Context

Action for Children works with vulnerable children and young people, and their families. The focus of this report is on supporting young people to become financially educated and capable. The organisation has campaigned successfully for children in care and care leavers to be entitled to savings accounts, and has also given a clear message to UK governments about the importance of financial support and education for vulnerable children and young people. This study follows up on this campaigning and aims to explore the current state of financial education for vulnerable children and young people, to understand the impact of lacking financial skills and to learn about the effect of problem debt.

The study

This report builds on existing workshops with Action for Children practitioners, young people and parents across the UK, at which financial education and debt were identified as top concerns.The study included:

• A survey of 148 Action for Children practitioners to understand the scale and impact of debt on service users of Action for Children.
• A survey of 1,058 children and young people across the UK aged 12 to 18, which took place during August 2014.
• Analysis of client records of young adults who had contacted StepChange debt charity in 2013.
• Qualitative research with 21 young people in focus groups.
• The methodology states that the children and young people were “from across our services” which implies that those surveyed and included in focus groups were all Action for Children service users, although no further information was given about how they were selected.
• Action for Children commissioned this research to inform government policy; the report is described as a policy paper.

Key findings

• • 45% of children and young people surveyed had no financial education, or didn’t remember having one.
  • The primary places for receiving a financial education are at home or school but this is a challenge for those who don’t find either a positive place to learn.
• • High interest credit is a major problem, driven primarily by ease of access to high interest credit products. 42% of Action for Children staff said that service users are accessing high interest credit such as payday loans.
  • Analysis of the data of people who had contacted the debt charity StepChange showed that young people with debt problems are more likely to have payday loans than older people; payday loans are particularly common amongst younger men, whereas catalogue debt is more common amongst younger mums who are on benefits; apart from unemployment and redundancy, the main reason people tend to fall into debt is through inability to budget.
• • 27% of Action for Children staff felt that service users weren’t aware of the hidden costs and risks of credit.
  • The children and young people interviewed said that they found financial products and the acronyms and financial language used confusing, banks were intimidating and mainstream financial products were seen as ‘not for people like us’.

Overall, the study found that there is still a lot of work to be done to improve financial capability and inclusion amongst vulnerable children and young people. The authors recommended that strategy must include early intervention for vulnerable children and young people by targeting support, going beyond school and home, and asking them what solutions might prevent financial problems in the future.

Points to consider

• The research is timely and topical given the prevalence of debt in the UK and the proportion of children and young people affected.
• This study focused on vulnerable children and young people but some of the recommendations about financial education apply to children and young people as a whole, such as combining financial education with other life skills such as cookery.
• The research is aimed at influencing government policy, however it would also be of interest to educators and anyone working with children and young people.
• Very little information is given in the report about the methodology and it is not clear how the sample was selected, so it is hard to know to what extent the results are representative of the universe. The survey of Action for Children staff has a low base size, although the size of the universe is not known. The data is useful in providing a description of the issues.

Full report

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