Financial Inclusion: Young People

I beg to move, That this House has considered financial inclusion for young people.

It is a pleasure to see you in the Chair, Sir John. Today, young people are one of the groups most at risk of financial exclusion. Analysis by Fair4All Finance has identified 2 million unsteady starters in financially vulnerable circumstances across the UK. That includes 11% of financially vulnerable adults in Hertford and Stortford. Predominantly under 35, those young people are facing a combination of pressures: low financial resilience, higher housing costs, insecure work, rising insurance costs and a growing exposure to online financial risks. They experience poorer financial wellbeing as a result, closely linked to poor mental health, creating a vicious cycle that can undermine their educational attainment, employment prospects and economic participation.

Financial inclusion is about more than access to banking; it is about access to affordable credit, insurance, savings, trusted financial guidance and opportunities to build a financial track record. I am pleased that the Government have recognised the importance of tackling financial exclusion in the financial inclusion strategy. If we can break down the barriers to financial inclusion, we can improve the lives of millions of people and unlock growth across the country. In this afternoon’s debate, I want to examine the barriers to financial inclusion that young adults face, and consider where Ministers could build on the financial inclusion strategy to prioritise practical interventions to support young people.

Although a young person may pay rent regularly, meet mobile phone payments or have built responsible financial habits, they often lack sufficient credit history to access mainstream financial products on fair terms. We know that young adults are over represented in the gig economy, temporary employment roles, part time work and on zero hours contracts. The insecure and variable income they receive is compounded by the high cost of living. It is harder for them to budget effectively or qualify for mainstream financial products, and they are more reliant on costly forms of borrowing as a result.

As the cost of living crisis continues to eat into disposable incomes, young people struggle to build emergency or long term savings. They typically have fewer savings than older adults, which leaves them acutely vulnerable to financial shocks: losing a job, an unexpected bill, increased rent or transport costs. In those circumstances, without emergency savings to draw on, many face a poverty premium, paying more in the long term through instalments because they cannot afford the cost of an up front payment.

I commend the hon. Gentleman for bringing this forward. The situation in Northern Ireland is no different from the one he described in his constituency and the wider United Kingdom. Young people face unprecedented barriers to building financial security. High street bank closures are turning rural and working class communities into banking deserts. At the same time, the aggressive use of unregulated “buy now, pay later” schemes and predatory online lending apps is driving vulnerable young adults into spirals of unmanageable debt before they even secure their first mortgage or full time career. Does he agree that the Government must implement comprehensive, mandatory financial literacy education in our schools, as a priority?

I could not agree more about the importance of financial education for young people, which I will come to in my speech.

We can already see how those overlapping pressures exacerbate a young person’s financial insecurity. Insurance is another area where they are left facing vulnerability to financial shocks that they are already ill equipped to absorb. I was shocked to learn that 18 to 24-year olds are significantly less likely to hold contents insurance, even though they are more likely to experience flood damage, escape of water, fire damage, burglary and theft. That is especially true when they live in rented accommodation, which many young adults do.

I want to draw particular attention to the cost of motor insurance. Young people often make significant personal investments in driving lessons, to make it easier to get to work or education, only to find they cannot access affordable insurance when they pass their test. That directly impacts their ability to access work, training and other opportunities, especially in semi rural communities such as the one that I represent, and it highlights how young people can face financial exclusion even when they are doing everything right.

Too often, young people are entering adulthood without the tools, confidence or support networks that they need to navigate increasingly complex financial decisions.

My hon. Friend is an incredible advocate for young people in his constituency, but also across the country. What is his opinion of a lot of young people getting financial education from social media or AI chatbots? The Government need to regulate that but also, ahead of the social media ban, ensure that we are bringing financial education into schools and other real life forums, so that young people do not miss out.

I could not agree more about the importance of regulating access to financial information across social media and AI, which is an emerging challenge. Embedding financial education in school is so important, particularly ahead of the social media ban, which my hon. Friend mentions.

Research has shown that young people have the lowest confidence in managing their money. The latest MoneyView survey from the Money and Pensions Service found that although 41% of adults lack confidence managing money, the figure rises to 63% for 18 to 24-year olds. That is the highest for any age group.

I welcome measures in the financial inclusion strategy to embed financial education in the primary school curriculum, helping children to develop healthy attitudes towards money at the earliest stage, but there is a need to go further. A report in 2025 by the London Foundation for Banking & Finance highlighted a significant gap in financial education provision. Financial capability programmes are concentrated in primary schools, the early years of secondary school and workplaces. There is comparatively little structured support for young people aged 16 to 24 as they transition to financial independence. That is one of the most financially vulnerable periods in a young person’s life. They have to navigate leaving school, entering work or going to university, and living independently for the first time.

Particularly as students, young people are vulnerable to developing bad financial habits, experiencing a financial crisis or falling into debt. They are often having to balance their education with work. If a financial crisis hits, they face the prospect of sacrificing more of their education to pay down debt, with a potential impact on their future life chances. These significant moments in a young person’s life are when small mistakes and unexpected costs can quickly escalate. Early support in this transition period is critical to prevent longer term financial problems.

All this takes place in a rapidly evolving digital landscape. Young adults are adopting AI tools faster than older generations, which is providing them with opportunities for more accessible guidance, but leaving them at risk of exposure to inaccurate information, scams and poor or misleading financial recommendations. MoneySuperMarket’s latest Money Talks research with the Campaign Against Living Miserably found that 44% of 18 to 34-year olds are turning to generative AI as a private space to express their money worries. That is almost half of young people who are being exposed to unregulated financial advice.

Financial exclusion does not only increase economic inequality between those who have savings, access to financial education and good support networks, and those who do not; it also has a significant impact on young people’s mental health. Financial anxiety is no longer associated just with moments of crisis. For many, it has become a daily occurrence. Research from MoneySuperMarket, CALM and UM showed that one in two young adults is in debt, one in four young people has used a food bank in the past year and, more than social media, body image or relationships, money is the topic causing young people the most worry right now. Young adults are 77% more likely to have experienced suicidal thoughts because of issues with money or money worries than the wider adult population. One in 10 young adults with debt will have had suicidal thoughts in the past 12 months because of worries about making repayments.

There is a profound link between financial difficulties and poor mental health. It is often cyclical, with financial stress leading to more mental health challenges, and poorer mental health making financial management harder. We must recognise that relationship and how financial insecurity and exclusion are leaving young people lacking agency in our society and without hope. Beyond arguments about economic growth and inactivity, this alone should spur us on to do better.

What might solutions to the barriers I have set out look like, and where might we be able to go further? First, on credit visibility, small sum lending can support young people with thin or non existent credit files to establish their financial identity, and therefore access affordable financial products. For example, Fair4All Finance is piloting small sum lending in partnership with Monzo, and I would be keen to hear the Minister’s reflections on the role of small sum lending in that area. What further action can the Government can take alongside regulators to support young people to establish a financial track record?

Secondly, on insurance affordability the interim findings of the recent Milburn review highlighted the stark challenge of 1 million young people who are not in education, employment or training. I know the Government are committed to tackling the high number of NEETs, but I would be grateful if the Minister would set out what work is being undertaken with regulators and industry to improve access to affordable motor insurance for young drivers, and to tackle the prohibitive costs restricting their access to work and education, leaving them financially excluded. Modelling from WPI Economics has found that improvement in that area could increase the UK’s GDP by £369 million annually through increased employment and participation in the labour market—there is an economic opportunity here.

Thirdly, will the Minister reflect on how the Government can expand financial education and support in that critical period of transition for 16 to 24-year olds, and share what consideration she has given to the growing influence of AI on financial decision making? Finally, on financial wellbeing and mental health, will the Minister commit to working across Departments to ensure that financial resilience forms part of the Government’s wider approach to supporting young people’s mental health and wellbeing?

If we want to grow the economy, tackle the NEET challenge and improve young people’s mental health and wellbeing, we must ensure that they are not excluded from the financial system that underpins modern life. Real financial inclusion must mean that every young person can build a secure and sustainable financial future. A young adult who can save, build a credit history, access affordable insurance and make informed decisions about their finances is more likely to succeed in work, education and life. They will feel that they have agency in our society, and they will have hope for the future.

Order. I should remind Members that they need to bob, though I see they already know that. I call Robbie Moore.

It is a pleasure to serve under your chairmanship, Sir John. I commend the hon. Member for Hertford and Stortford (Josh Dean) for securing this important debate, and congratulate him on his speech—I thought he made some excellent points. Many young people are entering adulthood without the knowledge, confidence and access to the financial services that they need to build secure futures. Some 70% of adults believe that better financial education in their younger years would have improved their ability to manage their finances, and two thirds of young people believe that the lack of financial education has played a role in their amassing the debts they hold.

I wish to talk through a few issues that have been raised with me, particularly regarding access to apprenticeships and the challenges that those in our rural economy face with increased costs. I recently visited Keighley college in my constituency, where I met the principal Kevin O’Hare. Kevin highlighted to me a key issue that is putting young people undertaking apprenticeships at a financial disadvantage compared with those who decide to stay in full time education, if they are from financially deprived backgrounds.

Currently, young people who remain in full time education after the age of 16 continue to be treated as dependent children for the purpose of a range of household benefits. In contrast, young people who enter an apprenticeship are generally treated as employees, which can lead to a loss of income related support linked to household benefits. For some low income families, the resulting loss of benefits can exceed the apprentice’s initial earnings, meaning that a household might be financially worse off when a young person chooses an apprenticeship, compared with had they remained in full time education.

I am keen to understand what conversations the Minister is having with the Department for Work and Pensions and the Department for Education on that classification, because that appears to run counter to the Government’s objective of promoting apprenticeships as a prestigious pathway that is equal to academic study. It may disproportionately affect participation among young people from disadvantaged communities. I have seen that in the casework coming into my office. What assessment have the Government made of the impact of household benefit losses on participation in apprenticeships among 16 to 18-year olds? If the Minister cannot answer that in her speech, I would be grateful if she would write to me.

The second issue that I want to raise follows a meeting that I had this weekend with Silsden and Skipton young farmers club, whose members were keen to raise the cost of car insurance. Young people in rural areas face a crisis of skyrocketing insurance premiums, which makes it difficult for them to get around. Limited public transport makes owning a car essential, but they face huge costs. They cannot take up job opportunities and education if they are priced out of the market.

The hon. Member for Hertford and Stortford spoke about the mental health implications when young people feel the strain of debt, whether from going through education or simply because of the cost of living in rural areas. The key underlying point is the Government’s failure to grow new opportunities for young people. Unemployment has risen to 5% and youth unemployment has risen to 16.2%. In January to March 2026, an additional 110,000 young people aged 16 to 24 were unemployed than in the same period in 2025. Young people at Keighley college who wish to pursue opportunities through apprenticeships face being worse off. That is further exacerbated by the rise in employers’ national insurance and the minimum wage, and the Employment Rights Act 2025, which has created challenges.

Fiscal inclusion is about education and, crucially, about fostering an economy that rewards hard working and ambitious young people, rather than punishing them. I would be grateful for the Minister’s thoughts on those points.

Order. Four Members are standing, so they have about five minutes each.

It is a pleasure to serve under your chairship, Sir John. Thank you for allowing me to speak. I thank my hon. Friend the Member for Hertford and Stortford (Josh Dean) for giving us the opportunity to reflect on the importance of financial inclusion among young people. As the former co chair of the all party parliamentary group on financial education for young people, I am really pleased to see the work that the Government have already done to expand education to support young people. I will focus on financial education as a way to remove the barriers to financial inclusion for young people.

In its 2025-26 review, the London Foundation for Banking & Finance found that 64% of young people surveyed felt anxious about money, and that only 19% could answer basic financial literacy questions. It is therefore vital that we roll out our curriculum changes as soon as possible, as 80% of those youngsters wanted to learn more about finance—they are willing and ready. Will the Minister set out how we will provide financial education for young people? How will we ensure that there are enough teachers and that they are supported to teach that vital skill?

It is crucial that we do not focus just on those still in school. Financial inclusion for young people must also include young people over 16. Before coming to this place, I worked for a housing association, and I undertook a significant piece of work on financial and digital inclusion. It was immediately clear that many adults need support, so how can we ensure that financial inclusion also covers those who are post 16? It is clear that financial vulnerability leads to high loan interest—a poverty premium, so to speak. That burden falls particularly heavily on young people. Young people in temporary accommodation are often financially trapped by their circumstances.

I put on the record my thanks to Young Enterprise and particularly Alice Clarke, not only for its support as the secretariat for the APPG but for being a leader in this space and helping to prepare young people for the future. We will be doing an investigation into how to support financial inclusion post-16, because 16 to 18-year olds in school or college are at a key stage in their lives when it comes to making financial decisions about their future. There are excellent examples of engaging with schools to support teachers with lesson plans and resources, but we need to ensure that we have an equivalent for those aged 16 and above, so that those young people can continue to be engaged. Will the Minister set out how we can ensure that when they are rolled out, the youth hubs can continue to engage 16 to 24-year olds, particularly on financial inclusion, so that we can support our young people to grow and learn financially?

Finally, as the parent of a 19-year old, I know about the barriers faced by young people, including with car insurance. Like the hon. Member for Keighley and Ilkley (Robbie Moore), I have a rural constituency, so having access to a car is important because the lack of transport is holding people back. We need to understand how to work with the insurance sector to ensure that young people are not unfairly penalised for the financial cost of insurance.

It is a pleasure to serve under your chairship, Sir John. I commend my hon. Friend the Member for Hertford and Stortford (Josh Dean) on a terrific speech and on gathering us in Westminster Hall today.

May I take a moment to take you back to your first job, Sir John? I am sure you will remember your pride at bringing home your first payslip. In today’s society, young people are turning to TikTok for beauty advice, fashion trends or the latest dance craze. It is where they learn how to spend their hard earned cash, but it has also become a place of toxic finfluencers, where so called get rich quick opportunities are being targeted at young people. All of a sudden, things on social media can start to feel slightly odd, because for young people those opportunities are often promoted on familiar apps that they know, in formats that they recognise and delivered by people who seem relatable.

An influencer who a young person might like may appear to be educating them about money, as perhaps a big brother or sister would, but we often find that those types of ads and reels can become exploitative. As a former Financial Conduct Authority regulator, I think we are now entering a phase of TikTokification of financial advice. The FCA, my old place of work, must be commended on its work on financial promotions, but unfortunately it has found that in some cases the majority of TikTok ads breach its finprom rules.

I call on social media giants and big tech to do more to take heed from the FCA’s work on two fronts. First, social media giants must ensure that finfluencers properly declare any conflict of interest. Secondly, there must be greater education, almost like public good messaging inbuilt into the algorithms, where officially verified types of financial education filter through them. Aviva found that one in five children under 16 are now getting financial information from social media platforms, and only one in eight said that they would get their financial advice from school or college, so the math really ain’t mathing. Boys in particular are being brought via the toxic hinterlands of the manosphere into Ponzi schemes and get rich quick schemes linked to body dysmorphia and other dangerous influences in the manosphere, which is an important link.

A good way to get young people into healthy financial habits is through savings. Gordon Brown understood that, as shown through the child trust fund, which was scrapped in 2011. Today, a child born into a family with money is likely to have a junior ISA opened in their name, as I have done for my children. Compound interest works favourably over the years, so by the time those young people are adults, they have a foundation that can act as a springboard for life. We need to have that nudge theory built into the system from the start. We have to think about how products delivered by fintechs can get young people saving.

I will briefly touch on fraud, because I am concerned that many of the social media ads I talk about are fraudulent. Some 47% of 18 to 34-year olds have lost money to scams in the past year. The average loss is three grand; that is over a month’s wages. It could be the first home deposit wiped out in one. That is what financial exclusion does.

I am particularly thankful to the hon. Members who have mentioned the car insurance market. There is a phenomenon called ghost broking, where fraudulent car insurance—insurance that does not really exist—is sold to young people. They are a young driver, they think “premiums are high”, they are sold a pup and an insurance policy that does not exist. They then get into an accident, and things go wrong from there. I would like to see social media companies and the Government prioritise ghost broking and for them to listen to the Association of British Insurers’ work on that.

I want my two boys to grow up in a world in which the first financial lessons they receive come not from a stranger with a ring light and a referral code, but from good, hard working northerners who know how to match that graft with good financial advice. I think that is the world all of us want to see when it comes to sound financial education for all.

Just for the record, my first job was in Chiesmans, a department store that then existed in Lewisham, where I served in the china and glass department.

It is a honour to serve under your chairship, Sir John. My first job was on the deli counter of my local supermarket. I congratulate the hon. Member for Hertford and Stortford (Josh Dean) on securing this important debate.

In the middle of a cost of living crisis, whether a young person knows how to manage their money, can afford to stay in education, can access affordable financial services and advice they can trust, can avoid problem debt and can build a secure future has never mattered more. Young people are facing challenges that previous generations did not. Money has changed. For previous generations, it was coins in a pocket or cash in a wallet. Today it is numbers on a screen—online banking, apps, digital wallets, “buy now, pay later” schemes, cryptocurrency and social media influencers offering financial advice that often benefits themselves rather than the young people following them.

We assume that because young people are comfortable with technology they are financially literate, but those are not the same things. The Milburn review laid out the importance of financial inclusion for young people. Between January and March of this year, 1.01 million people between the ages of 16 and 24 were not in education, employment or training. The number of young adults regularly relying on borrowing has increased by 45% in just one year. Many are using unsecured loans and buy now, pay later products to cover everyday essentials, while one in five were employed on zero hours contracts, making it almost impossible to budget or save. This is not just about people on the lowest incomes; it is increasingly affecting younger people who are working hard but cannot get ahead.

The challenges are even greater in rural constituencies such as West Dorset. Financial inclusion depends on being able to access financial services, yet facilities that make this possible—bank branches, cash machines and post offices—are disappearing fastest from rural communities because they are considered commercially unviable. Meanwhile, our communities are expected to embrace digital banking despite persistent mobile phone and broadband blackspots in villages such as Drimpton, Burton Bradstock and Stoke Abbott. Across the country, 1 million people have cancelled internet packages because of the cost of living crisis. Digital banking cannot be the answer if people cannot get online.

True financial inclusion should be about giving people the confidence and knowledge to make informed decisions throughout their lives, yet less than half of children receive meaningful financial education either at home or in school. Nearly one quarter of young adults have low financial capability. Most children say that they would ask their parents’ financial advice, yet only about half of parents feel confident having those conversations. Financial education should become a core life skill, taught from primary school onwards.

Every young person should leave school with an understanding of budgeting, saving, borrowing, mortgages, pensions, taxation, credit scores, fraud and the long term consequences of debt. Those are skills that will benefit them throughout their lives. Financial education should not stop when the school day ends. Family hubs, community hubs and banking hubs could and should become centres of financial guidance, not just financial services. Parents and carers should receive greater support because they remain the single biggest influence on their children’s financial behaviour.

We must also recognise the growing risk facing financially excluded households. An estimated 2 million people are now borrowing from illegal moneylenders—an increase of about half a million since 2022. More people are turning to payday loans simply to pay their rent or mortgage. That is not sustainable and we must do better. We must ensure that everyone has access to appropriate and affordable financial services, regardless of where they live, and can access affordable credit and independent debt advice before they reach crisis point.

For constituencies such as West Dorset, financial inclusion is also about opportunity. It determines whether a young person can take up an apprenticeship, manage their first wage, avoid exploitative lending and build financial independence. When we fail to equip young people with the skills and services they need to manage their money, we do not simply leave them financially excluded; we rob them of opportunity itself.

It is a pleasure to serve under your chairship, Sir John. I thank my hon. Friend the Member for Hertford and Stortford (Josh Dean) for securing this important debate on an issue that matters greatly to my constituents. My first job was as a paper boy; I would not say that I had to lie, but I certainly had to say that I was a little bit older than I really was to secure the job.

In a debate about financial inclusion, it would be remiss of me not to mention student loans, one of the greatest barriers to young people achieving financial security. In the financial inclusion strategy, the Government rightly recognised the importance of embedding financial literacy in the curriculum to empower young people to make informed financial decisions. However, there remains a glaring gap when it comes to student loans. Young people seeking to go to university do not have a proper understanding of what they are signing up to. They are either unaware of the scale of the student debt they may incur or are misled into believing that student loans are not real loans. Some are told, “You don’t even have to pay them back.”

One constituent told me that although she wanted to pursue an apprenticeship, she was instead encouraged to go to university. All the virtues of university were relayed to her, but none of the drawbacks. She was told that student loans would be the easiest loans she would ever take out. Now she is saddled with tens of thousands of pounds worth of debt and mounting anxiety about how she will ever pay it back. Financial literacy cannot simply mean learning about taxes, savings and budgeting. It must also mean understanding student loans, the first debt many young people will ever take on, so that they can make a genuinely informed decision about whether university is the right path for them.

Although I welcome the Government’s ambition to encourage saving and prevent people from being burdened by debt, unless we fully address the student loans crisis, millions of young people will be saddled with loans of around £30,000 and upwards right at the precipice of their adult lives. The debts continue to grow despite repayments, imposing a seemingly insurmountable financial burden on young people for the majority of their working lives. That inevitably impacts their ability to save. A Barclays survey revealed that savers with student loans put away £2,000 a year less than their peers without student debt.

If we are serious about improving financial inclusion, helping young people to save and building financial resilience, we cannot ignore their single biggest financial commitment, which many of them make before they have even entered the workplace and can end up feeling for the majority of their working lives. I welcome the Government’s financial inclusion strategy and the steps they are taking to ensure financial inclusion for young people, but we must tackle every barrier to financial security. That includes addressing a student loan system that leaves young people feeling weighed down by debt before they even have the chance to get ahead.

It is a pleasure to serve under your chairmanship, Sir John. I congratulate the hon. Member for Hertford and Stortford (Josh Dean) on his work to secure this debate and his excellent opening remarks.

The decline of high street services has been an ongoing issue in the UK, with banks and other essential services disappearing at an increasing rate. Local high streets provide a variety of vital services to their local communities, but the current landscape is extremely challenging for many local enterprises. I join other Members by referring to my first job, which was at WH Smith on Camberley High Street; I reflect on how many of the jobs from our small sample this afternoon were in a retail environment on a local high street, and how important that is for young people looking to get their foot on the ladder of a future career.

I am sure that colleagues from across the House have heard from countless local businesses in their constituencies, on their high streets and in the hearts of their communities, about the challenges they face, from the Government’s national insurance contributions rise to sky high energy bills, and uncertainty about what the Employment Rights Act 2025 means for them. This is placing an unsustainable burden on many businesses and services.

In the past three years, nearly 2,000 bank branches have closed across the UK, due to declining in person transactions and the rise of online banking. Many villages and small towns now do not have even a single bank, forcing residents to travel long distances for financial services. These challenges are often compounded by limited broadband or limited access to the internet, leading to swathes of people in rural communities being excluded from online services and digital banking. Alternative solutions such as banking hubs are emerging, but there are not enough of them. The Government should be facilitating more to ensure that people across the country can access vital services when they need them and to prevent digital exclusion.

The Liberal Democrats are concerned about the inequality of provision as the 5G network is rolled out. We believe it is wrong that people should be disadvantaged simply because of where they live. I urge the Government to prioritise major investment in broadband for underserved communities. It is deeply concerning that some 2.4 million people are unable to complete basic tasks such as opening an internet browser and that over 5 million employed adults cannot complete essential digital work tasks. It is reported that basic digital skills will become the UK’s largest skills gap by 2030. Beyond that, 1.7 million households have no mobile or broadband internet at home, and around 1 million people have cut back or cancelled internet packages in the past year, as cost of living challenges have forced people to find ways to cut and save. As we live in an increasingly digital world, the lack of access to digital services will exacerbate the difficulties faced by young people in trying to get their first job.

The Liberal Democrats made a manifesto commitment to introduce a national financial inclusion strategy, requiring both the Financial Conduct Authority and the Prudential Regulation Authority to have regard to financial inclusion, such as protecting access to cash, especially in remote areas, supporting banking hubs and expanding access to bank accounts. We are also supportive of the introduction of a fair banking Act in the UK to help to tackle financial exclusion.

Compared with similar economies, the UK has some of the worst levels of financial exclusion, leaving millions without access to essential financial services. Even before the pandemic, over 10 million people in the UK were unable to access affordable credit, with over 3 million resorting to high cost lenders such as payday loan providers, which often charge extortionate interest rates.

Small businesses also struggle to secure fair financing and receive only a small fraction of bank lending. This has created a multibillion pound financing gap that stifles economic growth, particularly in underserved regions outside London and the south east, as well as within marginalised communities. We must do more to bring an end to the affordable credit crisis and help millions of people who are struggling with unsustainable debt.

Regarding broader financial inclusion in education, a lack of financial engagement is an issue that permeates much of the UK beyond the younger generation. Research by TheCityUK shows that the UK has relatively low levels of retail investment compared with international peers, which has implications both for long term household outcomes and for how effectively domestic savings are channelled into the real economy.

Britain’s investment gap undermines our economic future. The Financial Conduct Authority estimates that around 22 million adults with £10,000 or more in cash savings might be missing out on the benefits of investing, and many small businesses are missing out on the benefits of receiving that investment, which would help them to grow.

The UK continues to have a relatively narrow base of retail participation, with a significant proportion of households not engaging in market based investment products at all. This limits both wealth creation at the individual level and the breadth of capital available to UK markets. One in four UK adults invest outside their pension, which is the lowest rate in the G7. It is a structural brake on household wealth, economic growth and social mobility.

This is a systemic challenge. Low levels of retail investment reinforce economic inequalities, weaken the link between savers and UK businesses, and reduce the overall effectiveness of the UK’s saving and investment ecosystem. Mobilising long term savings into productive investment is central to unlocking future growth, strengthening UK capital markets and ensuring that the UK remains internationally competitive.

The investment gap reinforces financial inequality. Those who invest pull further ahead while millions remain outside the wealth creation system. Proactive individual investment can help to bridge the gap, offering the potential for higher returns and greater financial security in later life. However, that requires proper financial education, and the gains are so much greater when young people can start investing earlier and see the value of investing.

The recent review of youth unemployment warned that one in six young people will not be in education, employment or training in five years unless action is taken, with more than 1 million already not in education, employment or training. That is a really alarming figure. The Liberal Democrats repeatedly warned that Labour’s job tax would hammer job opportunities for young people, and that their business rates hikes would kill off high street job opportunities that give so many young people their first job. The Government must urgently take action to unlock the skills and opportunities that young people need to build a future they can believe in, and that includes, critically, ensuring access to financial education, financial services and employment.

It is a pleasure to serve under your chairmanship, Sir John. You have launched an unfortunate trend of people fessing up to their first jobs; however, it gives me the opportunity to make a point about the context in which we are debating the financial inclusion of young people. My first job—probably illegally, at the age of about 10—was a Saturday job helping out a milkman on the milk round. I then had a Christmas holiday job helping the Royal Mail to deliver Christmas letters, and a summer job packing electric parts, all of which I did in Bedford. The key point, which relates to financial inclusion, is that a lot of what this Government are doing is turning employers away from being able to offer those job opportunities to young people. I really hope that they will rethink that, because as we have heard, the number of young people out of employment is going up quite considerably.

I congratulate the hon. Member for Hertford and Stortford (Josh Dean) on securing this debate. I also thank him for the tone and the insights with which he opened it, which all subsequent Members reinforced, and would like to refer to some of the points made. The first was from the hon. Member for Hertford and Stortford, who recommended more action to support small sum lending and spoke about the beneficial effects that that can have on credit track records; I will reinforce that point a little later in some questions to the Minister.

My hon. Friend the Member for Keighley and Ilkley (Robbie Moore) raised a point that the hon. Member for Ilford South (Jas Athwal) spoke about from a different angle, which is that young people make quite an important decision that affects their financial wellbeing: university versus apprenticeships. At the moment, it seems that both paths lead to potentially detrimental effects on young people’s financial wellbeing. They spoke about the decision to take out a student loan at a young age, and whether people get the right advice about what that might mean for their long term financial wellbeing. My hon. Friend the Member for Keighley and Ilkley made a really interesting point about the potential disparity in how young people who decide to take an apprenticeship are treated in terms of access to financial resources, versus those in full time employment, so perhaps the Minister can also say something about that.

The hon. Member for North West Leicestershire (Amanda Hack) used her experience on the APPG for debt and financial inclusion to talk about the excellent work undertaken by Young Enterprise to improve young people’s understanding of money. That is quite timely, because My Money Week, which Young Enterprise started to try to teach young people in schools about finance and expand their knowledge, has just concluded. I echo the hon. Member for North West Leicestershire in saying that it would be good to extend that level of involvement beyond the age of 16 to young people more generally.

The hon. Member for York Outer (Mr Charters) used his experience to echo a point made in an intervention by the hon. Member for Kettering (Rosie Wrighting) about how young people are turning to social media as their source of understanding. Turning to social media for anything is usually not good for one, which is one of the reasons why the Government have come around to banning young people from social media. When it comes to getting advice about finances, young people are already at risk through a lack of knowledge and understanding. Social media is a very dangerous source of information that can undermine what they might learn from their parents or schools. I also echo the point made by the hon. Member for West Dorset (Edward Morello): familiarity with technology is not the same as access to financial services, although there is an opportunity for us to do something with financial technologies.

Financial inclusion for young people is a passion shared between my party, the Liberal Democrats and the Labour party. This is one of the areas where we are all looking to make progress. Under the last Conservative Government, we made financial education for 11 to 16-year olds compulsory in the curriculum. I think the evidence shows—the Minister may confirm this—that we were not getting all schools doing what they should be doing, or at least that the results were not as we would have wished. However, it was the right step and the Government are moving now to make that compulsory in primary schools. That has to be a positive step.

The last Government also made progress in improving student attainment in mathematics. In the PISA—programme for international student assessment—ratings for mathematics in 2009, England, as education is a devolved matter, was ranked 27th; by 2023, it was ranked 11th. That is good progress and is part of ensuring that young people understand numbers and can therefore get to grips with things.

In the Government review by Professor Becky Francis, she commented on life skills and talked about the importance of young people learning about budgeting, interest, mortgages, pensions and financial planning. One thing that young people have to their advantage—the hon. Member for York Outer also mentioned this point—is the beauty of compounding interest. If they get the right start at a young age and are able to put some money aside, by the time they get to my age—perhaps even to your youthful age, Sir John—people will find it remarkable how compounding interest has worked on the savings that they have put aside. On the other hand, if they fall into debt, compounding interest can drive them the other way and into a much worse situation. It is absolutely crucial that we teach people the power of compounding, both positive and negative.

Let me move on to my questions. As I did not have a chance to advise the Minister of my questions in advance, I would be happy to receive a reply in writing afterwards. First, ironically, I want to ask about cryptocurrencies. What assessment have the Government done of the potential for cryptocurrencies to promote financial inclusion? I am sceptical, but there may be potential benefits as well as risks; cryptocurrencies can provide an easier way in than financial institutions and have lower transaction costs. I am interested in the Government’s view.

Secondly, I echo the point that the hon. Member for Hertford and Stortford made about microfinance. What assessment have the Government made of the use of microfinance platforms targeted at young people, to enable them to take the first steps in building up a credit record or potentially being small scale entrepreneurs—another great thing that young people could do?

Thirdly, what is the Government’s view of the merits of leapfrogging traditional financial systems in favour of educating young people on emerging fintech platforms? Is that something that might raise young people’s engagement with financial education, and that might ultimately be in their best interests?

I have a small point on “know your customer” rules—I am not too familiar with this point, but the Minister may have a view. Is the Minister satisfied that the way the “know your customer” rules currently work is effective for maximising young people’s access to basic financing and banking facilities?

Finally, I am sure that the Minister and I agree on the need to ensure that schools are teaching financial inclusion at both primary and secondary level. How satisfied is she that schools are complying with the compulsory rules on financial education? What can we do collectively, as constituency Members of Parliament, to ensure that schools are delivering the quality of financial inclusion and financial education that we would all like to see?

I call the Economic Secretary to the Treasury. Rachel, could you allow a short time at the end for Josh to wind up and for me to put the Question?

It is a pleasure to serve under your chairmanship, Sir John. I am grateful that my first chance to speak as the Minister in Westminster Hall is in such a thorough and rich debate on this topic. Let me join in with the tradition of talking about our first job by saying that I spent many a happy afternoon doing a Saturday job on the high street in a sadly now closed women’s retailer. I am very proud that jobs like that still exist: it gave me a thorough and deep understanding of the importance of the high street.

It would be impossible to cover or respond to all of the rich and broad points that have been raised this afternoon. I also want to give my hon. Friend the Member for Hertford and Stortford (Josh Dean) a chance to respond; I thank him for securing this debate and for all his work to focus the Government and colleagues on young people and the particular challenges that they face.

We have had a really broad range of contributions, including from the hon. Members for West Dorset (Edward Morello) and for Keighley and Ilkley (Robbie Moore) and from my hon. Friends the Members for Ilford South (Jas Athwal), for North West Leicestershire (Amanda Hack), for York Outer (Mr Charters) and for Kettering (Rosie Wrighting). It has been a powerful debate. We can all agree on the importance of ensuring that everyone across the UK has access to affordable financial products and services to enable them to engage in the economy. In responding, I want to talk briefly about youth employment and support for mental health, and then try to get through the questions put to me by my hon. Friend the Member for Hertford and Stortford.

Following the Milburn report and the contributions made today, we have to be clear that the Government are in no way complacent about youth unemployment. We are absolutely determined to unlock the potential of young people across the UK. Funding for employment support is increasing to more than £3.75 billion per year by 2028-29. At the last Budget, the Government committed to more than £1.5 billion to back young people through the youth guarantee and invest additional funding in the growth and skills levy.

This afternoon, we have heard interesting suggestions as to how that work can be undertaken, whether it is in youth hubs or in other youth settings. It is the responsibility of us all to consider how that investment can be made most effective, with industry working with the Government to provide jobs guarantees for a wide range of people and ensure that there are youth jobs grants under which businesses receive £3,000 for every young person they hire between the ages of 18 and 24. This is a partnership approach between industry and Government, and one that I believe will make a real difference.

I also want to talk about the significant issue of mental health and its prevalence in society, particularly among young people. Today, we are talking specifically about its interaction with financial inclusion. The strategy recognises that mental health can significantly affect people’s ability to access and use financial services, along with the interrelationship between people’s mental health and their attitudes and ability to work with particular financial products. It is therefore important that we strengthen the support available for individuals through interventions to improve debt collection practices, expand the breathing space scheme to support individuals in problem debt during a mental health crisis, and examine how pre existing mental health conditions are treated in the travel insurance market. Each of those approaches is very much under way.

I welcome the Minister to her place. On the issue of mental health, many young people in my constituency raise the challenge of getting into work. With youth unemployment now at record levels, does she realise that one of the best ways of tackling mental health issues is to enable people to get into the job market in the first place, so that they do not have the additional pressure and anxiety of not being able to earn funds? Does she not recognise that things like employer national insurance, the Employment Rights Act 2025 and minimum wage increases have exacerbated the unemployment figures? Will she work with industry to address the concerns that are being raised with me and, I am sure, with her in her new role?

As the hon. Member will expect, I disagree with his characterisation of employer NI and the Employment Rights Act. I remind him of the positive impact that both those measures are having on workers, our NHS and the services that they are funding, and of the specific ways in which they operate with young people. His evidence base therefore does not entirely stack up.

I turn to the issue of building up a credit record. The Government are continuing to engage with the FCA on its work with industry to tackle thin credit files. As part of that, the FCA has recently consulted on introducing mandatory credit information sharing by regulated firms, which would mean that any firm reporting to one designated credit reference agency must report the same information to all such agencies, ensuring full and consistent information on a consumer’s file.

To give my hon. Friend the Member for Hertford and Stortford a chance to respond, I will rattle through actions on insurance. The Government recognise the important role of insurance in supporting individuals’ financial resilience. There are pilots among social renters, led by Fair4All Finance, and the Government also recognise that affordability is a key issue.

We have had quite a thorough discussion about scam ads. The Online Safety Act 2023 places duties on the largest social media platforms to tackle fraudulent adverts. Ofcom is due to consult on those measures later this year, and once they are implemented it will be able to impose fines of up to £80 million or 10% of qualifying revenue, whichever is greater.

I certainly want to hear from my hon. Friend the Member for Hertford and Stortford. There is much more to cover, and I commit to doing so in writing. I am grateful to my hon. Friend for securing the debate, and will be happy to continue the conversation.

Will the Minister give way?

No, I have finished.

But we have half an hour.

No, only three minutes.

Absolutely. You missed the cut there, Robbie. I call Josh Dean to wind up very briefly.

I will keep it brief, Sir John. To add to the trend, I will just share the fact that my first job was in a local coffee shop.

It has been great to hear about rurality, the importance of car insurance, social media, fraud and student loans; I will not share just how high my student loan bill is, having checked recently. The importance of financial inclusion has really been brought to life, as have the challenges that young people face. I thank all Members who have contributed to this important debate, and I thank the Minister for her response. Every young person deserves to build a secure and sustainable financial future. I hope that the Treasury will continue to think ambitiously about how we can support them in doing so.

Question put and agreed to. Resolved, That this House has considered financial inclusion for young people.

Sitting adjourned.