MPs Discuss Credit Unions as Vital to Survival in the Cost-of-Living Crisis

Friday 26 January 2024

Members of Parliament gathered in Westminster Hall on the 18^th July to discuss the role of credit unions and the cost of living crisis, and MPs and MSPs shared their appreciation for the hard work of their local credit unions in supporting the community.

Hannah Bardell, MP for Livingston moved the motion and stated that the role credit unions play in supporting families across the UK during the cost-of-living crisis is “indisputable”. Bardell, an SNP politician, also highlighted the importance of credit unions in furthering financial education as the MSP praised credit union initiatives that teach children about money by going into schools. The Livingston MP also mentioned the benefits of credit union payroll deduction schemes and urges more employers to offer this for their employees.

The SNP politician referenced positive change for credit unions through new technology such as through the community banking platform Engage. She cited that Sofia Dogan, CEO of Kingdom Community Bank found the cost for Engage’s services were less than 50% of the cost than a bank offered, and Engage allows payments to be sent to members’ accounts in minutes.

The MSP raised that the number of adult credit union members has never been higher, and borrowing has also increased which Amy Callaghan SMP linked to the result of high interest rate from other lenders. Bardell stated that although it is welcome that more people are using credit unions, the root cause for this need for credit is concerning because the cost-of-living crisis has squeezed family finances.

The Economic Secretary to the Treasury (EST), Andrew Griffith, pledged his commitment to support the credit union sector in its many functions and he said: “the Government really value the unique role played by credit unions for all their members, and particularly the financial inclusion agenda.” Griffith stated he would like to see more credit unions after “seeing those we have being even more successful and wanting to grow the number of users”. He added that part of the fight against inflation in the UK and protecting the most vulnerable in society requires “access to affordable, inclusive credit, such as that provided by credit unions, can make a real difference”.

The EST said that “the Government are firmly on the side of credit unions” and he will support the sector which he said the passage of the Financial Services and Markets Act 2023 will help with the grow and diversify credit unions. Griffith further highlighted the Government’s support of the sector as set out in ABCUL’s Vision 2025 publication which identified how the sector intends to deliver on key priorities. As another essential role credit unions play, Griffith stated that financial literacy is a Government priority and that credit unions also focus on financial inclusion and help members to save which makes them more resilient.

Lastly, Stephanie Peacock MP raised an issue she was aware of where credit unions have experienced difficulty operating the eligible loan deduction scheme by the Department for Work and Pensions. In response, the EST pledged that he would investigate the issues and he supports “anything that removes a point of friction and allows credit union to do their important work”.

ABCUL CEO, Robert Kelly said: “It is pleasing to see so many Members of Parliament championing credit unions on the national stage. The sector is looking forward to grasping the new opportunities the changes to the Credit Union Act will bring and thank the Government for enabling this to pass. ABCUL’s Vision 2025 document highlights how we intend to deliver on the sector’s priorities and will work tirelessly to achieve the best outcomes for the sector and its members”.

Read the full discussion here.