Marked wrongly?

A reader thought that the student's answer to the Synthesis question below was acceptable, and asked for our opinion.

Primary 6 English Language Paper 2

The only difference between the student's answer in blue and the correction in green is the use of should concentrate in the former and the use of should have concentrated in the latter.

Which is correct?

The past tense modal should does not need changing when reporting the speech, so the student's answer is correct.

If a modal auxiliary in the direct speech is already in the past tense form, then the same form remains in the indirect speech (Quirk et al. 301):

"You shouldn't smoke in the bedroom," he told them.
~ He told them that they shouldn't smoke in the bedroom. 

The answer given for correction seems to have been the result of an overgeneralisation of the backshift rule that applies to verbs and present tense modals. The following pair illustrates this tense backshift:

(1) John said, "I jogged yesterday."
(2) John said that he had jogged the previous day.

The past tense verb jogged is backshifted to the past perfect had jogged.

However, past tense modals such as should and could in direct speech do not undergo tense backshift and remain the same in indirect speech.