Numeracy Review and Petrol Prices

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1:33The price of petrol is the highest it's been for nearly four years. How can you pay less? It's 50 years since the invention of an investment that just followed the stock market. But three quarters of our invested money still tries to chase winners, usually in vain. And a review is launched into how firms deal with child trust fund money for hundreds of thousands of young adults. But first... Sit up straight now, no talking at the back, and get your maths books out today. Percentages. Well, if that sends a cold shiver down your spine, you're not alone. A new survey suggested nearly a third of people in the UK believe they lost money last year because of their poor maths skills.

2:16And many adults remain afraid of sums. In the early years, maths was a struggle. Every time I was asked to do something around maths, a maths question, I would just freeze. Maths was a really difficult subject for me. I was terrible at maths, so I really, really struggled. I think I would avoid any situation with maths. I just didn't feel confident with maths. And yet, numbers and arithmetic are all around us. Heating your home will cost 4 % more next month. Switch your insurance to save£200. And how much does a supermarket loyalty card really save? If you struggle to grasp these things, managing a household budget can be very hard indeed.

2:56An economic research group also suggests people who struggle with numeracy earn on average£1 ,600 a year less than people who don't struggle. The government has asked the House of Lords Committee to investigate these problems and its chair, Lord Agnew, will be here with us shortly. But before that, Moneybox reporter Dan Whitworth has been speaking to Anne, Peter and Jo, who we just heard from, about how they learned not to be afraid of sums and how it transformed their lives. Dan? Well, they all got help from the UK charity National Numeracy Pool, and it says around half of the UK's adult population struggles with maths and have the numeracy skills of a primary school pupil.

3:37Well, Jo from Wiltshire, she tried to avoid maths for most of her adult life after failing it at GCSE, but she got motivated to study it again after wanting to help her own daughter with her GCSEs. So two years ago, Jo resat her exam, and not only did she pass, but she told me how it's changed her life now at 52 years old so much for the better. It's helped with working out utility bills and price increases, splitting bills with friends at restaurants. It's helped me to work out prices in supermarkets and discounts. And it's also helped me with my hobbies. I'm a keen sewer and it's helped me to work out how much material I need for a project.

4:20the word I like to use is empowering and it's certainly given me more confidence. It's a similar story from Peter in Norfolk who struggled with numbers for years after having a tough time at school. He was inspired to study maths in later life after getting a large unexpected tax bill and told me how getting his head around figures helped in many other ways too. Bank statements, all my financials, fares, savings, the interest rates And of course, now in older life, you've got to think about insurances. What's the best insurance? What about energy bills and so on? The fact that I can now look at, you know, if I'm going shopping, am I getting the best value?

5:01Even restaurant bills. It gives me so much more confidence in whatever I'm doing in everyday life. I'm not fazed by finances, by figures. And for a last one Paul, Anne in Fulkirk says she also struggled with maths at school but turned things around so much she was able to learn maths in adulthood and embarked on a long-held ambition of a career in construction. For me, it's been a game changer. It's really changed the life that I have. I'm now a homeowner, which, again, at that early stage, I didn't think would be something that would be achievable for me because it seemed like there was too much maths involved in that, in those discussions, so it was something I avoided.

5:41But it's every day. It's as simple as going to the shops and picking a discount. ...experiences there, Dan, and they show, don't they, just how overcoming fear of numbers and arithmetic can help in everyday life. Oh, very much so. And I think what links them all, Paul, is the fact that it is possible. Joe, Peter and Anne, they all struggle with maths at school but got to grips with it later on in life. And the impact on how they're now able to manage their personal finances, Paul, it has been profound. And just lastly, another message from them all was, if they can do it, so can anyone. And lots more of the help they got can be found on the website of the charity that helped them, nationalnumeracy.org.au.

6:22UK. Thanks very much, Dan. Well, let's go live now to talk to Lord Agnew. He is chairing the House of Lords Numeracy for Life Committee. Lord Agnew, you were appointed by the government to look at numeracy in England. What have you found so far? Well, we found that there is a big problem, that there are large swathes of the adult population who really struggle with maths at At a simple level. So, for example, 40 % of lowest earners wouldn't understand what a 10 % pay rise meant if they were earning£15 an hour. So one of your interviews there with Joe talks about empowerment. And I think this is the lack of empowerment, which is so which is so which is so inhibiting.

7:07Yes. I mean, in a sense, these problems are familiar, aren't they? We've known there's been this problem for some time. but you chair a trust that runs more than a dozen primary and secondary schools. What are they doing there to boost numeracy among their pupils? Yes, well, I set it up nearly 15 years ago and it is hard going. But the key thing that makes the difference is good quality maths teachers and we're very lucky in my trust over a number of years to have brought together a superb team of really strong maths teachers across the three phases, primary, secondary and A-level. So that's the magic bullet.

7:47But, of course, getting to that is extremely difficult. Yes, and you've found the best, but not everybody will be able to do that in the thousands of schools there are. A lot of what's needed for our finances, though, is not really maths, is it? Like even GCSE, it's numbers on your energy bill. It's dividing the cost of a meal out. It's measuring the material you need for your sewing. That's just adding up in percentages. Are we teaching the wrong sort of maths? Do we need to know how to work out the interior angle of a pentagon, for example? Well, I think we must be careful not to throw the baby out with the bathwater.

8:21At the top end of our maths teaching, it's a very strong story, and we are pulling ahead of our OECD partners. And indeed, even Becky Francis, who was commissioned by the government to do a curriculum review, said in her report, there's much to celebrate in maths education, The number of pupils doing A-level maths has gone up over 100 ,000 this year. It's the most studied A-level, I think, in the whole syllabus. So we must be careful not to disparage what's working. But it is the bottom end that I'm worried about because they're the ones that are being hardest hit. And we bang on about the so-called cost of living crisis.

9:00But it's actually a productivity crisis because their lack of numeracy is a ceiling on their earnings, as well as the point you made earlier about losing money because they don't understand transactions that they are having to enter into. Yes, I wasn't in the least suggesting that maths should be stopped and the maths that is mathematics, if you like, because, of course, that's very important and it is brilliant that so many young people are taking it and doing so well at it and that will help all of us in the future. But do we also need a programme like the... It's called PISA, isn't it? The Programme for International Student Assessment.

9:32It has very practical lessons. It helps you work out what it'll cost to run a car for the first year or should you buy tomatoes loose or in a large box. It's those practical things that maths perhaps, as it's structured, doesn't teach us. And the National Numeracy Charity helps schools with that, doesn't it? Yes, you're right. And National Numeracy were one of our strongest witnesses to our inquiry. and they are doing fantastic work. And the examples you found today just show evidence of that. So we definitely need to make maths and numeracy relevant to people in their daily lives. But you've got to start that probably right at the beginning.

10:15I mean, we're breaking it into five phases, preschool, primary, secondary, young adult, and then full adult. And there needs to be a different approach in each of those areas. And can I tempt you just to give us one thing you hope your committee will recommend, literally one thing in 10 seconds? Well, I'm afraid there's no magic bullet, but the signposting, certainly for adults, is really crucial. So how many people listening today have heard of National Numeracy, for example? Yes. So we want to push more people to go to what is already working out there. Helping people as Anne, Peter and Jo were helped.

10:56Lord Agnew, Chair of the Numeracy for Life Committee, thank you very much for being on Moneybox.

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12:04The price of petrol is the highest it's been for nearly four years. Today, RAC Fuel Watch says the average price is 163.4 pence. It was autumn 2022 when petrol last topped 160 pence. Today's rise is due to the continuing uncertainty over the war in Iran. That, of course, began in March and the biggest rise then was diesel, which hit around 191 pence in April. Slightly lower now, but still almost 185 pence. And that means the cost of the Middle East war to diesel drivers is now more than 42 pence a litre. Petrol retailers told Moneybox this morning it's going to get worse. another 8 or 10p a litre rise in wholesale prices expected this coming week.

12:51Our reporter Catherine Lund spoke to this driver in Prestwich who's working more from home to save money. It gets to a point where you start putting in less petrol in your car and you can't go to work as often and it's impacting your finances. Every single week, it goes up every other day now. And back 20 years ago, if you went up 1p, people would kick off and now they don't, they just accept it. You mentioned work, you mentioned money. Is it a case of re-budgeting food or going to work last days of the week? It's go to work last days of the week, but then you get reprimanded for that as well.

13:21So you can't win the game. This is 156.9 or something. Maybe a year ago it was 140. Before COVID it was 120, 110. How's it got 40p? You've really noticed it then, haven't you? No, you do. And then when you're on the motorway and you're stuck because you're at a service station, it's£1.80, what are you meant to do? Well, listening to that is Tom Jervis. He's consumer editor at the magazine Auto Express. Tom Jervis, that driver talking to Catherine, very frustrated by the price of petrol. And I have to say, 156.9, chance would be a fine thing today. And of course, as I said, we're expecting it to rise further this coming week.

13:55How are your readers reacting to the rising price of fuel? Well, I think everyone's really, really frustrated. I mean, as you say, 156, I'd love to shop around and find something that cheap. But yeah, I mean, people are changing their plans. You mentioned the RAC earlier. I mean, yes, OK, we get loads of emails from our readers every single week at Auto Express saying, you know, I'm having, you know, I'm not able to run my car as much. I'm not going as on as many journeys. But I mean, the RAC believes that roughly one in 10 people planning trips over the recent bank holiday weekend effectively cancelled their plans because they went, well, I can't really afford the petrol or diesel to go to the seaside or wherever I wanted to.

14:39or roughly about a third said they'd change their plans in general. So that can mean perhaps not having fish and chips on the seafront. Yes, and of course, it also affects work plans. We heard there from that driver in Prestwich that he was going to drive to work less, do more work at home, which didn't go down too well with his bosses from what he said. So this is having an impact not just on leisure behaviour, but on work behaviour as well. Well, of course. And you mentioned, you know, people going to work. I mean, people that are travelling cross-country often are driving diesel cars. Historically, that's what people have been driving.

15:12So you're speaking about these huge increases in the cost of diesel, you know, 40 pence per litre. You know, that's going to have a real tangible impact, especially when you consider, you know, 30, 40, 50, 60 litre fuel tanks. You know, you do the maths. That's a huge increase in the cost. Yes, and according to the petrol retailers, it'll go up another few pence next week as well. the problem that people see with petrol retailing though is that it's not very competitive that they don't follow the price down as quickly as they follow the price up and there was a competition and markets authority research into this a report into this wasn't there what did they find well what they found is that there have been some accusations that you've got the retailers that are capitalizing on this instability in the oil market they haven't really found much of that.

16:04But what they have found is the fact that these retailers adopt what's known as a passive pricing strategy. So rather than looking at the markets and going, right, OK, the oil prices have gone down, let's try and undercut the competition and get some people over here. They're effectively not doing that. They're waiting for the petrol station across the road to drop their prices. Yes. And of course, the Petrol Retail Association said it was very glad that the CMA found no evidence that its members had taken advantage of the war. But they did want that 5p fuel discount made permanent, which might even be taken off next year, mightn't it?

16:40Yes. So we've got the 5p discount that was introduced all the way back at the start of the Ukraine war. The government was going to start phasing that out around now, to be honest. But now they've pushed that back towards the end of this year. So then next year, fuel prices are going to go up by five pence a litre. And then the government is going to start raising fuel duty in line with inflation each year. So things are only going to get more expensive. Yes, we'll wait for the budget to see exactly what's going to happen. And very briefly, I'm afraid, Tom, what can people do to cut costs? Is it worth downloading one of these petrol prices apps, Fuel Finder apps, very briefly?

17:21Yes, I mean, we definitely recommend doing that. You can save several pence per litre, which adds up to several pounds for a fuel tank. We also encourage changing your driving habits, whether that be lifting and coasting or using your sat-nav to programme a more economical route. Tom Jervis from Auto Express, thanks very much. Now, it's 50 years ago this week that individual investors were first given the choice to hitch their fortune to the performance of the whole stock market. Until then, people had to pay someone to pick the shares they thought would do well and sell them when they feared they may do badly.

17:58But then John Bogle founded the American investment company Vanguard Group, and he invented a very different approach based on advice he had received doing a summer job at a brokerage. I came into this business when I was at Princeton, and I worked for a brokerage firm in the summer. And one of the old runners said, Bogle, I'm going to tell you everything you need to know if you're going into the investment business. And I said, what's that, Raymond? And he said, nobody knows nothing. And that's true. We don't know what the future holds. Don Bogle talking to Richard Wood from Barnett Ravenscroft Wealth Management in 2012.

18:35Now, Bogle died in 2019 at the age of 89, but it was the 1970s when he ran with that idea that nobody knows nothing in the investment world and decided to take all the decision-makers out of picking stocks. We asked Robin Powell, an author and journalist specialising in finance, to look back at how Bogle did it. Yes, even the bankers hired to sell it thought John Bogle's fund would be lucky to raise$30 million. It raised$11 million. The press called it Bogle's folly. You can see why they doubted it. Fund management then was all about picking winners. Bogle's fund didn't even try. Instead of paying a manager to choose the best stocks, it simply bought every company in the market and stayed invested.

19:23It took years, but today index funds account for about a quarter of all the money invested in UK investment funds. The main reason is cost. An actively managed fund can charge a full 1 % a year. the cheapest global index tracker charges a 20th of that. 1 % a year doesn't sound very much, but on a£400 ,000 pension, that's£4 ,000 every year, whether your active manager beats the market or not. And over 10 years, AJ Bell found just 21 % of active funds beat a comparable tracker. Bogle's insight was that you can't control what markets do, you can control what you pay to be in them. Well, listening to all that is Miranda Seath.

20:17She is Director of Market Insight for the Investment Association, which represents investment firms. Miranda Seath, how important was that first tracker fund that John Bogle created? I don't think you can understate the importance of it. When you look at what he was talking about, he managed to raise$11 million. It might sound like a lot, but actually there is$450 billion now invested in tracker funds in the UK. It's moved the market significantly. It took a while, though, didn't it? And fund managers have posted it. I'm even getting some tweets this morning from people saying, oh, if everybody tracked funds, there wouldn't be anyone to set the market.

20:53And those criticisms delayed it. But then Vanguard came to the UK. I mean, in 2009, there were trackers here then, but it was offering them with 0.1%. Now, how did that transform things? It brought in a lot of competition to the market. So it transformed things because it gave investors a low-cost option. They could hold UK or US public companies, the whole market, at a low cost. And critically, it was a simple strategy, so they could understand what the fund was trying to achieve. It was tracking the returns of that index. But it also brought down the price of actively managed funds too. And so we've definitely seen actually overall that the cost of investing is lower now because of indexing.

21:35Yes, because Robin Powell said they might charge 1 % now, active funds, but they can be more than that even now. But historically, they were double that, weren't they? And suddenly you've got, I think, the cheapest tracker is now 0.05%. I mean, it's negligible amounts, really. But what about active funds? Because A.J. Bell analysed, I understand it, that your members' performance and only around one in five outperformed a tracker. So you had an 80 % chance of doing worse in one than if you bought a tracker. That's over 10 years. Why do so many people still use active funds if passive is better?

22:10There's lots of different reasons why people would use active funds. If you look at markets, whilst it's great that trackers follow those markets, when they go down, inevitably they will follow the market down. And active managers are trying to actively select stocks that will manage what we call volatility, money going up and down. Forgive me for interrupting you, but they try to do that. They say that's their purpose, but eight out of ten times they fail to do it. I mean, they're not very good at their very highly paid jobs, are they? Well, some are brilliant, and inevitably there are some funds that don't perform as well as their objectives are, but what I would say is it's about the long term.

22:48It's about investment performance, but it's also about thinking about the risk of the fund and cost, and it's thinking over five to ten years at least. Yes, and of course the cost is crucial too, isn't it? Because if you have 1 % a year of your money to pay active managers compared with 0.05 % for the cheapest passive, that's going to be a huge advantage for passives right from the start. It could be, but it's also about value. So if you're paying 1 % but your fund is returning a significant amount more than that, then that's really what matters. That's the bottom line for me. If it is. Now, the government's encouraging people to invest their pension, their savings and so on.

23:26How might people listening think, oh, well, I might try that because so much money is in cash, isn't it? How do they get started? Well, we know from the FCA Financial Lives study that 7 million people have£10 ,000 sitting in cash and they could start investing. But they could do that with as little as a pound. You can get started right away. Often going onto an investment platform, you don't actually need to do the complicated decision making about what to invest in. There's lots of tools available now that can help you understand what kind of risk you might want to take, what your investment objectives are.

23:59And they can recommend a mixed investment portfolio. Could be actually invested in active and tracker funds, in fact, to help you get started. Always make sure you've got some money in cash for emergencies. Miranda Seath from the Investment Association, thanks. And if you do have substantial amounts, of course, you can pay a good independent financial advisor to help you. Now, as we've reported before, more than£1.5 billion is languishing unclaimed in government-backed child trust funds. And this week, the Financial Conduct Authority has launched a review into how firms can ensure the young people who own it get their own money.

24:35Dan is still here. Dan? Well, child trust funds, Paul, were open for every baby born between September 2002 and January 2011, normally kick-started with£250 from the government. And the idea was, by the time the baby turned 18, along with bits and bobs of money from family and friends, it will be a nice financial nest egg to help them start adulthood. And it's worked that way for many, but the FCA says there are still 760 ,000 accounts holding an average of£2 ,000 each waiting to be claimed. Now, we've covered this before, Dan, you and I, haven't we? What's the FCA doing now that's new that might help?

25:09Well, it's clearly worried some young adults aren't getting their money. So it's looking at how firms are ensuring child trust fund customers get fair value under consumer duty. It's also asking if there are barriers to vulnerable young adults accessing their money, such as the 80 ,000 or so with learning disabilities, and what's stopping their parents claiming the money on their behalf. Well, that's good news too, because it's another topic we've covered. So is this real progress? I believe it is, Paul. And that review will report next year. Meanwhile, of course, as we've reported before, remember those dates, Paul.

25:42September 2002, January 2011. go to gov.uk and search child trust funds. You'll find all the information you need. It's free. And also the FCA warning people not to use firms advertising on social media. They can charge hundreds of pounds and that's money down the drain. Thanks very much, Dan. It's not hundreds of pounds, not even one pound, not even something's hapenny to get this Moneybox podcast. It's free to subscribe and you'll also get Moneybox Live, which this week is about lending money to friends or family. How can you do it while keeping your money and your relationship safe? You help set our agenda by emailing questions and comments to moneybox at bbc.co.uk or send a voice note or a message on WhatsApp 0306 783 183 and they are coming in all the time.

26:31In this podcast, the reporters were Dan Whitworth and Catherine Lund, researcher Joe Krasner, studio manager Paul Lewis, the other one, they wouldn't trust me with such a crucial job, Our editor is Jess Quayle. I'm one of the Paul Lewises, and this was a BBC News money and work production for BBC Sounds. Any questions? Please welcome your Any Questions panel. Hello, I'm Alex Forsyth, host of Radio 4's Any Questions. If you don't know the programme, this is what it's about. Every Friday, I'm joined by politicians, journalists and public figures who answer questions directly from a live audience, giving you real views, real challenges and real conversations about the issues shaping our lives.

27:15We take our lively debate to communities across the UK, where they get to ask the questions about the topics that matter the most. Live political debate, where the audience drives the agenda. Any questions, every Friday night at 8pm on Radio 4 or subscribe on BBC Sounds so that you never miss an episode.

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