Commons Sense

House of Commons · Westminster Hall

Credit Unions and the Cost of Living

18 July 2023 · 3 other contributors · 3,648 words

Opened by Hannah Bardell SNP Livingston

Responding minister: Andrew Griffith

EconomyTaxationBenefits & Welfare

Summarised by AI from the official record, so it can contain mistakes.

Read the full transcript on Parliament.uk

At a glance

Hannah Bardell raised concerns about credit unions and the cost of living in Westminster Hall. A government minister responded.

Key points

  • Ms Bardell is concerned that high levels of credit union borrowing indicate financial strain on low-income households.
  • Ms Bardell calls on the government to fund financial education and community projects to support credit unions further.
  • The Minister acknowledges the importance of credit unions, noting their role in reaching over 2 million members with assets exceeding 4.5 billion.

Key requests to Government

Ms. Bardell asks the Government to take urgent action to address the cost of living crisis and support credit unions further. She suggests funding specific outcomes such as financial education for schoolchildren and supporting community-focused projects. The UK Government should also continue to fund initiatives like the no-interest loan scheme led by Fair4All Finance.

How the debate unfolded

MPs spoke in turn to share their views and ask questions. Here's what each person said.

Opened the debate

Hannah Bardell SNP Livingston

Ms. Bardell is concerned about the role credit unions play in supporting hard-working families during the cost of living crisis. She notes that while credit union membership has increased, the high levels of borrowing reflect the economic squeeze on low-income households. She mentions that 41% of people borrowed to pay for essential bills and expenses, while 20% borrowed for appliances and white goods. The number of adult members in credit unions reached an all-time high of 1.98 million, with loans increasing by 18.9% to £785 million last year in England alone.

Other contributors (3)
  • Amy Callaghan

    Reflecting on the increased borrowing with credit unions due to high interest rates from high-street banks, highlighting the vital role of credit unions during the cost of living crisis.

  • Chris Stephens SNP Glasgow South West

    Mr. Stephens wanted Ms. Bardell to mention the work Pollok Credit Union does in his constituency, focusing on affordable food larders and community supermarkets.

  • Stephanie Peacock Lab Barnsley South

    Congratulating the hon. Member on securing the debate and mentioning a local council report that one in five residents in Barnsley have debts overtaking their incomes, with food prices increasing by 19%, gas and electric similarly rising. Encouraging awareness of credit unions as an affordable option. The Community First Credit Union in my constituency raised issues with me about the operation of the eligible loan deduction scheme by the Department for Work and Pensions and some of the work that the Government do with credit unions. She wonders whether she could write to the Minister, because he might be able to look into some of those issues.

Government Response

Andrew Griffith

It is a pleasure to serve under the chairmanship, I congratulate the hon. Member for Livingston on her thorough contribution. The Government values credit unions' role in offering affordable credit and promoting financial inclusion, reaching over 2 million members with assets of more than £4.5 billion. Recent cost-of-living challenges highlight the importance of trust in the sector. To address inflation, the government aims to halve it by year-end through fair products and competitive banking practices. The Credit Unions Act 1979 was amended via the Financial Services and Markets Act 2023 to allow wider product offerings and better resilience. Vision 2025 outlines future priorities like insurance services distribution and funeral plans. We are providing £145 million from dormant assets funds for initiatives such as no-interest loan schemes. Financial literacy is a key priority, and we aim to tackle problem debt upstream. Credit unions also play a role in advocating savings habits and distributing cash ISAs.

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