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….