Children need lessons to teach them how to be “financially literate” and taught in schools to use credit cards to avoid wracking up debts as adults, West Midlands MPs have claimed.
They urged Ministers to put financial education on to the curriculum, to teach youngsters about the dangers of taking out unnecessary loans or buying items on a credit card which they could not really afford.
The MPs admitted that their own generation had developed bad habits, based on the easy availability of credit, which they were now passing on to youngsters.
The plea was issued by Worcestershire MPs Mark Garnier (Con Wyre Forest) and Robin Walker (Con Worcester) in the House of Commons.
Mr Garnier said that the banks were rightly blamed for causing a financial crisis – but shoppers who took out loans were also responsible.
He said: “We are in the midst of a financial crisis, and the banks are accused on a daily basis of causing it. They are quite rightly accused of making irresponsible loans to customers in the housing market, yet we all too frequently gloss over the elephant in the room.
“For a bank to make an irresponsible loan, it needs an irresponsible consumer to take on that debt. Our response to that situation is to increase the regulation of the financial system, and in so doing increase the cost of financial services to consumers.”
The level of debt in the UK was “frightening”, he said. The nation had a staggering £1.5 trillion of personal debt, or £25,000 for every man, woman and child, and although the UK made up around ten per cent of the population of the EU it had around 50 per cent of the personal debt.
“When we as a society send children to school, we do our very best to equip them to face life and give them the best opportunity possible to have a successful life and career. We teach them basic subjects such as maths, reading and writing, computer skills, sex and relationships education and how to be good citizens.
“That is all extremely good and important, but we signally fail to equip people to be financially literate.”
Mr Walker pointed out that the Government was currently reviewing the curriculum, and called on Ministers to ensure financial education was included.
Consumers today are “increasingly bombarded by offers of credit” – but many did not understand them, he said.
“The constant bombardment becomes a real problem when people lack the tools to understand concepts such as APR – annual percentage rate – or to develop a proper understanding of the real costs of the debt they are being offered.
“It is a shocking fact that only one in three adults in the UK knows what APR stands for, let along what it means financially.”
Education Minister Nick Gibb, speaking for the Government, said Ministers would consider the proposals.