Meeting of the Parliament 17 September 2019
I am glad that there appears to be broad consensus on the benefits that credit unions can bring to people across the country in providing accessible finance at a much lower risk than using payday lenders. The additional £10 million that was announced in the programme for government is welcome, as are the plans for a new national strategy for the industry, and I look forward to seeing the implementation of the plans that the cabinet secretary has described today. Given that credit union membership has increased by 20,000 people in the past year alone, it is important that support for the sector is able to match the demand that is placed on it.
Exciting things are going on in the sector. Membership of credit unions in Scotland is steadily increasing and stands at more than 350,000 people. Unions hold assets of around £650 million and lend £362 million per annum, which is nearly a quarter of the total for the UK. Those are not just numbers on a page; they represent lifeline financial services for people who might not be able to get credit elsewhere.
However, we must not be complacent. Although there have been very welcome steps forward for credit unions, some areas require further attention to ensure that the industry can continue to improve. In a brief to members that it issued yesterday, the Association of British Credit Unions Ltd described how credit unions have to accumulate capital from their earnings, yet in order to increase those earnings they need to increase growth, which in turn requires increased amounts of capital. The point is that, without sufficient external investment, the industry could find itself in a downward spiral in which it would be unable to provide for its customers.
The association also stated that most loans go to people in the bottom 10 per cent in the Scottish index of multiple deprivation. If we were able to broaden the base of people who go to credit unions, that would in turn provide for further investment. I hope that the £10 million announced by the Scottish Government, along with the significant work that is being done by the UK Government, will be enough to achieve that, but I urge ministers to keep a close eye on the issue.
Across Scotland, in communities such as my own, people must be made aware of the financial options that are available to them and the services that credit unions offer, so credit unions must be brought into the mainstream. It was good to see the Scottish Government establish a public information campaign last year to raise awareness. I am not sure whether the campaign was intended to be for a limited time, but it seems to have fallen by the wayside in recent months. I hope that in her closing speech the cabinet secretary will address whether the Government is considering making further efforts to inform the public about the value of credit unions.
The intrinsic value of credit unions is such that we should seek to promote their widespread use whenever possible. For those who might not be able to get bank loans or other more accessible options, they represent a far better source of finance than payday lenders, which apply punitive interest rates that run well into the thousands.
I welcome the investment that was promised in the programme for government and I will scrutinise its effect, as well as the new national strategy, in due course. Further work needs to be done to ensure that credit unions continue to be sustainable in the future. However, I am confident that we have the means and the will to make that happen.
15:25