I am proud to be the Vice Chair of the APPG for Credit Unions and a Labour and Co-operative MP.
It is well known that both the Labour Party and the Co-operative Party have a proud tradition of championing credit unions both from the Government but also in recent years from the opposition benches.
Credit unions are a crucial alternative provider of affordable financial services. This is particularly important for those on low incomes, like many of my constituents, who might otherwise fall prey to payday lenders and other forms of high cost credit. But equally importantly, credit unions are open to all and offer savings and other products to those who want to use an alternative to high street banks, firmly grounded in their communities.
The statistics provide good news as the credit unions are growing in size. In 2012 they passed the historic milestone of 1 million members. Their long term plan is to expand further with the aim of doubling the membership within the next few years.
This expansion of credit unions is incredibly timely. Many of the high street banks have withdrawn from many of our communities as a result of their branch closure programme. These closures risk leaving constituencies like mine as ‘desert’ communities without any mainstream financial service providers. This is particularly problematic for some elderly people or those without internet access at home who struggle to use the internet banking services that the high street banks are offering as an alternative.
Credit unions are also expanding their range of services. More credit unions are now offering current accounts. This is a very important step in improving financial inclusion. Other credit unions are working to provide short term loans which would be in direct competition with the payday lenders however at affordable rates.
Despite the good news, credit unions do face many challenges ahead. They are in need of raising their profile so that more people become aware of the services they offer. Credit unions do not have the resources to run the multi-million pound advertising campaigns or the plush high street shop-fronts that we see from high street banks and payday lenders.
One of the key mechanisms for raising the profile of credit unions is through employers. Some of the biggest and strongest credit unions in the world are based around particular sectors of the economy or professions. For example the UK Police Credit Union and the NHS Credit Union are great examples of this. It is the element of payroll deduction whereby loan repayments or regular savings can be made directly through your pay packet that makes these credit unions convenient to use. Marketing in the workplace and word of mouth from colleagues can also be an important way of spreading the word.
This is why I fully support the proposal for a specific credit union for the armed forces. And why I was so pleased to chair an event to mark International Credit Union day on behalf of ABCUL at which Mark Lawton from Navy Federal – the world’s largest credit union – spoke compellingly about their work.
It is true that many of the armed forces could join their local credit union but we know that the reality is that many of them don’t. Importantly, a specific credit union for the armed forces could be promoted by the Ministry of Defence and service charities like the British Legion among others and operate a system of payroll deduction which would have the potential to dramatically improve the availability of affordable financial services to service personnel and their families.
I am proud that it is the Co-operative Party of which I am a member that is championing this worthy cause and would urge readers to visit their new campaign website www.givethemcredit.org . I hope that before too long we will hear word from the Ministry of Defence that they are going to take the necessary steps to make it a reality.