Credit Unions

Lord Cormack Excerpts

Thursday 13th December 2012 Lords Chamber

[Lord Cormack]

My Lords, it is a very real privilege to be able to follow the right reverend Prelate the Bishop of Durham, who has brought a new dimension to our debates on financial matters and will, I trust, continue to do so when he is elevated to an even higher station. We are very fortunate to have him and it is good to have someone in a position of moral authority in our country who is so aware of how society works and aware, too, of the problems surrounding financial institutions.

I was provoked into taking part in this debate because over the past few months the noble Lord, Lord Kennedy, has asked a number of pointed Questions on credit unions and I have chipped in. It is not a subject that I have studied in great detail in the past, although no one can represent a constituency in the other place, as I did for 40 years, and not be aware of the enormous problems faced by so many of those less fortunate in society, not be aware of the appalling activities of loan sharks, not be aware of how families are often torn apart, with distress, disintegration of family units and, sometimes even worse, with people being driven to suicide. That is really the background to the debate we are having today. We have had some fascinating and important contributions, not only from the noble Lord, Lord Kennedy, who introduced the debate so splendidly, but my noble friend Lord Griffiths of Fforestfach, who has tremendous experience in these areas and who injected a new reality into the debate, for which we are all, I am sure, extremely grateful.

No one in public life who is concerned about the welfare of the less fortunate can fail to be full of admiration for those pioneers of Christian socialism and the Co-operative movement in the 19th century. That is part of the warp and weft of our civilisation, and I honour those people. As a young Conservative, I was just as inspired and motivated by the great speech made in 1872 by Benjamin Disraeli—of course, Mr Miliband is on to this now—when he talked about the need for the Conservative Party to have as one of its prime objectives the elevation of the condition of the people. Those two things march side by side.

One can say, here in 2012, that although credit unions have been around for quite a long time they are an idea whose time has come. We need to have an ambitious acceleration of this movement in the way that my noble friend Lord Griffiths sketched in his speech—as did my noble friend Lord Stoneham, who brought to the debate his great experience of the housing association movement. When my noble friend the Minister comes to reply, I hope that we will hear a sense of real determination to be more ambitious. We are all grateful for what the Government have done and are doing but we need to be more ambitious. The two figures that stuck in my mind from the speech of the noble Lord, Lord Kennedy, were that two-thirds of the population of the Republic of Ireland and something like a third of the population of the United States are involved in credit unions.

At a time when people are often bemused by the advance of technology and the impersonality of the technological society, we need people who can talk to people. How many of your Lordships have not been exasperated when ringing a bank or some other institution on being confronted with a metallic voice instructing you to press button one if you want to inquire about a debit balance and button two for something else? It is bad enough for those of us who have had reasonable educations and think that we are moderately intelligent, but for people who are struggling in the face of debt and difficulty, that sort of thing can be daunting to the point of destruction. The great thing about the credit union, when properly administered, is that people are talking to people.

I was greatly taken by the suggestion of the noble Lord, Lord Kennedy, endorsed by others in this debate, that some of the brightest and the best from our banking system—I speak as the father of a banker—should give some time or be seconded to assist the development of these extremely important parts of society. Our bankers should believe, as I hope the best of them do, in responsible capitalism. Like my noble friend Lord Griffiths, I believe in the market economy and in capitalism, but I believe in responsible capitalism.

I have had the privilege, for the last 10 or 12 years, of being involved in the annual award run by First magazine for responsible capitalism. The first chairman of our judges was Lord Dahrendorf and our present chairman is the noble and learned Lord, Lord Woolf, the former Lord Chief Justice. Each year, we try to give an award to somebody who has really demonstrated responsible capitalism. In the last two years, we have instituted a second award for the SME sector and named it after Lord Dahrendorf. If we believe in responsible capitalism, we believe that the benefits of the market should extend to all our people. It is through the intelligent development of credit unions that that can happen.

Although debates in your Lordships’ House are not always as widely and as well reported as we would like, I hope that people will read today’s speeches by the noble Lord, Lord Kennedy, my noble friends Lord Griffiths and Lord Stoneham, the noble Lord, Lord Graham, with whom I worked often in the House of Commons many years ago, and of course the right reverend Prelate the Bishop of Durham. Running through all their speeches is a coherent thread, saying that those who are among the least fortunate in our society must not be overwhelmed by that society. Because of the rapid advance of technology, there is a real danger that that happens, just as there is a real danger that many of our children and grandchildren will grow up with myriad virtual friends and very few real ones. We have to be aware of these things.

The intelligent development of the credit union movement can help inject a new sense of belonging and community in and throughout our land, so perhaps my noble friend the Minister should ask my noble friend Lord Griffiths to head another inquiry into how we can accelerate the development of the credit union. I would like to see that. My noble friend Lord Griffiths talked about the banks paying these enormous fines and asked whether they could not find relatively small sums of money to augment the development of the credit union. Yes, they could and they should—especially as the taxpayer has such a large stake in those banks. From this debate, a message should go out to those in charge of our great financial institutions, saying that they have an obligation and a responsibility to make it possible for people who are perplexed, and very often greatly worried, to understand the system and to be able to have those in whom they can trust.

The importance of trust is another theme of this debate. That importance runs right through our society, which at the moment is, frankly, in danger. We have had so many examples in recent years of people feeling let down. I will not go into details because your Lordships know the sort of things that I have in mind, However, there is a real chance for the development of this movement, not only in areas such as the diocese of Durham—we had a very good account of that a few minutes ago—but throughout the country. Whether it be my in own rural county of Lincolnshire or the county of Staffordshire, which I had the honour to represent for so long, all over the country there are people who can benefit.

One point that has not been taken up since the noble Lord, Lord Kennedy, mentioned it is the need for people of all financial classes, if I can use that word, in society to take part in this movement. This is not merely a helping hand for the poor. It can help those who are in poverty and encourage them to save, making them cope with their debts in a realistic and proper way. We should indeed all be in this together and I would hope that when my noble friend comes to respond on behalf of the Government, a new sense of urgency will have been injected into government quarters and that he will be able to give us a rather more encouraging response than he gave to the last Question from the noble Lord, Lord Kennedy, on the Floor of the House. Although that answer was entirely benign, it indicated progress that would be far too slow. We have a duty to speed it up.