Credit Unions

Baroness Armstrong of Hill Top Excerpts

Thursday 13th December 2012 Lords Chamber

[Baroness Armstrong of Hill Top]

My Lords, I pay tribute to my noble friend Lord Kennedy, not just for today’s debate, but for continually reminding us of the importance of supporting credit unions and changing the environment in which they operate. I have had long-term experience of credit unions in the north-east. I used to teach at what was Sunderland Polytechnic. I taught only mature students, who had come into higher education without the traditional qualifications, on a course where they would eventually become qualified community or youth workers. There was one incredibly strong woman who came from south Tyneside and who had had a difficult life, but was an incredibly good community organiser. We put her on a placement in an estate in Jarrow where there were real problems. These led to significant intimidation and threats because of the number of lenders and so on who operated on the estate without any controls or proper attention. We discussed this and talked about whether she should set up a credit union, which she did. It is now a strong and powerful credit union.

Subsequently, I joined my local credit union as an investor, along with the then Prime Minister. Even so, it did not succeed and I was part of winding it up. However, in the process of doing it, we encouraged other credit unions in Durham to look at merging. They did not quite get that far, but we were able to get housing providers in Derwentside and Wear Valley to support their local credit union. They made this a major issue in their tenants’ away days and in other ways when they put on events for tenants. They really got them to look at how they manage their money and brought in the credit union to help that thinking and spread good practice. Actually, in the housing association in Derwentside, some senior staff got very involved in running the credit union, so it is absolutely strong and has a very good base now. Again, I recommend that to others.

I also managed to get Barclays Bank to come and give advice, support and some publicity to the credit union. The banks could do more, and I very much support the ideas that both my noble friend Lord Kennedy and the noble Lord, Lord Griffiths, had about them. Banks have a great a responsibility but also they would learn an enormous amount about customer relationships and how to work with people who may not have much money but want to be careful with it and use it effectively. As my noble friend Lady McDonagh said, this debate is very timely. At the beginning of this week, I was talking about food banks. A young MP said to me, “I can’t remember: did we have poverty at this level with this effect during the period of Mrs Thatcher?”. Actually, we did not because the safety net was stronger.

I do not know whether the Minister ever gets the opportunity to wander around towns in poor areas but when I go into Consett, in the constituency that I used to represent, I am horrified at the number of shop fronts that are now easy credit shops. They advertise to folk who I know do not just have nothing but already have massive debts to go in and get another instant loan. Too many of those folk do not have pay days for it to be anything but ridiculous that they are offered that sort of opportunity. They then go into a shop where they get white goods and furniture, and they are charged the most incredible rates of interest on a weekly basis. Of course, in the past social fund loans funded that. The experience that the right reverend Prelate talked about in Stanley—“Big Stanley” as we call it in County Durham—links to that directly. Your cooker has broken down and you need a cooker to cook the kids’ tea so what do you do? What you do now is go to one of those shops where they give you extortionate prices for goods, even sometimes for second-hand goods.

I do not think the Government will be comfortable with that or with that being the end result of stopping social fund loans. We have to rethink this. I am not saying, “Go back to the old system”, but there needs to be something that gives people an opportunity to be able to feed their children without getting into that level of debt. Credit unions are one way—not the only way—but they are simply not there on the high street, certainly not in the north-east. I know that one or two of the very big ones have shop fronts but that is not there for most. The Government have to really think through some of the excellent recommendations that there have been and act quickly. The problem out there is getting more and more serious.

I had a Christmas greeting this week from someone that the Minister may have heard of: Bob Holman. Bob works and lives in Easterhouse, and was many years ago my tutor when I trained to be a social worker in Birmingham. He has more integrity than anyone I have ever met in my life. He left university teaching because he wanted to work on a normal wage among the people who he had been training us to work with. He berates me regularly for not taking a low wage—and for not taking a low wage when I was in Parliament. He lives by his beliefs. He described to me in his Christmas note the number of people in Easterhouse now using the food bank as the only way they can feed their children. He talked about the café they had opened at the local church, where they give free tea and coffee and subsidised meals. Bob, of course, is the person who persuaded Iain Duncan Smith to take poverty seriously when he visited that estate.

I do not think any of us can be proud of what is happening today on estates like that. The Government have a responsibility in this. I could have gone on about all the other ideas that everybody has had but I do not want to take up the House’s time. I hope that the Government will take up these good ideas but will also implement them quickly so that more people have access to decent credit and savings in a way that the credit union movement enables them to do.