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Credit Unions

Volume 751: debated on Thursday 16 January 2014


Asked by

To ask Her Majesty’s Government what action they are taking to allow civil servants to join and save with a credit union using payroll deduction.

My Lords, the Government support the work of the credit union sector and are investing up to £38 million in participating credit unions, to expand their service while reducing their delivery costs, by April 2015. The Government will not require departments to offer a facility for payroll deductions for their Civil Service workforce where these do not already exist. It will be for each department to consider the costs and benefits of offering such a facility.

My Lords, your Lordships’ House and the other place have given the Government a good example by setting up this facility a few weeks ago. Would the Minister meet with representatives of the credit union movement and me to explore how this could be rolled out across government? Also, what words does he have to encourage the private sector to offer such services to its staff as well?

My Lords, I have just read that the noble Lord, Lord Freud, and Mr Iain Duncan Smith have joined the London Mutual Credit Union. It is open to all Members and the staff of both Houses to join that union. Part of the problem, as the noble Lord well knows, is that most credit unions are locally based and for other departments—such as the Home Office or DWP, with employees scattered all the way across the country—the cost of joining employees into a very large number of credit unions is rather complicated.

My Lords, I wonder whether the Minister would accept that this Government are very much in favour of nudging. How much nudging is going on to get departments to take up this very big issue? The credit union movement is well worth supporting; it is supported on every side. I do not believe that it is helpful just to say that departments can make up their own minds. I hope that we can have some nudging.

My Lords, there is a lot of nudging going on but, as the noble Lord will know, there are employee-based contributions to credit unions and employer-provided contributions to credit unions. The Government are aware that it is not without cost to run an employer-based set of contributions, particularly, again, if you are trying to roll it out across the entire country, in which there are some 340 locally based credit unions.

My Lords, it seems that there is a need for more diversity in financial services. Would it not be a good example if the House were to send out a message that we are leading the way on this? The common bond is government employees, so that should be easy. In terms of pursuing this enthusiastically, could the Minister ensure that a cost-benefit analysis is undertaken and that it is placed in the Library, so that Members can see it and can have a part in ensuring that we push for a credit union and be an example to the rest of the country?

My Lords, I will take that back and see what we can do about a cost-benefit analysis. I should mention that, apart from the Houses of Parliament, the other department of government that already has an employer-based credit union arrangement in place is the National Offender Management Service. Members will consider whether they think that is a good parallel to our work or not.

My Lords, while I am entirely in favour of the “nudging” to which my noble friend Lord Deben referred, what we really want is explicit, enthusiastic public encouragement by government Ministers of this very important movement.

My Lords, I am very proud to be associated with the scheme that extends also to members of the National Offender Management Service, as I think all Members of this House will be and should be. My noble friend made an important suggestion, namely that arrangements should be made for him, the Minister and somebody from the credit union to have access to somebody in each department to see how this could be pursued further. I would be grateful if the Minister could respond to that point.

I will take that back. My briefing says that this issue is not without cost in terms of payroll arrangements, but we will consider it and see what can be done.

My Lords, following the comments of my noble friend Lord Deben, can we at least expect a bit of joined-up government in terms of nudging different departments? If the difficulty is not one of principle but simply one of practicality, surely if one department can encourage this, others can too.

My Lords, I think that we are about to trespass on the next debate. The Cabinet Office nudges other departments; whether it can direct them is a question on which the noble Lord, Lord Hennessy, will no doubt touch in a few minutes.

The Minister will be well aware of the popularity of credit unions in Australia, New Zealand, Canada and particularly the Republic of Ireland, where I think the figure of support is of the order of 50%. Am I right in thinking that the equivalent figure for the United Kingdom is somewhere between 1% and 1.5%?

My Lords, I have 2% in my brief, but that is still a very small figure. Given the reduction in bank services in a number of areas in this country, this is an issue that we should all encourage. Noble Lords, including the noble Lord, Lord Kennedy, will remember the most reverend Primate the Archbishop of Canterbury talking about the Church of England becoming more extensively involved in the credit union movement.

My Lords, the noble Lord, Lord Cormack, asked for enthusiasm from the Government in this regard. Perhaps they could start by the Minister saying to his noble friend who represents the Department for Education, “Let’s have a go at getting schools interested in credit unions”, as the St Albans credit union has done. That body has had great success in getting youngsters into the habit of saving.