Lessons in budgeting

Personal finance will start rearing its ugly head in secondary schools shortly before (or shortly after) the start of the 21st century if the Personal Finance Education Group gets its way. The group launched this week is the brainchild of Robert Browne-Clayton, chief executive of Independent Financial Adviser Promotion, the trade association for IFAs, but it has the backing of the Association of British Insurers, the Association of Investment Trust Companies, Autif, the unit trust trade body, the Life Insurance Association, Imro, the investment managers regulatory organisation which is providing a secretariat, and ProShare, which is providing the chairman, Gill Nott.

The initial membership also includes Umist, formerly part of Manchester University and NatWest Bank, which has done more than most to promote financial literacy, in association with the University of Warwick. Government departments, including the Treasury, the DSS, the Department for Education and Employment, and the DTI have observer status, as do the Securities and Investment Board and the Personal Investment Authority.

At this stage the members are drawing up a plan of action, after which they will start to look for funding. In the current climate the Government is unlikely to loosen its purse-strings if it thinks it can get the private sector to do so, but the steering committee will certainly be willing to accept funding from banks or insurance companies, provided of course that it offered without strings.

The group does not intend to put an army of trained financial advisers into the schools, or to draw up a formal curriculum for education in personal finance. It hopes to draw up a series of briefings which schoolteachers may want to introduce into lessons in history, personal and social development.

It may also try to negotiate a way for volunteers from the personal finance industry to come into schools to say their piece, in much the same way as NatWest Bank's Community Investment programme does. The initial effort will almost certainly be devoted to the more elementary aspects of personal finance such as basic budgeting, the avoidance of debt, regular savings and the need for insurance. Only afterwards will it start to move towards more advanced concepts such as mortgages, tax-free investments, risk evaluation and buying shares.

Nobody doubts that schools are the places to start, although it might be as difficult to retain the attention of teenagers with classes on the merits of providing for long-term care for the elderly as it is to keep them interested in history or civics. If it can win over the support of Britain's notoriously sensitive and self-important teaching unions however, the initiative might start making a positive contribution to what is arguably the most important social problem facing the UK, perhaps even more important than employment prospects.

After all, only about 20 per cent of the population runs a real risk of long-term unemployment, but it could well be argued that in excess of 80 per cent of the adult population is financially illiterate and incapable of making the necessary financial decisions en route from cradle to the grave.

Whether an initiative with relatively modest initial objectives will be able to get the message across fast enough and far enough to cope with a problem which is growing in size and is cascading rapidly backwards through the generations, to affect progressively younger adults who until recently were only really concerned with getting and paying a mortgage and a car loan, is a different question.

There is also potential for disputes between the factions in the personal finance industry.

Commercial interests can never be kept out, and it may be hard to avoid conflicts between the interests and ethics of teachers, financial advisers and companies with salesmen and products to promote.