MP Discusses Vital Role Credit Unions Can Play in Cost-of-Living Crisis

Thursday 25 January 2024

The cost-of-living crisis is having an undoubted impact on the financial well-being of families across the UK.

Zync Digital caught up with Labour MP for Harrow West, Gareth Thomas, to discuss the vital role that credit unions and community banks can play to build resilience in the face of rising energy and living costs.

Gareth begins by describing how he first became aware of the sector when he was a young councillor in Harrow. “Harrow then was seen as very much a leafy well-off borough, but there were clearly pockets of real poverty and I was just really interested in how to tackle poverty, and what I as a counsellor could do about it,” Gareth said. “That led me to the co-op movement, and in particular to credit unions. I think credit unions are a great force for good. I’m struck by the power of credit unions, particularly in the United States and in places like Ireland and the Caribbean and pleased at the growth of the credit union movement in in the UK.

“They’re becoming slowly more recognised in the UK, and are seen as an ethical alternative to payday lenders and the exorbitant amounts of interest that they can charge.”

Explaining the important role the sector can have today, Gareth said: “As you know, we’re in the middle of a cost-of-living crisis now and peoples’ budgets are really, really tight in many cases, so if something goes wrong – say you suddenly need to buy clothes for your children to go to high school, and you needed to get a loan to do that, instead of going and having to pay exorbitant sums of money and having a fairly unappreciative computer chase you for that money you can go to a credit union, get a loan, and not have to pay huge rates of interest.

“You can talk to someone about how you pay that loan back, and it’s just a much calmer, less stressful way of getting a bit of help.”

“What sets a credit union apart is that there will always be someone you can talk to about your finances, you won’t have to pay big rates of rates of interest, you get a competitive rate.

“So, I think actually the government should go out of its way to promote credit unions. It isn’t doing so at the moment, but it seems to me that they are an obvious part of the response to the cost-of-living crisis.”

Looking ahead to the future, Gareth would ‘love’ credit unions to offer a whole range of financial services to be more visible on high streets .

“Access to insurance would be one thing, and access to mortgages which some credit unions do, or providing more of the quick loans which most credit unions are now doing,” Gareth added. “As credit unions can build their financial strength, more of these services can be offered. And I would love to see credit unions being as big in the UK as they are in in the in the United States, Ireland and the Caribbean.”

A full transcript of the interview can be found on the Zync Digital Website.