Meeting of the Parliament 17 September 2019
I am pleased to take part in this debate, as we can never highlight enough the importance of credit unions to our communities. More than 410,000 people are served by credit unions, but I am sure that the potential customer base is much higher than that. As others have said, it is really important that knowledge of the existence of credit unions is embedded in our schools and that saving is started in primary schools and continued in secondary schools.
In my research for the debate, I was interested to read that 6.9 per cent of the Scottish population are enrolled in a credit union compared with only 1.5 per cent in England and 2 per cent in Wales. I think that that is a testament to the backing and promotion that credit unions get from the Scottish Government. Like Pauline McNeill, I looked enviously at the level of participation in Ireland, which is 70 per cent. We have a bit of a way to go.
In my opinion, banks and credit unions should be seen not as operating in competition with each other but as co-operating to offer a better service to customers, especially those in our poorer communities. That is happening with Lloyds Banking Group’s credit union development fund. In 2014, Lloyds Banking Group launched a fund of £4 million over four years to help credit unions to strengthen their financial position and enable them to grow sustainably, build resilience and help many more people in the long term.
To date, the Lloyds Bank Foundation has supported credit unions with more than £6 million UK-wide. I am not sure how much of that support has come to Scotland but, as well as financial assistance, its support includes signposting customers to credit unions; sharing expertise, with a number of bank colleagues volunteering in credit unions; and the secondment of two full-time colleagues to work with the Department for Work and Pensions credit union expansion project.
In Scotland, the Scottish Government has match funded the Carnegie UK Trust’s investment of £1 million in the affordable credit fund to allow individuals with low incomes and poor credit ratings to access finance.
That is all good news, as credit unions tend to be much less scary than banks. Their offices are usually in our communities and they are often run by people whom their customers know. It is also important that credit unions are embedded in the networks of support and financial advice in our communities, with signposting to other financial and budgeting advice and crisis services such as food banks, if necessary.
When we talk about credit unions in the Parliament, we tend to focus on the saving part, but it is important that those who save also consider borrowing from their credit union. As well as savers, credit unions need borrowers, because that is what keeps them in business—I think that Johann Lamont mentioned that. One reason why the North East Scotland Credit Union—the credit union in which I saved for many years—folded last year was that not enough borrowers with good credit ratings were borrowing from it. It was asset rich, but there was not enough lending business to keep it going.
There is much unanimity on the subject in the chamber and much support for the work that the Scottish Government is doing in the realm of credit unions, so more power to the cabinet secretary’s elbow.