What do the Beano, Test cricket and the online video game Fortnite have in common? The answer is that they could all be used to boost the UK’s flagging levels of number confidence.
As the deepening economic impact of the coronavirus puts the screws on nation’s personal finances, getting to grips with figures has never mattered more.
Even before the pandemic we were not in great shape, with only one in four Britons of working age said to be functionally numerate. Half the population has low confidence in making decisions to do with money, according to research by the Financial Conduct Authority (FCA), and 50 per cent have problems understanding credit card repayments.
It gets worse. In 2016, the UK was ranked joint bottom for adult financial literacy in a league table of 17 OECD nations, putting it on a level with Albania, and was the only OECD country where the numeracy skills of 16- to 24-year-olds were lower than the over-55s.
“Every other country is becoming more numerate over time, yet our young people have fewer skills, and that’s super relevant right now as younger people are bearing the brunt of the Covid crisis,” says Andy Haldane, the Bank of England’s chief economist.
One of a host of high-profile figures supporting the UK’s first Number Confidence Week, which kicks off next Monday, Mr Haldane firmly believes that these shabby statistics can be reversed if people of all ages embrace improving their numeracy.
“This isn’t neurological, it’s psychological,” he says, adding that “confidence, not competence” is the key issue.
Organised by the National Numeracy charity, of which Mr Haldane is the vice-chair, the week-long programme of virtual events, quizzes and online tests aims to help people feel more comfortable working with numbers in everyday life.
The charity’s ambassadors include Bobby Seagull, the celebrity maths teacher who shot to fame battling Eric Monkman on television’s University Challenge. On a mission to demystify maths, he’s completing a doctoral thesis exploring maths anxiety at Cambridge university and was recently asked to explain on BBC news how the government’s new Job Support Scheme was calculated.
“In theory, an 11 or 12-year-old could work out the fractions and percentages setting out how much people will be paid, but at the moment, people are being bombarded by numbers and feel overwhelmed,” he says.
The men have very different experiences of using numbers — Mr Seagull in the classroom; Mr Haldane as an economist and central banker making decisions about interest rates and quantitative easing.
To mark Number Confidence Week, both agreed to speak to the Financial Times about why now, more than ever, the nation’s number crunching skills need boosting — and ways this might be achieved.
In happier times, our interview might have taken place over a lavish lunch in a gilded room inside Threadneedle Street, with its sweeping staircases and pink waistcoated attendants. Alas, the coronavirus relegates our discussion to a Zoom chat.
Mr Haldane is beamed in from his book-filled study in darkest Surrey, and Mr Seagull from his bedroom in east London, close to the school where he teaches, practically in the shadow of the West Ham stadium. His personalised claret and blue shirt proudly hangs in the background behind a pile of half-term marking.
Their conversation begins with how maths — and personal finance — is taught in schools.
Mr Seagull refers to the “binary nature of maths” which can be psychologically challenging. Get a question wrong and there’s an angry red cross in the exercise book. He says the sense of shame often persists into adulthood, convincing people that they “can’t do maths” — an attitude he encounters at school parents’ evenings.
“Often, if their child hasn’t done well that term, parents will say ‘Oh, I didn’t have a maths brain either’ but that concept is flawed. It’s like exercising a muscle. We can all get good at going to the gym, and getting more competent with numbers isn’t something to be afraid of.”
Mr Haldane agrees. “To succeed, you first need to fail, but in mathematics that’s really hard because to fail means getting it wrong. Will that encourage you to try even harder, or discourage you?”
“It should be more about understanding the process and how you get somewhere,” Mr Seagull says. “In the real world, if you don’t understand pensions, you don’t need to know the final answer immediately, you just need to be able to take some steps. In a maths exam, it’s you sitting there on your own, getting things right or wrong — but in the real world, you can discuss and consult.”
In a bid to break out of this binary approach, the Bank of England teamed up with The Beano this year to produce free learning resources for primary schools, featuring characters including Dennis the Menace in real-life situations involving money.
“I was super keen to have the Beano as a partner because the comic was originally set up as a teaching device to encourage reluctant readers to read,” says Mr Haldane. “That’s why so many of the characters are naughty, which is absolute genius. They make reading appealing, rather than scary. The learning is subliminal.”
The challenge, he says, is transferring this approach to numeracy, and how people spend, save and earn. One group discussion task in the BoE’s Money and Me programme involves Gnasher, who “loves shopping for snazzy outfits at his favourite shop, Topdog.” One day, the shop assistant offers him a store card that gives him 20 per cent off — but the interest charges hit naughty Gnasher when he forgets to pay his bill on time.
It’s hard to imagine a classroom of 7-11 year olds relating to store cards, but every initiative has to start somewhere.
Mr Seagull emphasises there are myriad ways that young people he teaches are already interacting with money. “Engaging young people with technology is one way of making them more number literate without forcing them,” he says.
“They understand the concept of being on Fortnite [the online video game] and only having 200 V-Bucks left on their account. I think gaming can help young people become more financially confident.
“Some of my older pupils aged 15-16 have got banking apps, and because they’re seeing it on their phones constantly they’re acutely aware of how their £20 pocket money is being spent with £2.50 in Lidl here, £2 on football stickers there.”
Mr Seagull also notes the rise of contactless cards such as Gohenry, Osper and Rooster for children as young as six, which are linked to apps that allow parents to “pay” them pocket money when they complete tasks such as household chores, or their maths homework.
With three school-aged children, Mr Haldane admits he is sometimes asked to assist. “Very unusually for an economist, I didn’t take A-level maths at school,” he says, adding he spent a “very difficult summer” getting up to scratch before he went to university.
“I was playing catch-up, but I’m on the right side of competent now,” he says. “It means I can also see the barriers that huge numbers of people face. For many, it’s a fork in the road — they reach the view that theirs is not a ‘maths brain’. That’s why I think number confidence issues are so critical.”
With the furlough scheme and mortgage holidays coming to an end on October 31, the FCA warned last week that 12m UK consumers were now classified as “financially vulnerable” meaning they could miss bill payments or debt repayments.
Overlay this with a lack of confidence about dealing with numbers, and it could prove to be “a very toxic mix when finances are squeezed,” Mr Haldane says, noting there are millions who lack an adequate savings cushion.
Over the past few years, he has met around 40 individuals through charities who had experienced problem debt.
“What struck me is how easy it is,” he says. “These people weren’t being reckless, there was a combination of unlucky events, maybe a degree of sticking their heads in the sand — but they were suddenly in a precarious debt situation.”
“They were carrying around this financial burden and, more importantly, the psychological burden of not knowing quite where their finances were. Their financial bearings had been lost.”
Many told Mr Haldane their “epiphany moment” was being shown how to draw up a simple household budget, plotting their weekly income and outgoings on a sheet of paper.
Mr Seagull recalls the Micawber principle from Charles Dickens’s David Copperfield, where ending the year sixpence under or over budget produced the binary result of either “happiness” or “misery”.
Mr Haldane adds: “For many people I spoke to, it was an absolute revelation to find the way they were going about their spending meant they were in the red, and if they didn’t correct that, they’d be even further in the red next month.”
No matter how good your numeracy skills, they cannot fix a deficit budget. With unemployment rising, wage subsidies reducing and footballer Marcus Rashford’s campaign for free school meals dominating the headlines, regulators expect demand for debt advice to rise as households sink deeper into the red.
The FCA has encouraged banks, mortgage lenders and finance providers to treat customers who cannot afford to pay with forbearance, but this approach rests on consumers seeking help.
An inability to request advice could prove financially catastrophic for some families — yet again, showing how number confidence could mean the difference between happiness or misery.
Financial uncertainty is also something that people are grappling with as stock markets roil, the mortgage market tightens and talk of negative interest rates persists. How might innumerate Britons get their heads around that?
“Even the concept of a positive interest rate is not well understood,” Mr Haldane says. “If you ask the question ‘Do you understand whether you are made better off or worse off by interest rates in the economy being changed, in whatever direction that might be?’ there’s an alarming lack of understanding.”
He cites the example of “What does an APR [annual percentage rate] really mean for my finances?” referring to how consumers struggle to understand the high costs of short-term borrowing on credit cards and payday loans.
Confusion would no doubt increase if interest rates were to turn negative, with people effectively being charged to deposit money, and being rewarded for borrowing.
Mr Seagull worries that rock bottom rates have already caused a problem, removing the incentive to save. If so many people can’t prioritise saving in their day-to-day budgets, he asks, “then what about saving for the future, 20 or 30 years’ time, in the form of a pension”?
Mr Haldane accepts the UK has “a savings deficit issue, and a savings culture issue” but thinks that emphasising the long-term benefits of savings could help.
“We’re not fully appreciative of the power of compound interest, the so-called eighth wonder of the world. Even with the low levels of interest rates globally, the genius of compound interest still applies.”
In a speech in 2016, Mr Haldane controversially admitted to “not being able to make the remotest sense of pensions” saying that levels of complexity were “a desperately poor basis for sound financial planning”.
“My mailbox in response to that speech was very interesting,” he says. “Half of the messages were from pension providers and independent financial advisers who thought I may have exaggerated the degree of complexity. The other half were from the same groups of people offering their help tackling the complexity problem!”
Since then, Mr Haldane says he’s been encouraged by steps the industry and policymakers have taken to simplify and demystify long-term savings — but says they shouldn’t stop there.
“We know that complexity increases the likelihood of people being susceptible to fraud, so the simpler the product, the less chance of people making a big mistake. But if you’re fearful of numbers and not used to reading the fine print, that’s also a good reason not to save — which is the last thing we need right now.”
Mr Haldane admits to being baffled at how the UK scores so poorly on financial literacy when London is the pre-eminent financial centre in the world. “There is a huge endowment of financial expertise and numeracy in London, Edinburgh, Leeds and elsewhere — can we not find a way of exporting those number skills across the country?”
Number Confidence Week’s founding partner, City brokerage TP ICAP, is trying to do just that. How number confidence could boost young people’s chances of a City career will be explored in a free webinar next Tuesday. According to its research, 78 per cent of young British women would not consider a career in financial services and nearly half said that a lack of number confidence was a reason for this.
Number Confidence Week
To see the full programme of events and sign up to the online challenge, visit nationalnumeracy.org.uk/number-confidence-week
“Over 90 per cent of business leaders say they would love staff numeracy to be improved as this would improve productivity on the job,” Mr Haldane says.
He hopes bosses will promote Number Confidence Week in a wider drive to improve financial wellbeing. The online Numeracy Challenge, a multiple-choice tool that has now been taken by more than 300,000 people, is the obvious place to start.
There are no red crosses: if you don’t get an answer right, an explanation is provided with links to further exercises.
Mike Ellicock, the former chief executive of the National Numeracy charity, stumped presenter John Humphrys on Radio 4’s Today programme when he asked him to name any profession that didn’t require some degree of numeracy. “He couldn’t,” recalls Mr Haldane, “because there isn’t one.”
A football fanatic, Mr Seagull has proved adept at answering Mr Humphrys’ questions. He was a Celebrity Mastermind winner this year after being quizzed on England’s performance at the World Cup. He cannot resist asking Mr Haldane if he were to take part, what his specialist subject would be.
“I’m a great lover of Test cricket,” he says. “There are lots of numbers around cricket as you know, it’s an absolute feast of statistics. But I couldn’t hope to emulate your performance.”
“I actually studied really hard for it,” says Mr Seagull. “I made a spreadsheet with every single match, every single incident — I’ve got a football brain, but I worked hard at it, so I become more confident.”
Mr Haldane recalls the words commonly attributed to championship golfer Gary Player: “The more I practice, the luckier I get.”
For the UK to improve numeracy levels, the pair agree we need a lot more imagination. “If your thing is apps, let’s do it through apps. If your thing is gaming, or sport — let’s do it through that,” Mr Haldane sums up. “Starting from the things people are familiar with, rather than the theory, could really make a difference to getting us a bit more numerate as a nation and that’s something we sorely, sorely need — especially right now.”