England faces ‘crisis’ in adult financial literacy as one in three cannot work out change from shopping trip

People from England and Northern Ireland among worst global performers on everyday financial numeracy tasks, above only Turkey, Russia, the Czech Republic and Israel, shows study

A third of English and Northern Irish could not work out the correct change from a shopping trip, and four in ten could not correctly apply a simple discount to an everyday household product they might buy, according to study by UCL and the University of

England and Northern Ireland are facing a “crisis” in financial literacy skills, academics have warned, as research reveals one in three people in the countries cannot work out the correct change from a shopping trip.

The two nations are the worst global performers on everyday financial numeracy tasks, above only Turkey, Russia, the Czech Republic and Israel, according to a new study by researchers from University College London (UCL) and the University of Cambridge.

It shows that a third of English and Northern Irish could not work out the correct change from a shopping trip, and four in 10 could not correctly apply a simple discount to an everyday household product they might buy.

When it came to interpreting a graph containing basic financial information, more than half of adults in England and Northern Ireland failed to do so.

The researchers analysed data from 8,797 16-to-65 year-olds in the two countries and 30 other nations who completed the Programme for International Assessment of Adult Competencies (PIAAC) test in 2011.

Adults were asked four questions as part of this test which captured their ability to apply numerical skills to every day financial tasks.

The study concluded that between 63 per cent and 68 per cent of those in England and Northern Ireland combined could answer a question on how much change they would get if they were given a set amount of money and asked to buy certain goods.

Between 57 per cent and 62 per cent overall could answer a question on how much they could expect to pay for a given quantity of a product - for example, a third - if they were given the cost of the whole item.

England and Northern Ireland ranked 27th for the financial questions in the test. Japan, Singapore and South Korea were the top three countries respectively, with Lithuania, Austria, Finland and Denmark following behind them.

Germany was 16th, the USA was 19th and France ranked in 21st place, while Russia ranked lowest just below Turkey and the Czech Republic.

Professor John Jerrim, of the UCL Institute of Education and co-author of the paper, said the research highlighted how England and Northern Ireland were facing a “crisis” in terms of adults’ financial literacy skills, and raised concerns that people were more prone to making potentially damaging financial decisions.

He told The Independent: “These questions aren’t rocket science. They are fairly basic, but a substantial number of people don’t seem to be able to answer them correctly. It’s particularly worrying considering the low interest rate at the moment – people are buying houses they can’t afford if interest rates go up.

“There’s a direct link between basic financial literacy and being able to make big financial decisions, such as knowing the implications of getting a mortgage with a certain interest rate. People can end up having quite a financial shock.”

Asked why England ranks so low, Professor Jerrim said: “We’ve known for a while that maths skills aren’t England’s strength. But it’s surprising that the proportion of those getting the questions right is quite so low. In absolute terms this means there is a large number of adults who can’t do these simple sums.

“It’s likely to be because there’s not enough financial education in schools, as well as lower maths ability in England and Northern Ireland general, which has been the case for decades. There’s a cultural view and attitude in England of saying: ‘I’m not good at numbers’.

“Another factor is that adults aren’t using those skills so much because of technological developments.”

Professor Jerrim said that a long term solution was to teach more financial education in schools and universities, where people are taught to “apply maths to real situations”. He said that in the short term, companies and organisations selling financial products should make clearer how much things are going to cost.

The Government's Apprenticeships and Skills Minister Anne Milton said: “We do need to improve adult numeracy skills, but it’s of note that even in the best performing countries the test is still failed by one in four people.

"Almost half of working-age adults in the country currently have the numeracy levels we expect of primary school children. Numbers are part of everyday life – we use them when cooking, shopping, planning journeys, planning meals and budgeting.

“All adults can sign up to take free maths qualifications to learn the skills they need to get on in life. They range from entry level all the way up to GCSE, and will include financial calculations and real life scenarios. Last year half a million adults enrolled on a course."