As I See It - PISA Envy: Why Is The UK Afraid To Sit The OECD's Financial Literacy Assessment?

At 18, the British state asks young people to sign up for decades-long financial commitments. Plan 5 (most current undergraduates from August 2023) is written off after 40 years; for a 2027 graduate that’s roughly age 61 or 62. A typical student may leave university with £50,000 of debt, indexed, interest-bearing, and contingent on future earnings. We ask them to make one of the biggest long-term financial decisions ever while we still debate whether they can responsibly rent a car.

Uncertainty

One might observe, gently, that governments routinely make poor short-term financial decisions with rather larger price tags and rather less data. Two examples suffice. First, the repeated stop-start nature of savings incentives and tax wrappers - ISA tweaks, lifetime adjustments - creates uncertainty that costs more in behavioural confusion than it saves in fiscal neatness. Second, the oscillation in student loan terms themselves - interest rates, repayment thresholds - illustrates a system willing to shift rules mid-game while declining to test whether players understand them.

Yet, curiously, the same state hesitates to take a comparatively modest step of its own: sitting the OECD’s Programme for International Student Assessment (PISA) Financial Literacy tests. The next opportunity is PISA 2029 as countries commit well in advance, with preparatory frameworks, sampling, and field trials beginning years before the main assessment.

Flying Blind

We trust young people with long-term borrowing, but we are wary of testing whether they understand borrowing at all. This hesitation looks increasingly like PISA envy. Parliamentary questions and committee evidence have raised concerns that the UK is missing an opportunity to benchmark financial capability internationally, to assess the effectiveness of its policies, and to identify gaps in young people’s understanding. The concern raised in committee evidence is that the UK is flying blind.

Informed Decisions

Financial literacy is more than a synonym for "vaguely good with money", quite simply it is the ability to make informed decisions. The USA’s MyMoney Five - earning, spending, saving & investing, borrowing, and protecting - is not a bad checklist for a British curriculum audit. We teach the "earning" bit reasonably well since GCSE maths covers payslips and percentages. "Saving" gets a nod. "Borrowing" and "protecting" — understanding APRs, insurance, what happens when a payday loan compounds against you — are exactly the areas where financial capability charities report the biggest gaps, and precisely the areas a school-leaver is likeliest to encounter first, and worst, in the wild.

Earlier this year the Department for Education expressed interest in joining the financial literacy field trial for the next cycle of the Programme for International Student Assessment. A field trial is a rehearsal about whether the test questions translate sensibly into a British idiom; it does not commit the UK to appearing in the main study, still less to publishing the results if they're unflattering.

Commitment

Three things follow from the Department's announcement. First, "interested in the field trial" needs a date attached to it before it curdles into another line in another strategy document. Second, whatever we learn from the field trial should be published, not filed. Third, the field trial should be treated as step one of a commitment to the full 2029 study, not as a face-saving substitute for it.

HM Treasury and the Department for Education have an opportunity. Committing to the OECD PISA Financial Literacy Assessment 2029 would signal confidence, not weakness. It would demonstrate that the UK is willing to measure what matters, to learn from others, and to improve.

We are a nation that happily sets exams, from GCSEs to A-levels to professional qualifications, yet balk at one more test for the system rather than the student. If we expect our 18-year-old students to make long-term financial decisions, the least we can do is take one short-term financial education decision ourselves—sit the test.