Saving the future from debt... Financial Education

This is an idea that could really help a future generation from getting into some of the difficulties that their parents have fallen prey to.

What is it?

Some people are saying that we ought to have mandatory education on financial matters (like what APR actually means, and calculating how much tax or interest you will have) i.e. financial education.

Why are they saying that?

Well, the UK has a problem. A problem that looks like this:

• Every day in the UK 331 people are declared insolvent or bankrupt. This is equivalent to 1 person every 60 seconds during each working day.

• 101 properties are repossessed every day

• 9,072 new debt problems dealt with by Citizen Advice Bureaux each working day

• Average household debt in the UK (excluding mortgages) was £7,948 in December.

People don't understand how to budget, what things like APR mean, how store cards, credit cards and payday loans work and the effect that getting into arrears/debt can have on the rest of their life.

But this can change

Before the general election in 2010, financial education was a hot topic and it was on Labour's agenda. But then the election happened and we changed government, and it got pushed aside.

In September 2014 a new curriculum for all subjects will be introduced. That means that this year and next are crucial for debate on what should go on it.


I'm pretty passionate about schooling actually giving kids what they'll need to be competent, engaged citizens.


I certainly didn't learn about interest, tax, how store cards work or anything of that sort when I was at school and it would have been really useful to have some sort of grounding in it before it came to the time to actually use those products.

The Commonsense Sniff-o-meter
on youcanarguewithstupid:
rotten haddock - eggy - pine fresh

On the Commonsense Sniff-o-meter this is definitely Pine Fresh. There are several initiatives focussing on financial capability (also called financial literacy) - largely as partnerships between banks and NGOs/charities - to help improve the money management of people of all ages. There are links to some of these at the bottom. They do great work but it would be even better if we had financial education on the statute books so that no one could fall through the net. It could help to create a whole generation of 'financially capable' young people.

So who's behind it?

A heck of a lot of people, and lots of them could have real clout in getting it on our compulsory curriculum.

Scrabble fanatic Martin Lewis

Martin Lewis of www.moneysavingexpert.com has been instrumental in getting this issue heard about and debated. He says:

"As a nation, we've educated our youth into debt but never about debt."

In 2011, he started an e-petition for compulsory financial education in schools. E-petitions are an exercise in direct democracy - if you start one up and it gets to the magic number of 100,000 signatures, the petition is considered for a debate in the House of Commons. This is exactly what happened in late October.


On December 15th, that debate took place.

House of Commons debate, 1886

Nick Gibb, the Minister for Schools, was there and he said this: "I think we're all in agreement about the importance of good quality financial education. It is true that young people are growing up in a materialistic world that they are not prepared for."

The Commonsense Sniff-o-meter
on youcanarguewithstupid:
rotten haddock - eggy - pine fresh

That sounds promising, but it's not a commitment. Generally the government line has been that they think it's a good idea and that we need to teach schoolchildren about money and give them maths skills that are applicable to real life BUT they're making no promises about it being compulsory. Which to me, is a bit eggy.

And that's not all...

There's also what's called an APPG on Financial Education.

APPG = All-Party Parliamentary Group - it means a group of MPs and/or Lords from all different parties, who come together in a group on a specific issue. It's great because it's cross-party, so they're not just getting bogged down in their own party ideals or issues.

The APPG on Financial Education for Young People (launched in January 2011) has 225 members - this makes it one of the biggest ever APPGs. You can read more about it on its page here.

It has a huge list of supporters, such as Action for Children, Barclays, British Banks Association, HSBC, NUS, Lloyds and UCAS. Basically it seems that most of the main players in finance or youth activities want this to happen.

Don't forget Vorders...

Vorderman at the National Television
Awards 2012

Ah, Carol. She led a study for the Conservatives in 2009 looking into financial education and recommended the very clever tactic of splitting maths into two subjects (like we do with English Literature and English Language) - so 'pure' maths ( stuff like algebra and geometry) and 'functional' maths (financial literacy).

This would mean that for those not very skilled at complex maths, there would still be the opportunity to learn what they needed to understand their finances as adults. 


She said this:
“In my view, it is pointless for most 14-year-olds starting their GCSE courses, to be force-fed mathematical topics which they will never use, when what they desperately need is to become more comfortable with numbers including percentages and fractions used in the world of finance,” said Miss Vorderman. [source]

So the idea has huge backing and makes immense logical sense in the light of our current financial situation. UK citizens need to understand money management, have less debt, and learn to save for their old age and the burden of medical bills that can come with it. This could provide the kids of today with a much more financially capable and secure future.


So far there has been no commitment from the government to introduce it into compulsory education. So far, they are saying that it could be compulsory as a part of PSHE/Citizenship - but no commitments have been made and the idea of splitting maths into two parts needs more support from government. 2012 and 2013 will be crucial in keeping financial education high on the agenda and getting it on the statute books.

youcanarguewithstupid

Further reading/sources:
APPG on Financial Education here - To find out more or to express your interest in become a supporting organisation, please contact kat.hodgkinson@pfeg.org or 020 7330 9488

Statistics on debt are from here and here

Good article from ResPublica (think tank) on why adding it into PSHE isn't the right way to do it here
Barclays Money Skills for financial capability here
Money Makes Sense financial literacy help here

Martin Lewis on what would be taught in financial education here
His general financial education page with loads of links here

Looking backwards to move forwards...napkins

Yes this really is a post about napkins. The cloth kind, not the paper kind. In some cases, the best idea or the cleverest solution has been staring you in the face all along. This is one of those cases.

available here

A little napkin trivia



The first napkins were made of dough or bread. From the Spartans onwards, people would wipe their mucky fingers on slices of granary. I'm not sure if they ate them afterwards.

Then the Romans, being the tirelessly innovative people that they were, started using strips of cloth called sudariam meaning handkerchief.

By the 16th Century napkins were an expectation of refined diners.

In 1729 a French treatise told us this:

"The person of highest rank in the company should unfold his napkin first, all others waiting till he has done so before they unfold theirs. When all of those present are social equals, all unfold together, with no ceremony."

And then it went all wrong...

In 1907, there was an epidemic of Polio in Philadelphia. A local school teacher realised that the cloth napkins they used were spreading the infection as they weren't being washed regularly.

He cut up bits of notebook paper and told his schoolchildren to use those to blow their nose on or sneeze into, and then to throw them away immediately.

The first commercial production of paper towels came soon after with the Scott Paper Company's sexily named "Sani-towels". From there the industry grew, producing not just hygienic receptacles for your snot, but all the superfluous little paper serviettes you get in cafes and the rolls and rolls of kitchen towel households everywhere are buying up and chucking out.

 It doesn't make any sense...

It depletes our forests - which in turn causes less carbon to be absorbed and exacerbates global warming; it adds tons of paper to landfill and is an additional burden to recycling facilities.

Make your own just like this here

It's as though there is no other choice. But there is.

Perhaps not the bread option: I don't fancy wiping my fingers on a slice of stale Kingsmill, but cloth napkins are a simple, fun, brilliant, sustainable invention.

They come in all different patterns and colours so you can actually express yourself rather than using the generic paper versions.

Now that's what I call
napkin-folding technique

You can make them into funny shapes.

They feel softer.

They save you money because you can just wash and reuse them instead of buying more and more and more rolls of kitchen towel.

This is on Etsy.com - search
"napkin" on there and you'll be
spoilt for choice

And if you use the paper version for cleaning, the same goes: cloths. Those jay cloth things our parents/grandparents used to use are remarkably effective with a little cleaning product and again, they are environmentally and pocket friendly.

Those are the two golden attributes of a clever, forward-thinking product: green and money-saving.

 

These stickers are part of
an American campaign
here

If every time you use a piece of kitchen towel, you pause for a moment and remember that it's part of a tree, and you're wiping up your spilt baked beans with it and just tossing it into a bin to go to that mysterious place we like to call 'away', it starts to take on a different meaning.

Search on www.etsy.com for 'napkin' and you'll see such a variety of styles, colours and patterns that you'll actively want to incorporate them into your meal times. 

youcanarguewithstupid

Further reading/sources:
Napkin how-to-make-your-own here
Napkin history here and here

Plan Zheroes... the food redistribution heroes

This is one of those initiatives you come across that makes the end of a grey London Monday feel a whole lot better.

One of Carl Warner's many amazing
food pictures - there are more 
on his website here

Plan Zheroes is an organisation and interactive website where charities needing food can hook up with companies with excess food that they would normally chuck in the bin.

Why does this need to be done?

The UK food retail industry sends 1.6 million tonnes of surplus food to landfill every year.

This could be distributed instead to some of the 4 million people in the UK currently classed as suffering from 'food poverty'.

Initiatives like this do already exist, for example the Pret Charity Run that you can read about here and FareShare which aims to redistribute 20,000 tonnes of food per year (and who are always grateful for more volunteers).

Plan Zheroes says that although these organisations do a great job, they aren't a comprehensive solution and many companies are still falling through the net and throwing away food that could be diverted to people in need.

So in steps Plan Zheroes as a network for the retailers with the surplus food to find the charities needing the food, and vice versa.

The really clever part of Plan Zheroes is its interactive map, which allows companies and charities to plot themselves on it with details of what they can give/need. Then they can see each other, connect, and get redistributing!

This grassroots approach means that food establishments and charities of any size can sign up, so that even your local corner shop could donate.

Another Carl Warner, because I love them

youcanarguewithstupid

Further reading:
Clear explanation of food poverty here
Faculty of Public Health food poverty brief, with statistics on the sorts of illnesses it causes here
On the growing crisis of food poverty in the recession here

The future of waste...Extended Producer Responsibility (EPR)

I first read about EPR in Annie Leonard's book The Story of Stuff a couple of years ago (summary of the book to come in another post).

What is EPR?

Extended Producer Responsibility makes manufacturers responsible for the entire lifecycle of the products and packaging they produce.

So, in real terms, Remington have to deal with your hairdryer when it's gone bust, Apple have to deal with your dead iPod, Kelloggs have to deal with your cornflakes box and that silly plastic bag thing inside it.

It's an extension of CSR - Corporate Social Responsibility - where large companies are expected to plough some of their profit back in to society. In reality, this is often more of an 'ethics-wash' and a very small slice of profit. EPR enhances it by saying it's not enough to pour some funds into 'good works', but that companies should also take responsibility for the product at the end of its lifecycle (the end-product). 

In some places it's referred to as "polluter pays", "take-back" and "product stewardship".

Why is it such a Genius Idea?

The Commonsense Sniff-o-meter
on youcanarguewithstupid:
rotten haddock - eggy - pine fresh

Once you know what EPR is, it seems blindingly obvious and definitely pine fresh on the Common Sense Sniff-o-meter.
Why on earth are we or our local council spending time and money sorting through our waste for recycling, or searching online for where we can safely dispose of our electrical/white goods? Why is taxpayers' money being forked out to dispose of the toxic chemicals in our fridges?

EPR puts the practical and financial burden of waste on the producer instead of on the local council.

Doing this has a number of benefits:

• it encourages the producer to use packaging or components that are less toxic (white goods, e-waste) and made of materials that are more easily recyclable 

Google images outdoes itself with this
prime example of planned obsolescence

• it encourages producers' to make more sustainable products, and  discourages a culture of planned obsolescence

• it internalises the costs of waste management; companies have an easy ride at the moment because they don't have to worry about this end of the chain

The main disadvantage cited against EPR is that it can drive the price of the product up, because the manufacturer is factoring in the costs of recovering the end-product.

However, the costs of recovery exist whether you put them on the council, the consumer or the producer. EPR creates a more accurate pricing of the whole lifecycle of the product.

This is already happening...

There are actually EU-wide and UK laws on Producer Responsibility (links below), which state that as of 1998 onwards, UK producers are expected to "take reasonable steps to recover and recycle packaging waste".

There are 3 main requirements in the law:

1) Source Reduction: limiting packaging weight/volume to the minimum adequate to maintain the necessary level of safety, hygiene, and acceptance for the product and the consumer;

2) Minimum Presence of Hazardous Substances: manufacturing packaging in a way that minimises the presence of hazardous substances in emissions, ash, or leachate when packaging or packaging waste is incinerated or landfilled; and

3) Recovery, Reuse, and Recycling: the packaging should be designed, produced, and sold in such a way as to permit its reuse or recovery, including recycling, and to minimise its impact on the environment when disposed.

Ways of putting it into practice

Now, manufacturers are savvy and the reality is that on a large scale, they're not going to deal with your empty juice cartons or Babybel wrappers. So they do what they do so well - they outsource.

In the UK one of the main providers of "producer responsibility and recycling solutions" is Valpak. To take the burden off producers' hands, Valpak issues them with something like a certificate (Packaging Waste Recovery Note or PRN) proving that they have bought Valpak's services to recycle/recover their waste for them.

In Europe, they're big on the Green Dot.

Pro-Europe's Green Dot trademark

An umbrella organisation called Pro-Europe gives this trademark out to producers and it acts like a signal for consumers telling them that the producer is taking some responsibility for the recovery of the end-product.

Further abroad, the USA is lagging behind with no mandatory EPR rules in place, although the Product Steward Institute over there is trying to drive the idea forwards. Taiwan and Japan have take-back schemes on home appliances that have been in place since 1999 and 2001 respectively.

So EPR is out there and gathering steam, but there is still plenty to be done. EPR needs to be more comprehensive - that is, to involve more end-products (not just packaging, but also e-waste, batteries, clothing etc), and it needs to be a more conjoined effort. Out-sourcing to companies like Valpak combined with local authority schemes can make the whole thing look a bit disjointed. Having a UK-wide comprehensive EPR strategy across all end-products that is effectively monitored and enforced would be an enormous leap forward for sustainability and waste management.

youcanarguewithstupid

Further reading/sources:
Greenpeace report on EPR: "Throughout this report empirical evidence has been provided that clearly illustrates that the environmental performance of products subject to EPR law has improved, particularly regarding hazardous materials reduction and improved recyclability and recycling." here

Useful article on how long different materials take to decompose here

Telegraph article on methods of dealing with our waste after the traditional landfills are filled up here

Bernard London's famous 1932 pamphlet on 'planned obsolescence' here

The UK govt Producer Responsibility Obligations (Packaging  Waste) Regulations 1997 here

1994 EU directive on packaging and packaging waste here

and a useful summary of it here

New Ideas...Peston's Speakers4Schools

Peston, looking like he's come over
all Derren Brown

When he hasn't been looking stressed on the BBC news about the current financial situation, Robert Peston has been busy setting up an impressive new initiative.

This is Speakers for Schools (www.speakers4schools.org.uk).

It is a not-for-profit organisation that has signed up over 800 eminent characters to give free speeches to schools.

David Miliband, loves bananas

Where your Eton or your St Paul's might not blink twice at the sort of fees these speakers normally request, your average city comprehensive can hardly afford to bring them in. And yet these are exactly the schools that need to hear from successful people (other than the TOWIE cast) to give them inspiration, ideas and role models for their future.

Ed Balls, currently Shadow Chancellor
has signed up

This is where S4S can step in. It is a way for schools without the big bucks to get successful people from all sorts of fields in to give speeches.
It's a new initiative and the website isn't fully comprehensive yet, so we'll have to see how many of the talks actually take place, but the idea behind it and the list of names attached are admirable.

Dido Harding, CEO of TalkTalk
is another speaker listed

Speakers include all manner of luminaries, from Baronesses, Dames, sportsment, musicians to Lords and currently active politicians. Each speaker listed has agreed to give at least one voluntary unpaid talk per year. The school or college just has to go to the Apply for a Speaker page and they should, hopefully, have one of these bigwigs to themselves for an hour or so at some point in the year.

This is such a Good Idea because the majority of the speakers listed are not 'celebrities'. They are people who have worked very hard to get to the top of their game, whatever that game might be. In the Age of Entitlement and endemic fame-seekery, it is hugely important to give less privileged students a glimpse of a different sort of success.

 

youcanarguewithstupid

Further reading:

Peston in the Guardian about S4S here

Peston in the Evening Standard about S4S and bonuses here

Future Fodder...the shorter work week

Don't mourn for me friends,

Don't weep for me never,

For I'm going to do nothing

Forever and ever.

Traditional epitaph

[source]

On January 11th 2012 there was a panel discussion and lecture at the London School of Economics called "About Time: Examining the case for a shorter working week".

It was run by the New Economics Foundation (NEF), who call themselves a 'think-and-do tank', and who published a preliminary report in 2010 suggesting a 21 hour work week would reap huge benefits.

Now their aim is to build the case in more depth, explore the evidence and think more about ways of overcoming practical and cultural obstacles.

A bit of background

The idea of a shorter working week is far from a new one. Here are some instances where it has come up in multiple ways in the past:

• In 1974, Prime Minister Ted Heath imposed an emergency 3-day work week on the nation in response to a nationwide coal miners’ strike. It lasted 3-4 months. [source]

• In the 19th Century the UK govt passed the Factory Acts. These were essentially to improve working conditions for factory workers. The first Factory Act in 1802 stated that children between 9 and 13 years old could work no more than 8 hours in a day. The 1856 Factory Act stated that women and children could only work from 6am - 6pm in the summer and 7am - 7pm in the winter.

• In his 1931 essay Economic Possibilities for our Grandchildren, the eminent economist JM Keynes predicted a 15-hour workweek for his grandkiddies generation. He also notes a distinction between two classes of human needs - absolute needs (food, shelter etc) and "those which are relative in the sense that we feel them only if their satisfaction lifts us above...our fellows." He does say that this latter grouping may be insatiable, but I think he would be flabberghasted to see quite how much those needs now rule the economy and society.

Keynes, who also promoted
acceptance of homosexuality

• Though still maintaining a 40 hour workweek, in 2008 the state of Utah, USA experimented with shortening the number of days worked: In August 2008, they redefined the workweek for more than 17,000 of its employees so that they worked 10 hours on 4 days a week and not at all on Fri, Sat and Sun. By May 2009, the state had saved $1.8million and 82% of workers involved said they would prefer to stick to the new routine. [source]

• The European Work Directive of 1993 made a maximum workweek of 48 hours for EU member states. However it also had an opt-out clause - and guess what, the UK opted out. Essentially, we have a law that no one can be forced to work more than 48 hours per week, unless they wish to do so. So yeah, we don't really have a maximum. [source] [source]

There are loads more examples of legislation and policy ideas on workweeks; those are just a handful.

Here's what the experts said...

On the panel were:

Juliet Schor - Professor of Economics at Boston University and author of these related tomes

Lord Skidelsky - Emeritus Professor of Political Economy at Warwick University, he's way too impressive to reduce to a couple of lines - check out his site.

Tim Jackson - Professor of Sustainable Developtment at Surrey University and author of this book which I'll be doing a post on soon.

Anna Coote - chaired the panel, Head of Social Policy NEF

You can watch the event yourself at this webpage.

So, here's what NEF and the panel reckon about a shorter work week:

• "The time's right to think about time" - Coote: We need to start thinking about how we value time, money and products, and reassess those valuations. For example, by trading some money for some more time.

• Cutting working hours could: reap environmental benefits through less use of fuel in travel or powering work places; encourage more active participation in citizen affairs due to freed up time; improve health and stress levels; leave more time for relationships and family; reduce inequality and unemployment by redistribution of hours - less hours per person equals more people able to get some hours of work; potentially increase output in some fields.
•  Even if we could grow our way out of unemployment/recession, we don't want to: working hours are closely related to ecological issues and carbon footprints. Higher hours = higher footprint. The more you work, the more you degrade.

• Time-stressed households behave in a more carbon intensive way. (I don't have a stat for you proving this one, though I can imagine that it'd be accurate - most labour-saving home stuff requires electricity. You'd be more likely to drive or fly to places.) 

• To accumulate without end is pathological, i.e. to keep working more in order to make more money to buy more things that aren't necessities or above a certain low-level of comfort is an illness.

• We need to start thinking about our working experience qualitatively, not quantatively; i.e. about the quality of it, not how much of it we do.

• "Pathology of squeezing time through the frame of productivity growth to increase output in the economy" - Tim Jackson

•  Behavioural economics tells us that we have 'asymmetrical preferences': Applied here this means that people feel very differently about income that they already have compared to income that they don't yet have - we are resistant to giving up what we do have, yet not resistant to forgoing future earnings. That's why people like direct debits.

• The "delusive promise of more consumption" (Schor) perpetuates us passively taking on longer hours than necessary.

This is from www.getrichslowly.org

They ask us to consider what is Enough, what is Necessity, what is the Purpose of our working day, and how much do our unpaid activities (home life, leisure etc) become eroded by our working hours.

The problems with the idea

There are the general problems noted in the public domain about this idea.

The first is glaringly obvious: Some people barely earn enough to live off working over 40 hours/week on the minimum wage - how on earth could they live off 21 hours pay?

Prof. Juliet Schor
looking cheerful

Schor said in the panel discussion this: "the trajectory of progressive work time reduction in which you can use productivity growth to finance those changes [in work hours means that you don't] need to take income away from people."

So basically she's saying that somehow, people would still earn the same amount. She also said that minimum wage would need to go up. This is where the idea seems to turn into widespread income redistribution - which is a Good Thing in and of itself, but makes this whole 21 hour work week caboodle a lot more complex and unlikely.

Secondly, the argument that it would reduce carbon footprint slightly depends upon what people do with their extra day off. If Larry goes off and arsons a forest, it's not so helpful ecologically. Bad Larry.

For some reason this is what came
up when I image searched
'lump of labour'.

Thirdly and more technically, there's the lump-of-labour fallacy

This is basically the notion that there is not a finite amount of work available - i.e. that an economy can always generate enough work to employ its whole population.

This is what Schor has said here in response to someone bringing it up:

"Here’s a little bit of what’s wrong with that argument. It’s about a closed economy–not a set of wealthy countries in a global system with severe inequities and free movement of capital. There’s no reason that jobs are created in the wealthy (and declining) parts of the world. And second, climate change requirements act are a constraint on labor demand/job creation."

There's also the rather massive question of how we'd go about putting this new work week in place - would businesses start it? Would the govt regulate? Etc.

Parkinson's Law

Parkinson's law says that work expands to fill the time available to do it in. It was first used in 1955 by Cyril Northcote Parkinson in an humourous essay for The Economist [read it here].

Combining that adage and the basic assumption that it is better for the environment and society to try to consume less, a shorter working week makes rather a lot of sense.

I'd love to see or hear about some companies in the UK trying this one out.

The 10-4 notion (see above about Utah; 4 days a week working 10 hours daily) is a really interesting one and surely one worth testing out over here. It doesn't affect pay as the total number of hours worked weekly remains the same, but it does free up a whole extra day. The 5 day 9-5 grind is as much a construct as imposing this new version of the work week would be.

The Commonsense Sniff-o-meter
on youcanarguewithstupid:
rotten haddock - eggy - pine fresh

However, the idea of a 21 hour work week rates Eggy on my Commonsense Sniff-o-meter. It is SUCH a vast reduction, that I don't see how it would ever come about (except over a huge number of years - which the environment doesn't really have). We live in a largely passive society and the 9-5 is so strongly ingrained that a smaller shift is far more likely to come into effect. So for me, the 4-10 model rates Pine Fresh, and could be a starting point for bigger changes.

But the point isn't really about the numbers - it's about starting to think properly about how we live, and how we can improve our wellbeing. This is all part of that.

Any move towards normalising shorter work hours (whilst having a living wage) has to be a good thing. The insatiable wish to consume, to accumulate and to compete in a 24 hour globalised world has led many people and industries to a point where they no longer consider how they use their time, they just use it. But time as a commodity needs consideration; what should the division of it between economic and social use be?

To wind up, here's Keynes again in the same essay as above:

The love of money as a possession as distinguished from the love of money as a means to the enjoyments and realities of life will be recognized for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease.

youcanarguewithstupid

Guardian's lovely photos from the 1974 shorter workweek here
Juliet Schor explaining her argument for here
Books that talk about subjects touched on here (other than the panel's books):
How to be Free - Tom Hodgkinson
The Age of Absurdity - Michael Foley
Affluenza - Oliver James
Small is Beautiful - E F Schumacher
Articles about a 4 day work week:
Guardian
Inc