is a solvency practitioners one and an FCA one. They need to align much better. Part of that, again, is Treasury. There is an exemption for the way that IPs are regulated, which is too wide, so Treasury needs to look at that. It is looking at the AR regime, which is part of the problem as well.
There is a bunch of things that Treasury can do to close loopholes and make it easier. Search engines can do more. They are getting better. It is certainly better. We are not seeing as much, but social media is a really difficult one. How you regulate bad actors in social media is a really hard question.
Very quickly, in terms of the landscape, the financial inclusion strategy is full of really good stuff. The question is whether it is bound together in a set of objectives and outcomes. For instance, the thing for me is whether it has an outcome on things such as financial resilience that would reduce vulnerability to debt and the problems that we are talking about today. That is maybe its weak spot.
I agree that consumer duty and consumer understanding could be very good. It is a good point in terms of how far firms have to go, first, in just making sure that their products and comms are understandable and work well for consumers. The next bit is about support: if you know that they are not, what do you then do? There is a bit there about upskilling in terms of making what you do good.
There is a balance between focusing on getting people better able to understand stuff and upskilling them, and making the stuff that they have to understand more intelligible, and you come at it from both. Consumer duty is supposed to be about outcomes. If firms understand that their products, even though they have simplified them, are still unintelligible, what is the next step? It may be as you describe in terms of how the regulatory environment ensures that consumers who need help to understand do understand. That is a really good point.
Stephen Handley: On this one, with my debt adviser’s hat on, if we look at how regulatory organisations help support people in debt, from my experience as an adviser, if it is a Consumer Credit Act-regulated debt, there is support there, but that means a client having to reach out to them first, and that is where it does not happen enough. Credit card and loan companies will send out comms to people, but the way in which someone in debt deals with stuff like that is just to put it in the bin or delete the email.
When they do engage with that advice, we ask them to contact their creditors, and the outcomes are usually good from those regulated creditors. Where we do find a problem is when it is with councils. We are seeing a higher amount of council tax debt. Councils seem to rush to enforcement extremely quickly, which means that the client is feeling more pressured and is likely to then just go back into their shell and not deal with it.
There should be more support from councils and more referrals into organisations such as, as I mentioned before, the Money Adviser Network or GOV.UK. They should put holds on people’s accounts while they seek advice. They should not be so dismissive when people offer payments to the debt. Someone can provide a financial statement to a council to show what they can afford, but councils will often reject it and then go for further enforcement, which increases the debt.
They could go for a detachment of earnings, which, again, will mean that the person will just completely go into their shell, their confidence will have gone, and you might hear from them in four months’ time when something else more serious has happened regarding the debt. Regulation is fine for consumer credit debts, but, for other debts, such as those owed to councils, more could be done.
Michaela Kirsop: I do not have too much more to add. It is just worth flagging that the Money and Pensions Service is an arm’s-length body of the DWP, so it is part of that family. It is definitely not my place to make specific recommendations. One thing to pick up on is the financial inclusion strategy, which was published by HM Treasury back in November. That focuses on ensuring that people can access appropriate services and financial support. It is probably worth saying that it announced the creation of an inclusive design working group, and that is led by UK Finance. That is to identify where barriers exist in today’s retail banking services and to drive collective industry action to help remove them. That is probably my contribution to that question.
Q79 Lord Stevenson of Balmacara: I have a follow-on question from the one from Baroness Bull. Before asking it, I declare my interest as a former chair of StepChange a few years ago.
Going back to the interaction between financial literacy and financial competency and numeracy, are there any points that you would like to suggest the Government might do to help on the numeracy side, which would, in turn, help you?
Peter Tutton: This is not exactly my area of expertise, but I have a couple of thoughts. The first is recognition. Stephen just made a point about council enforcement of debt. Across Government, we need to recognise that a lot of people who are struggling have low numeracy, low income, low financial capability, and vulnerability. Really embedding that in the way that Government think about debt and debt recovery really would make a big difference. We are very pleased to see the stuff from the Ministry of Housing, Communities and Local Government that will, I hope, improve the way that councils do this.
I will defer to Michaela, but there is something about where we are. We have good work from people such as National Numeracy and Plain Numbers. How does that add up into a strategic approach in terms of building skills for adults? One thing that concerns me a lot is that a bit of research that was done for us recently showed that 40% of people coming for debt advice had had debt advice once before and 20% multiple times before. We have a population of people who are highly vulnerable and cycling round and round financial difficulty.
Numeracy and better skills will not deal with all of that. If we have a strategy to help people understand that vulnerability and deal with financial vulnerability, which numerous skills will be a big part of, in terms of helping people boost wages and stuff I have talked about before, that would be very good.
Aimée Allam: I would like to see more focus on adult financial education and more funding available for organisations that are doing it. It is preventative and remedial and can help in so many different ways. We are not looking at that enough in the financial inclusion strategy and the well-being strategy.
Stephen Handley: I have written three things down for this one. One is to change the payment frequencies of benefits, which I have mentioned before. That will help people budget, especially those with low numeracy. Councils should be brought more in line with the Consumer Credit Act regulations that I mentioned and should offer forbearance, which they do not seem to do at the moment.
More practical education is needed with regards to debt and money in schools, but with real-world examples. Do kids have a look at bills? Do they look at a council tax bill or an electric bill? I look at my gas and electric bill or council tax bill sometimes and I have to get a pen, paper and a calculator out. It is so complicated. That could be simplified. It is fine teaching children about compound interest, percentages and all those things, but are they actually seeing what a bill looks like? They are two very different things.
Q80 Baroness Spielman: Aimée, you talked about adult education. Reading the PIAAC detailed report for England, I was really struck by the fact that by far the biggest risk factor is being born outside the United Kingdom and, linked to that, not completing secondary education, which is typically people from elsewhere. What kinds of adult education do you think are most effective, especially for those who are in an occupation that does not give them opportunities to practise and reinforce numeracy?
Aimée Allam: Speaking English as an additional language is undoubtedly an additional challenge.
Baroness Spielman: This is slightly different. This is people who were not educated in the UK.
Aimée Allam: Absolutely, but language is a big part of that as well. It comes down to making sure that they have access. Unfortunately, providing this information in an overly simplified way or in a community language that they do not use to deal with financial services is not useful. We have to make sure that we are building the skill set and the ability to interact with financial services organisations here, if that is where people are living. It is a real challenge, but there are ways to synthesise very complex populations’ needs into general broad recommendations for how we communicate to them.
Baroness Spielman: To the extent that they are driven by an underlying lack of mathematical knowledge, what kinds of financial education can address those more foundational gaps?
Aimée Allam: You start at the beginning and it is as individualised as possible. Where possible, we try to reach out to community champions, people who they trust, who can take it with them at their own pace. For us, it is about that capacity-building with organisations that might be serving them in another way, perhaps as a point of religious congregation or a place where they find community elsewhere, where that information can be given to them at a pace that is appropriate.
I must say that it is not an area where we do a huge amount of work. We have a partnership with an organisation that supports women from a specific community fleeing economic abuse. Apart from that, it is not something we have done a great deal of, mainly because we wanted to build the backbone content that supports those community financial literacy champions who have the trusted voice, understand the circumstances and can help deliver that information at a pace and in a manner that is appropriate.
I think that my colleagues from the debt advice charities will recognise that informed, warm empathy beats a great deal of perhaps the more practical numbers and money detail. We can supply that latterly, once the barriers and the stigma that people feel around approaching their finances is reduced. That is best done at the community level.
Q81 Lord Massey of Hampstead: I just want to come in with a couple of questions. What we are about here is how we improve numeracy among the potentially 10 million people in this country who do not have sufficient skills. There seems to be a huge amount of information available out there from various organisations, such as your own, for those seeking the information. I have two questions. My first is whether you would say that there is enough provision out there for those seeking it. Of course, there are always a huge number of people who are not numerate, but do not seek to improve their numeracy skills. It is a question of whether there is enough provision out there for those willing to find it.
The second one is about, in terms of the people and cases that you see, especially in debt advice, the proportion in the round you would say are caused by low numeracy versus maybe other factors, such as poor financial discipline, unwillingness to control their spending, et cetera. What proportion is because they are just not very numerate?
Stephen Handley: It is quite a high proportion. I cannot give you exact numbers. We tend to see that the main reason why people do not look at budgeting is because they get overwhelmed. Most people can make a start with a very simple budget, even with low numeracy, given the right guidance and the right starting point. It is just literally, “I spend this much. I have this much coming in”. Then, over time, you can build on it. As we touched on before, it boosts confidence. The more you talk about debt, it boosts confidence and it gives people an incentive to look at their own financial situation.
From my own personal experience, I never used to budget. It was not until I got into severe debt that I started doing it. It started off extremely basic and grew and grew. It took a long time to do, but you can get there, even though you may not be great with numeracy. You have to start simple and get that right guidance. It is talking to the right people that makes that happen.
Peter Tutton: It is a really good question. We ask people about causes of debt and the reason why people are in debt. There are numerous different reasons. Up until recently, the biggest reason people were giving was the cost of living increase, so people knocked sideways by their gas bills going up and electricity bills going up by £1,000 a year. Things such as life events, so losing jobs, illness and so on, are big drivers.
We have another thing, which is called “lack control of finances”, which means all sorts of things. That picks up some of what you are talking about, so people not being able to cope and maybe plan forward. Often there is a bit of that that is skill, but there is a big part of it that is about the constrained circumstances they are in.
To give an example of this, 26% of our clients are single parents. It is massively disproportionate. We did some work with Gingerbread on trying to understand why this was. Its research found that single parents—it had spoken to the people who use its services—were actually quite good at day-to-day budgeting. They knew exactly how much money they had. The problem is that they did not have enough money to cover their ordinary living costs. Because of the nature of their childcare, they may be in part-time work with low job and wage progression. They are reliant on child maintenance that may be intermittent.
There is a bit of it that that is about people’s ability to cope and manage, and numeracy is part of that. I keep saying that it is a part of the problem, but it sits in a whole bunch of other different things that confound people.
Aimée Allam: I would like to tell you about a small bakery where we worked. It had a scheme for employing formerly criminalised people, so people leaving the criminal justice system. It paid its staff to come in and attend a financial literacy workshop. That is a very small business. That may not be replicable across the board. People seeking the information have to be heard, fed and able to make their rent payment. Then they have to have spare bandwidth left over to access the information, consume it and take it away, think about how it applies to their personal circumstances and act on it. There is information there. It is about helping people clear the decks so that they can engage with it as well.
Q82 Baroness Spielman: My question may be a little bit specific in the light of the answer to my previous one, so feel free to interpret it more generally if need be. I wanted to ask whether you had considered what was said in the recent curriculum and assessment review, although of course we do not know how that will translate into the specifics of a draft maths curriculum. What changes, if any, in school or post-16 and early employment education could help embed the financial skills that young people will need throughout life?
Aimée Allam: I have a lot to say about this. Before we started with adults, we focused entirely on building a comprehensive school curriculum for kids for financial literacy. When I refer to the FLIC curriculum, it is financial literacy and provides six 50-minute sessions for every year of secondary school, not primary. One key thing when we built that—we consulted with teachers—was teachers not feeling financially literate themselves, or feeling maths-anxious and not confident with numbers.
At the moment, it sits in personal, social, health and economic education. Following the curriculum assessment review, parts of it—it is unclear which—may move to citizenship. In any case, the better entrenchment of it in the school curriculum will necessarily rely on teachers who are, let us call it, lay to financial literacy, so not necessarily from maths, economics or business backgrounds, delivering this content to kids.
We have tried very hard to upskill teachers in that process. We offer lots of teacher training. One thing that we have done is build a toolkit that arms your early-career PE teacher—I must stop maligning PE teachers— music teacher or somebody who is doing something artsy and qualitative rather than quantitative to feel more confident. We take the maths out of the delivery by the teacher. We do it in standalone short-form video and then we are able to control how it is delivered, so we can be quite creative. We can teach kids about currency exchange using FIFA gaming points, so we can layer on some gaming education as well.
We try to take that off their workload, so that they can engage with it if they need or want to. Similarly, they might feel confident about budgeting or teaching kids about how to get on the property ladder, if that is something they have done themselves, but what really ignites kids’ enthusiasm is things such as crypto. How confident does your average teacher feel talking to kids about crypto, when it can appear that they know a lot more than you? We make sure that they have everything that they need there.
I would widen that when it comes to the adult financial education as well. There are figures in society who are trusted intermediaries, such as librarians, social workers and teachers, who have great multiplying power in their roles. My mother-in-law is a career social worker. When I told her I was starting this role, she said, “Good. One of the main reasons we have to remove children from homes is because budgeting is so poor that they are not putting food on the table at the end of the month. I wish I could give this to all my social workers”. I have broadened my understanding of that to so many other roles that interact with children, families and young people.
Baroness Spielman: Thank you. That is extremely interesting. Is this curriculum publicly available?
Aimée Allam: Yes, it is completely free. I think that last time I checked we were in over 950 schools. Some of them are delivering it to part of the available year groups. We have a beacon school study programme, where we are trying to measure its impact. I am really interested in what the impact is into adulthood. I would like to follow these kids through. We are at City of London Academy, Shoreditch Park, in our fourth year, and following the same cohort through the curriculum, testing what they know at the beginning and what they know after we have taught them from the curriculum.
Baroness Spielman: Have you managed to get random assignment to your study programme, so that it is not just how it works in the hands of enthusiasts, or is this enthusiasts?
Aimée Allam: Not yet, no. This is enthusiasts. I would not rest easy turning anybody away who wants to measure how this curriculum impacts their learners. We are in the process of trying to formalise it and to find an academic partner. We have been working with the KCL public policy institute on our adult learning and we are hopeful that we can expand, but high-quality research on this front is incredibly expensive.
Baroness Spielman: I know, and so hard to come by.
The Chair: We are going to have to press on. Lady Alexander?
Q83 Baroness Alexander of Cleveden: Incredibly briefly, because of the pressures of time, I want to flip from the school to the other end of at least the chronological spectrum. We have touched on it a little. Is there anything that any of the panel would like to add about the numeracy challenges faced by the over-50s? I am thinking particularly of things such as pension management, pension draw-down and anything in that space as to how you reach that cohort who are being asked to manage their financial affairs, particularly in a draw-down environment different from that which they had anticipated and perhaps without the skills. Is there anything on the post-50s?
Peter Tutton: It is really important. As I said earlier, I am of that age, so I see how difficult and complicated it is. The starting point of that is probably going to be how the pensions industry and financial services engage with people and make it easier for people to understand. Most people with small pension pots will not be able to afford financial advice, so we will need really good-quality information. We will need good default choices as well.
This is something that the financial services industry needs to think about a lot. Targeted advice is an opportunity. The pensions adequacy review might pick some of this up as well, because there are issues about keeping people’s pension savings when they are struggling with financial difficulties and saving enough.
There is an interesting point there. We did a roundtable in the House of Lords that was chaired by Baroness Morgan, who is very expert on this stuff, on women and financial resilience. It was understanding why it is that women are overrepresented in debt, overrepresented in people with low precautionary savings and overrepresented in people who have inadequate pension savings. There is something about this also relating to the life course, which brings all this together.
Those good pensions outcomes require support from much earlier on. That is not an answer, but there is the idea that there needs to be a strategy that focuses on this. There needs to be better support for people who are approaching retirement and decumulation. That is for financial services primarily, but there is something for Government and for parliamentarians to think about how you link that back through the life course.
Aimée Allam: I do not have a lot to say on this, other than it is not aided by the closures of bank branches and lack of in-person over-the-counter support. The pensions dashboard launch is a real opportunity to overlay education. I am trying to position our team to be ready to meet that when that comes out. Just as much as it will be a great opportunity for education, there will also be a flood of misinformation when it comes to things such as consolidation and so on. That is a real opportunity to have a national awareness campaign.
Michaela Kirsop: We are delivering the pensions dashboard, so we are already working on it. It is hugely important that you have education and information surrounding the pensions dashboard. We have streams of work looking at the onwards guidance journeys for people. We are responsible for that. We will absolutely be putting that support and education in place for the time that dashboards are launched. It is incredibly important.
I have an additional point on the curriculum point. I can follow up afterwards if it is helpful. The education space for financial education is a huge marketplace. There are lots of resources and a very clear curriculum around that. I can provide more information outside of this. I appreciate that we are running out of time, but it is a really important part of the picture. I know that we did not get to explore that fully in this session, but we can follow up afterwards if that is helpful.
Stephen Handley: We see quite a few people who have taken pension draw-downs after they are 55 and they still have debt. They have drawn down the pension. They call us a few years later and they still have debt. Forgive me if this is already in place, but, from my experience, it does not seem to be working well if it is. If you are going to draw down on a pension, you should maybe be signposted to debt advice if you have debts at the time of the draw-down. There might be a better option. A lot of people draw down on a pension to clear debt. Rather than draw down, maybe take some debt advice. There might be a more suitable option so that you can save that money there for when you need it.
Q84 Baroness Hamwee: We will produce a report with reflections, conclusions and so on from what we have heard through all the evidence and the written evidence we are getting. The recommendations we make all have to be addressed to Government. Can you each give us one recommendation you would like to see us make to Government in our final report? Sorry to confine you to one.
Peter Tutton: It would be quite a high-level one. One thing that the financial inclusion strategy covered a bit but not enough is this idea of financial resilience, which is underneath everything we have talked about today. We need a cross-governmental focus on financial resilience, which picks up from skills and education through to financial services and things such as savings, and that is very outcomes-focused. It is, “How do we help people cope with shocks without falling into debt? How do we help people get more resilience through things such as savings, insurance and other things? How do we help people navigate different sources of help?”
It is about skills and numeracy, but it is also about what policymakers and firms could do. I am increasingly concerned about, as I said before, the number of people we are seeing that are in a cycle of financial difficulty, recover a bit, then back in financial difficulty. We need to break that, and the way to do it is a financial resilience strategy.
Baroness Hamwee: You are saying to put it on every government department’s agenda.
Peter Tutton: Yes. Debt is so broad across the Government. One thing on debt that we do not have is generally a single focus on it, because it is so broad across Government because of the nature of it.
Aimée Allam: I would like a national adult financial education programme that co-ordinates the many good actors that are in the financial education space and embeds good referral pathways to high-quality resources. I would like a renewed focus on misinformation, with cross-sector collaboration in some way. We all see it. We all see so much of it and I fear that we are not closing the loops as well as we could be.
Stephen Handley: Mine is that, if you remember several years ago with mental health, people hid it. It was not talked about. It was in the dark areas. The same is true with regards to debt. I do not see why we cannot work towards reducing the shame associated with debt, like it was with mental health, and encouraging people to talk about debt. That will then boost their confidence, which will boost their competency, which will lead to better results longer term.
Michaela Kirsop: For me, it is going back to the beginning when we were talking about accessibility, so across the whole system everyone making sure that the guidance that they are giving is accessible and can be understood by the person in front of them or in front of the screen, and that they can act on it.
The Chair: Thank you so much. If you have other burning points you would like to make, do write to us. Your idea, Stephen, about insisting on some kind of debt management advice before you draw down on a pension at 55, when you are going to probably live another 25 years, seems to me like a very simple, practical idea. Those are the sorts of things that I am looking for. To Aimée’s point about having a national adult education programme, I agree that all the resources are there. The money has almost been spent, frankly, like your cartoons or whatever. We have to bring that together and make sure that we get to the people who need it. I am very grateful for all of your input today. Thank you so much.
