An uncharacteristic silence washes over the class of Year 10 pupils. “Who is this man?” asks the teacher, holding up a photograph of Alistair Darling, the Chancellor of the Exchequer.

After an age, comes the reply: “David Cameron?”. For the 22 girls sitting in the library of the Skinners' Company's School for Girls, in Hackney, East London, the episode does not bode well for the afternoon's lesson. Instead of struggling with Pythagoras, or delving into the finer points of Shakespeare, the girls, aged 14 and 15, spent one afternoon this week preparing their entries for Chance to be Chancellor, a competition run by the Citizenship Foundation, supported by Norwich Union and The Times.

Launching today, the initiative is open to all state secondary schools across the UK and gives 14 to 18-year-olds a chance to develop their own national budget.

Entrants will act as the Chancellor, balancing differing priorities, from education to the environment, as they decide how they would spend government money. They will present their ideas in their own Budget speech. The winner will receive an iPod Touch or a Nintendo Wii, and nine runners-up will receive Pure One digital radios.

For an hour and a half, the students debated the merits of lowering university fees, extending free transport for under 16s across the country, providing more support to the elderly and giving out energy-efficient lightbulbs free.

Norwich Union staff took the lesson with a somewhat unorthodox approach. Donna Boam, a political lobbyist with Norwich Union, said: “I presented it to them as like going into Topshop with thirty quid in your pocket. You want skirts, shoes, tops, everything, but you can only afford a few bits.”

The sectors that attracted the most investment from the chancellors in the making were international development and, surprisingly, pay and benefits for the armed forces. Urooj Khan, 15, said: “We have to give our soldiers better housing. These people are heroes. They've braved being blown up and we owe it to them.”One of the few issues to be universally discarded for investment was the 2012 Olympics.

“There's already millions spent on the Olympics,” said Raquel Costa, 15. “We've already got what we need; It doesn't need to be made better.”

For further information about the competition, which is being run by The Citizenship Foundation in partnership with Norwich Union, click here.

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