Meeting of the Parliament 17 September 2019
It is a pleasure to open the debate for my party.
The cabinet secretary is right to say that it is a shared vision. In our manifesto, we said that we would support the credit union movement in making financial services more accessible. Today, we will support the motion and the amendment. I suspect that most of us who speak today will repeat many of the same things.
In that vein, I welcome the announcement by the Scottish Government of the £10 million credit union investment fund to provide loans to support credit unions. I hope that that commitment by the Scottish Government will lead to the credit unions strengthening their presence in the market, both in a physical sense and on a digital platform. Their visibility is an issue for many people. I will come later to a point that Pauline McNeill made about how credit unions sit within the marketplace and how people view them.
When we had consensus on this before, we agreed that we needed to promote the uptake of services from credit unions. I note that, over the year that we have been debating it, there has been a small rise in uptake in Scotland. About 20,000 new members have come in this year. Scottish credit unions now provide about 24 per cent of the UK total of lending.
That makes us look at the worldwide position. Credit unions in the UK provide for just 1 per cent of the population. When we look around the world, we see that that does not compare well. In the US, 43 per cent of the population engages with credit unions. In Canada, the figure is 22 per cent and, in Australia, it is around 25 per cent. We can see that we have work to do. The cabinet secretary said that there are 40,000 credit unions in the world; I have a figure of 42,000. The number is not exact, but there are a lot of them and we are down at about 0.23 per cent of the world total. Therefore, there is scope for improvement.
We know that we can do better, but how do we achieve that? The cabinet secretary outlined a number of proposals that have been brought forward. We would support some of them. Northern Ireland has done some excellent work. It is forging ahead of us and is lending about 40 per cent of the UK total.
It has also shown us how credit unions should sit within our society. The belief has been that they belong only in poorer areas and are for people who are struggling, but the opposite is true; those of us who have more money should be investing in and supporting credit unions to allow them to flourish and to provide a fair interest rate and an equitable service. We know that credit unions come out extremely well in surveys when it comes to looking after the people they serve.
Credit unions play a key role in offering credit at reasonable rates of interest in a form that suits many low-income consumers, and in providing a valuable tool to encourage saving and responsible budgeting. I hope that everyone will join me in welcoming some of the steps that the UK Government has taken to make credit unions more accessible. It has increased the common bond from £2 million to £3 million, meaning that more people across the UK can access credit unions. That built on the success of the credit union expansion project that provided £38 million to the Association of British Credit Unions in 2013 in order to modernise and grow the credit unions.
However, we hear clearly from trade organisations that they are seeking reform of UK legislation, and, because of the peculiar situation in which the range of financial services that credit unions can legally supply is quite restricted, we in the Conservatives support that. Things that we consider quite normal within our financial institutions, such as credit cards or insurance, really need to be within the credit unions’ capacity to deliver.
The sustainability of credit unions is challenging, so the extra money is welcome. The Scottish League of Credit Unions said:
“The challenge for credit unions is that they operate in a restrictive legislative environment in which the interest rate that they charge on loans is capped by law.”
Credit unions therefore also have a narrow margin of profitability. We need to support the changes around that.
Overall, there are very positive movements, and we are more than happy to support the Scottish Government’s direction of travel. We will be supporting the motion and amendment tonight, and we look forward to a significant rise in uptake of credit union services over the next five years.
14:52