Monthly Archives: October 2012

Community Development and Credit Unions – can you do the former without being a member of the latter?

2010 was the European Year of Combating Poverty and Social Exclusion (EY2010). The excellent Bevan Foundation facilitated the year in Wales including a flagship event in Newport/Casnewydd in the September of that year. I attended a Debt and Financial Inclusion workshop chaired by Fran Targett of Citizens Advice Bureaux. The thing that struck me, other than how dismal the Communities First attendance was at the event given the topic, was how so few hands were raised by attendees of the workshop in response to Fran’s question “How many of you are credit union members?”. Barely a third of attendees raised their hands, nearly all of whom worked in the third sector or had a remit in any sector to support vulnerable people. Several required the concept of a credit union to be explained.

It is an enduring mystery to me that people who have social justice beliefs, work in community development and who advocate on behalf of the marginalised, disenfranchised and vulnerable are not members of their local credit union. I make no apology for the moralising tone: joining a credit union is a simple yet profound action that helps affect change in a community, thereby embodying core community development principles.

“Credit Unions are financial co-operatives offering their members an easy and convenient place to save and access to low cost loans when required. They offer a valuable service to everyone – business people, families, employed or unemployed, young people or those who have retired. They encourage their members to make regular contributions into savings accounts which create a central pool of funds. This is used to provide loans back to the membership at very favourable rates. The interest generated from the loans is used to cover administrative costs, with any surplus returned to members as a dividend.”

Writing from a Welsh perspective, it is apt that the above definition of a credit union is sourced  from the Robert Owen Credit Union website, based in Newtown/Y Drenewydd. Owen was an eighteenth century industrialist and co-operativist who used his wealth, status and influence to pioneer radical social and employment reform. Neither might it be a coincidence that the city regarded as an exception to the general rule of low credit union penetration in the UK – Glasgow – was where Owen’s radicalism was enhanced during his time living in the city.

Figures released in the summer by the Financial Services Authority places credit union membership (including junior members) in the UK at 887,000, which is almost triple the figure in 2000 (325,000 members). However this equates to a measly 1.42% of the total UK population.

According to the Welsh Government membership of credit unions in Wales totals 55,000. This amounts to 1.83% of the total Welsh population, and though the rate of increase is less than the UK’s over a similar period it is still marked, with a 57% increase in membership between 2004 and 2012 (based on figures included in Huw Lewis AM’s thorough Review of Over-indebtedness, 2005).

By way of sobering comparison, over 70% of the Irish population is a member of a credit union. In the UK, only Glasgow achieves a membership rate even remotely comparable with Ireland: 22% of the city’s population at its peak (though this has dropped back of late).

Yet where penetration is so paltry, so it is that growth and opportunity is potentially enormous.  For community development workers the prospect of large pools of local finance that is owned and controlled by and accountable to local people should be mouth-watering…and not just for the potential source of funding, both grant and loan, in an era when the public and third sector purses are burdened by a greater call on their services at a time of brutal austerity.

By offering affordable credit, non-judgementally, to people who are otherwise driven to pernicious, informal or illegal providers is the embodiment of the social justice principles that are the bedrock of community development work. The Communities First programme in Wales has been a significant factor in the increase in Welsh credit union membership by helping (re-)establish, promote and staff, usually with volunteers, collection points. It has also been a source of in kind and small grant finance for the development work that would otherwise be beyond the capacity of credit unions’ volunteer boards. The EY2010 workshop experience would suggest, however, that irrespective of how important and productive this support has been, much of the community development workforce has not taken the step to join, or made the connection in joining, a credit union itself.

Self-determination and working together are also underlying values of community development, so the prospect of being part of a broad, member-owned collective with access to finance, but more importantly an ability to dictate how it is used ought to be powerfully alluring to community development workers. The recent banking crisis has taught us how passive and disenfranchised we, as savers, are with the traditional, so-called high street banking sector. Though it is hegemonic and propped up by a political establishment (which it, in return, helps to insulate from the more invidious effects of globalisation) what should be more appealing to the community development workforce than a good, old-fashioned David versus Goliath political scrap? Many a time I have sat in a room with communities and community development workers who bemoan the elevation of a financial bottom line or return over an alternative social or environmental one. This is not to say that a community-owned financial co-operative would establish a financial Utopia of fairness, equality and prosperity; it would remain under pressure from competing demands, political and interest group pressure and, no doubt, contrived obstacles designed to undermine its ability to compete with and challenge the established banking order (for instance, the ridiculous state aid wrangling in the early 2000s). It would however be more transparent and accountable, and though there remain things credit unions can do to improve the visibility to their memberships of their decision-making, we also know how capricious, reckless and arrogant banks have been with our money, yet substantive influence on this culture on the part of savers is extremely limited.

In conclusion, it is surely hard to argue that the credit union movement and a community development workforce faithful to its core and underlying values are not compatible and mutually reinforcible, so click here to find your local credit union in Wales. Go on….


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Why The Western Mail was wrong to question Communities First exit strategy funding

The House of Commons Communities and Local Government Committee published a report in 2011 into the UK Government’s Regeneration to enable growth: What Government is doing in support of community-led regeneration. The committee’s critique of it is damning. In recognising that “funding for regeneration has been reduced dramatically and disproportionately over the past two years”, the Committee concludes, among other things, that the regeneration approach proposed in the document lacks robust enough evaluation frameworks. The danger in this grave oversight is that the impact of the withdrawal of funding, let alone, the impact of investing it, is not adequaltely analysed.

The Committee was particularly critical of the way in which Housing market Renewal Funding in England had been withdrawn “leaving many residents trapped in half-abandoned streets” (p.3). Evidence to the committee suggested that:

“the decision to end funding so suddenly has had a profound impact on the lives of people in town and cities throughout the North and Midlands”

Proof indeed that these strategies, or lack of them, matter. Gravely so.

In contrast to wrenching funding with minimal notice and no succession plan, of the projects the Community Fund investigated in order to assess the effectiveness of exit strategies developed by the organisations it funded:

“exit strategies…proved to be realistic in many cases and have been able to do what they planned”

This research is not new, however. It was published in 2002.

Thus there is a body of evidence and experience that shows that any achievements of community-led regeneration can be undermined by the lack of a planned, gradual, perhaps phased, withdrawal of funding and activity.

It is therefore sad and a reflection of the derisory standard and effort of print journalism in Wales that The Western Mail (29.09.12) poses the question “Should Welsh Government pay out £650,000 to 12 Communities First projects?”, claiming that:

“Questions have been raised about the Welsh Government’s decision to provide £650,000 in ‘exit strategy funding’ to 12 projects whose involvement in the Communities First anti-poverty initative is being curtailed”

It does not actually state these questions, choosing rather to quote an opposition Assembly Member’s hope that the money is “spent wisely…and not wasted in bureaucracy”. A hope shared by pretty much anyone, obviously. But therein lies the problem. Rather than delve into the Communities First programme and investigating and critiquing what it is intending to do, The Western Mail trots out trite and banal generalisms. It has never understood the Communities First programme; disappointingly, it has never been inclined to try.

The general thrust of the article is to paint a picture of ‘yet more good money being thrown after bad’. So rather than attempt to find out how the exit strategy funding proposes to accomplish what is widely regarded as an essential step in regeneration work, it reheats and rehashes the Plas Madoc scandal as a way of shoring up its cynical and sneering position. What regrettably happened in Plas Madoc is entirely unconnected to the process of allowing a small number of areas to exit the Communities First programme, in keeping with the recommended good practice. Instead the article serves to smear the programme and in so doing the disadvantaged communities it assists.

We deserve better of the self-styled National Newspaper of Wales.

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