John Woodcock MP 10th July 2013 Blog Co-operative development Share Tweet Picture courtesy North-West Evening Mail Co-operative MP John Woodcock reports on the new Barrow & District Credit Union he helped launch, putting co-operative values into practice. From the Rochdale Pioneers onwards, the co-operative movement was founded on a mantra of practical solutions to the hardships faced by working people. Today, as people struggle to make ends meet and increasingly distrust the power of politics to make a difference, co-operators face an ever greater challenge to show how mutuals can make a genuine difference to people’s lives. We, of course, are all signed up to the Co-operative Party’s values, but unless we can do more to show the changes they can bring on the ground we will remain a minority interest battling to be heard in an ever more hostile environment. That is why I am so delighted and proud that Barrow has now inaugurated a major new credit union to help people through these hard times. As the first ever Labour and Co-operative MP for Barrow and Furness, it was a privilege to be asked to speak at the opening ceremony. In many ways, the payday lenders, offering credit at four-figure interest rates, operating in a captive market of struggling families denied credit by mainstream lenders, are today’s equivalent of the over-charging mill owners. So what better area than the provision of credit to seek a co-operative solution? When I set up a commission to examine hidden poverty in my Barrow and Furness constituency last year, it found pockets of deprivation as bad as any inner-city, exacerbated by geographical isolation. This is a promising environment for legal loan sharks, who trap many of my poorest constituents in a cycle of dependency and exploitation. This cycle has become more entrenched as the Conservative-led government presses ahead with its discredited economic policies and failed to come up with any kind of plan to improve the lives of my least well-off constituents. The conditions were near-perfect for high-interest payday lenders to move in – and they have proliferated. Trading on the economic climate, these shops offer a quick-fix to families who have nowhere else to turn when faced with a domestic financial crisis. The loan sharks’ advertisements are designed to make vulnerable people think that the lenders are on their side – but that is far from true. Cash-strapped families take out payday loans believing they can solve a temporary financial difficulty, but three-quarters of borrowers struggle with the repayments, once the exorbitant interest charges are piled on top. Rather than solving their financial problems, turning to the legal loan sharks frequently exacerbates them. But some local people are pushing back against the dominance of the loan sharks. From modest beginnings a group of dedicated volunteers begged and borrowed office furniture and drew up plans for putting the financial co-operative into practice. Our credit union – Britain’s youngest – received its authorisation from the Financial Services Authority just before last Christmas. A packed audience at the opening were told by chairman Rob Cairns, the former chief executive of the Furness Building Society, that even before the official opening, the union had received a hundred membership applications, my own among them. The credit union is a highly professional organisation: local finance expert Jon Balm has been appointed general manager and the business plan is for total self-sufficiency within three years. The credit it can offer at reasonable rates means people who need a bit of help to pay for, say, children’s Christmas presents, or to replace a broken washing machine, will no longer be driven into the clutches of the high-interest operators. One local garage has become the first Barrow business to open a payroll deduction account with the credit union: employees who have saved for three months become eligible for a loan of up to £500 – at just two per cent interest. More local businesses are set to follow. From September the first Young Savers school scheme run by the credit union is expected to be operational from Greengate Junior School in the town. Whilst the Barrow credit union was successful in achieving FSA approval, there are real concerns in the mutual sector about the scale of the barriers put in the way of establishing credit unions. These include capital requirements that to many seem out of proportion to the scale of lending being proposed. Of course, it is absolutely right to have a regulatory system that protects credit unions and their customers, but it should not put roadblocks in the path of establishing small, responsible credit unions that can provide an alternative to pay-day lenders. Yet it has struggled through, and now the Barrow and District Credit Union – like many across the country – is an object lesson in practical, pragmatic co-operative solutions to the day-to-day problems of struggling families across Britain, showing how we transpose the vision of the Rochdale Pioneers into the twenty-first century. John Woodcock is Labour & Co-operative Member of Parliament for Barrow and Furness.