Cllr Nick Small 24th September 2012 Co-operative Party member and Liverpool City Council Cabinet member Cllr Nick Small reports on the Mayor of Liverpool’s £1m investment in credit unions. In May Joe Anderson was elected as Liverpool’s first City Mayor. One of his main pledges was to invest £1m in Liverpool’s credit unions to tackle legal loan sharking (£700,000 of the investment) and to introduce Liverpool’s first mutual microfinancing initiative for businesses (the remaining £300,000 of the investment). A consortium of seven of Liverpool’s credit unions with residential or live/work common bonds covering the whole city have come together so that every Liverpool resident will be able to benefit from this. Credit unions are extremely well placed not only to tackle financial exploitation, enabling people to move away from expensive, punitive pay-day, doorstep and hire purchase markets, but also to begin to address new challenges poor communities will face with the introduction of Universal Credit. Liverpool City Council’s investment will allow our credit unions to introduce immediate short-term loans, initially up to £400, approved in 24 hours and subject to a savings plan to take on the predatory lenders directly. The credit unions will also roll-out basic community banking facilities with a pre-paid Visa card, ATM access and direct debits. Individuals affected by Universal Credit changes will benefit from the development of Rent Credit Accounts allowing members to pay rent directly to social and private landlords. We’re aiming to make over 12,500 loans over three years – recycled over three years, the initial £700,000 investment is projected to grow up to £3.5m. But it’s vital that we also use co-operative principles to boost enterprise in poor communities. We shouldn’t just harness mutuality to ameliorate the symptoms of poverty; we must attack its root causes. Liverpool is near the bottom of the league for business density. With relatively few large and medium-sized firms in the private sector and a reducing public sector, it is micro and small businesses that will create economic growth and jobs in the city. The innovative microfinancing element of the Liverpool initiative will provide bespoke credit facilities and business loans to start-ups and existing micro businesses for working capital and investment purposes. The consortium of credit unions will work closely with the City Council’s own Start to Grow business support service to provide joined-up support, not just access to finance. Projections show the initial £300,000 investment potentially growing to over £1m after it is recycled. Cllr Nick Small is Liverpool’s Cabinet Member for Employment, Enterprise & Skills. Nick can be contacted at email@example.com and tweets @cllrnicksmall.