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Credit Unions

Volume 467: debated on Monday 19 November 2007

Via the growth fund, we are investing £42 million over three years in more than 120 credit unions and community development finance institutions. To date, more than 40,000 affordable loans worth a total of £20 million have been made, and as a result thousands of people have been prevented from falling into the clutches of high-cost lenders or loan sharks.

I am grateful to the Minister for his reply. He will be aware of the socially responsible work that credit unions carry out, but he will also be aware that the credit union movement feels that the current legislative framework is stunting its growth, and he will be aware that there are far higher levels of credit union membership in other countries, such as Ireland. What steps is he considering taking to update the law governing credit unions?

First, I should point out that the growth fund investment that my Department is making is the first ever substantial investment by Government in the credit union movement, and my hon. Friend will know of the First Alliance credit union in Ayrshire which is benefiting from growth fund money. My Department is looking in conjunction with the Treasury at the legislative and regulatory rules that affect credit unions, and I am sure that colleagues in that Department will have more to say about that in future.

Does my hon. Friend agree that it is important that credit unions are not just an urban phenomenon, but that they also offer savings and loan opportunities in rural areas? Will he commend the work of North Yorkshire county council, which on 4 December will consider a business plan drawn up in association with local housing associations to expand the common bond of the York credit union to the whole of North Yorkshire so that credit union facilities will be available in the whole of the county of Yorkshire?

I agree with my hon. Friend, and I can tell him that no fewer than 11 credit unions in Yorkshire are benefiting from the investment that the Government are putting in through the growth fund. We have found that in many areas a number of small credit unions have come together to collaborate and pursue a bid for growth fund money. That has been especially effective for credit unions that cover rural areas. My hon. Friend is right that such amalgamations must take place if we are to get wider coverage on behalf of credit unions, and that is precisely the sort of thing that growth fund investment has encouraged.

I am grateful to my hon. Friend the Minister for his answers. Obviously, the people who benefit most from credit unions are those at most risk from loan sharks and least able to look after themselves in this respect. Will my hon. Friend clarify the situation with regard to the funding he mentioned in his first answer? Is that just for expanding existing credit unions, or are there facilities for creating new credit unions from scratch, and where should people go if they want assistance in, or advice on, starting a credit union?

The growth fund money is being used in a number of ways. Some of it is expanding the capitalisation of credit unions—it is having a substantial impact in that respect. As I said, a number of credit unions have amalgamated or brought collaborative deals to us in order to bid for the growth fund. Some of the money is also available to assist in training and development for those who work in credit unions—both full-time staff and volunteers, who play an important role.