Hansard

On behalf of my party, I am pleased to open the debate on the important role of credit unions in Scotland. It will be a consensual debate, because credit unions have attracted strong cross-party support. There is a well-attended credit union cross-party group and members of all parties have spoken strongly in favour of credit unions, both in the Scottish Parliament and at Westminster.

In that spirit, I start by saying that the Scottish Government has done some really good work on credit unions, through its people, not profit campaign. I recognise that the UK Government has also done some good work through its initiatives.

We are united in our desire to see the promotion of the uptake of credit unions and to ensure that all Scots have access to finance and independent banking, alongside the regular high street banks, which have their own role to play in the market.

Credit unions bring a variety of benefits to our economy and can encourage an uplift in productivity—something that we would all want to see. An American credit union, the Filene Research Institute, found that a financially capable workforce not only improves productivity and employer profitability but results in

“less absenteeism, fewer accidents, less job turnover”

and lower benefit costs. Alex Rowley made that important point when he talked about the role that credit unions have to play, not only in day-to-day banking but in wider society. The cabinet secretary also touched on that. The institute’s research also revealed that, ultimately, employees who are financially secure are

“better able to learn, change and grow with the company”.

Credit unions have a real place in our economy.

There is also a place for credit unions in financial education, particularly through the junior saver schemes that members have talked about, which seek to instil the principle of saving in pupils at a young age. We can all agree that that is a commendable aim and one that we should all promote in our own constituencies. Often such schemes are geared towards a specific purpose or incentive, such as saving for a trip, and they demonstrate the value of saving for greater gain in the long term.

Unfortunately, the most recent figures that I have show that a majority of credit unions in Scotland do not operate a primary school junior saver scheme, with an even larger percentage eschewing a secondary school project. I urge members to investigate credit unions in their constituencies over the weekend to find out whether they operate such a scheme and, if not, to engage in a conversation to see how they can encourage that good practice to grow.

I would also like to touch on payroll deduction schemes, which have already been mentioned. That idea enjoys the support of ABCUL, the Chartered Institute of Payroll Professionals, the Scottish Government and the UK Government. The benefits of payroll deduction are clear. It is a simple process, with administration largely handled by the credit union. Savings are covered up to £75,000 per person—I wish I could reach that sum—so savers are at no risk of losing that money and there is an added financial cushion to protect members. I support CIPP’s efforts to encourage uptake among employers, and I encourage employers to open themselves up to the idea. CIPP has created a payroll data transfer standard that allows a smooth transfer of data to any credit union. The tools are there and all we must do now is promote them.

There are positive steps that have been taken to encourage the growth of credit unions. As the cabinet secretary has pointed out, there was a recent campaign, which we have seen everywhere—I hope that we will see more of it—that will contribute to that. An example that I read about recently was a project involving the Carnegie UK Trust and five Scottish credit unions to help workers in Scotland benefit from credit union membership through their employer by creating the new post of employer engagement officer. Given that building partnerships with employers is a major issue for credit unions, that step is most welcome.

The UK Government has also been working to encourage credit union growth. The chancellor announced a major package of measures in the autumn 2018 budget, which I hope the Parliament welcomes. Boosts for credit unions included the announcement of a prize-linked savings pilot scheme for credit unions, based on the United States save to win model, and operating in a similar fashion to a premium bond.

The Department for Digital, Culture, Media and Sport’s affordable credit fund has also helped 66 credit unions lend more than £20 million to their members, with £5 million of direct investment so far. The positive impact of that has been welcomed by both ABCUL and the Lloyds Banking Group credit union development fund—such a long title.

However, one of the most significant measures by the UK Government has been to expand the common bond from £2 million to £3 million. That opens up the world of credit unions to a plethora of new potential members and gives credit unions the scope to be ambitious with expansion plans, as well as adapting credit unions to the modern world in which people are perhaps not so closely tied together around a single business or area as they once were. That has refreshed the credit union landscape and I hope that we can work together to support that policy.

I recently came across the way in which credit unions interact with welfare payments and budgeting. At a recent welfare surgery in East Renfrewshire, I spoke to staff of the Pioneer Mutual Credit Union, who told me in detail about the partnership working that they are doing with East Renfrewshire Council management and Barrhead Housing Association to provide a free money management account for universal credit payments. Once a universal credit payment is made, the individual’s rent is deducted, protected within their account and transferred directly to their landlord or council, ensuring that their rent is paid and removing the threat of arrears. For those experiencing difficulty with housing costs, that could prove to be a valuable tool, and it is a good example of how credit mutuals work very closely with other partners.

Credit unions are a vital source of microfinance in today’s complex financial world. The variety, autonomy and specialisation on offer from the sector give it a depth that traditional banks lack, and a personal touch that cannot be replicated elsewhere. In support of those qualities, I suggest that we each become a champion for the credit union cause in our own constituencies.