New financial schemes to educate school pupils on dangers of debt

Pupils in Plymouth are to learn about the importance of saving money and how to avoid getting into financial difficulty, as part of a new scheme aimed at stemming the spiral of debt.

The project is a joint initiative between Plymouth City Council, Hope and City of Plymouth Credit Unions, Barclays, and local schools to educate young people on managing their finances. It is hoped the scheme will help break the cycle of debt in Plymouth, a city in which 30% of the adult population are over-indebted (12% higher than the national average). According to the Money Advice Service report Indebted Lives (November 2013), Plymouth is 48th worst out of 406 local authority areas for adult debt.

Under the scheme, which was agreed by Council Cabinet on Tuesday 11th November,  pupils will be visited by representatives of Barclays and the two Credit Unions to help develop their financial skills. In addition, all year 7 pupils (aged 11 and 12) who started at a Plymouth secondary school this year are being given £10 to open their very own Credit Union savings bank account, with an additional £10 at the end of the school year if they still have a minimum of £10 in the account. This scheme is being funded by the general (non-ringfenced) Council reserves.

All year 11 pupils (aged 16) are being given £10 at the beginning of the year to also open a Credit Union account. The Year 11 scheme has been funded from government funding allocated to local authorities for welfare assistance, although this funding is being discontinued in 2015/16. Although this funding will not continue next year it is hoped that the impact and legacy of this scheme will last at participating schools for some time after.

The ‘one off’ Year 11 scheme has been funded from part of last year’s Emergency and Welfare fund as part of the wider package of early intervention and prevention. It will be accompanied by the educational visits from Barclays and Credit Unions.

Councillor Chris Penberthy, Cabinet Member for Cooperatives, Housing and Community Safety, said: “As a cooperative council we encourage people to save with credit unions, particularly at a time when Government cuts, both to our funding and to welfare budgets, combined with the rising cost of living, is having a detrimental effect on Plymouth resident’s quality of life.

“This is a fantastic way to raise awareness of the work of credit unions, engage young people in the city and encourage them to think about financial issues and in particular, more affordable and ethical alternatives to payday lending.

“It is estimated that up to 9,000 adults in Plymouth take out Pay Day Loans annually; this is 51,000 loans a year at a cost of £8.8million in interest and charges to residents.

“Plymouth City Council is already working hard to counter payday loans, with a range of measures including a ban on payday advertising on any Council owned hoardings, blocking access to the websites of the top 50 lenders across their computer network, and funding a credit union shop front in the city centre. It’s hoped by teaching young people about money management at a young age it will stop them falling into the cycle of debt.”

Barclays’ involvement will see local staff using their knowledge and expertise through its    Five Million Young Futures programme to help young people develop their financial skills alongside the Credit Unions which are accredited by the Financial Services Compensation Scheme (FSCS).

The projects are part of the Life Skills programme and the Credit Unions are accredited by the Financial Services Compensation Scheme (FSCS). The training sessions will focus on budgeting, saving, borrowing avoiding scams and how to use basic bank accounts. The Council aims to break the cycle of debt by improving financial literacy, budgeting and saving skills amongst residents, focusing on our children as tomorrow’s savers and takers of loans.

Councillor Mark Lowry, Cabinet Member for Finance at Plymouth City Council, said: “These projects will provide young people with an easy way to start saving. It’s designed to educate children in money management, giving them a better understanding of the sometimes confusing world of finance. In the case of Year 7 pupils, not only are we starting them off with a £10 deposit we are also incentivising the scheme with the bonus of a further £10 at the end if they demonstrate good financial management.”

A number of schools across the city have already signed up to the scheme. The first school to sign up to the scheme was Ace School, a pupil referral unit which helps educate some of our most vulnerable and socially excluded children in Plymouth.

Pete Leidig, Head of Careers and Personal, Social and Health Education (PSHE) for Ace, said: “We work with some of the most disadvantaged local young people so our school is very pleased to be a part of this scheme. It’s a great way of encouraging people to start saving money at an early age.

Claire Burnard, Business Manager for Stoke Damerel Community College, said: “We’re very pleased that Stoke Damerel Community College has been invited to work with the Council, Barclays and local Credit Unions as part of the School Credit Union Scheme.

“Initiatives like this are an important, practical addition to our students’ financial education and will enhance their understanding of monetary matters which can only be of benefit to them in the future.”

Tracey Downes, Assistant Principal at Lipson Cooperative Academy, said: “Lipson Cooperative Academy is delighted to take part in this scheme which gives our pupils the knowledge and information they need to effectively manage their finances, an essential life skill. It is vitally important that students understand personal finance and are able to make ethical choices.”

Michael Watts, Barclays Community Leader for Plymouth, said: “This is an exciting new initiative launching in Plymouth which we are delighted to partner with as part of our commitment to help five million young people, by 2015, develop the enterprise, employability and financial skills they need to achieve their goals.  Projects that build financial inclusion and support young people will help ensure a brighter future for the next generation.”

A spokesperson for Hope (Plymouth) Credit Union Ltd said: “We are delighted to be able to work in partnership with Plymouth City Council to deliver this financial package to the schools in Plymouth. Of particular merit in our opinion is the packaging of both a financial incentive and an educational package to give a rounded approach to financial education. We look forward to welcoming city students as junior savers to both of our credit unions.”

A spokesperson for City of Plymouth Credit Union said: “We see this as a tremendous opportunity for our young adults of tomorrow, to use this as a foundation to save for the future. Develop a saving habit to help to achieve their savings goals and Giving them a real value of money.

“Enhancing their financial skills through various educational modules. For them to understand saving is a really good habit. We look to working alongside Hope Credit Union to make this a success and our other partners Plymouth City Council and Barclays, making the city proud of its young savers.”