Credit Unions

Lord Graham of Edmonton Excerpts

Thursday 13th December 2012 Lords Chamber

[Lord Graham of Edmonton]

My Lords, it is a joy and a pleasure to take part in this debate. I cannot recall a debate during my time in this House and the other place that has got off to a better start.

I was fascinated by the previous speaker, with his knowledge and his candour about who was doing what and what else should be done. Very often when I listen to a debate, I come to the conclusion that everything that could be said has been said but not by everybody, and those of us who follow inevitably need to tap into the resources of the previous speakers and quote what has already been said. However, this debate provides a first-class opportunity not just to remind the Government about aspiration but to congratulate the many people—I call them the “small people”—who have struggled for a long time in their communities to achieve things.

As noble Lords who are here today will know, my background is in the Co-operative movement. I shudder to say it but it is 70 years since I worked in the general office of the Newcastle Co-op. People used to come in to collect their dividend, which, in a co-operative society and in society in general, was looked upon as a way to save for a rainy day. Of course, coming from Newcastle and having been born in the 1920s, the rainy days came often, and people looked to the aggregation of the value in their passbook. My memory is that people used what they had there to buy a pair of shoes or a pair of towels or whatever, and it was a means by which to save for a rainy day.

When I was studying many years ago, I came across Raiffeisen, the German who helped to create the germs of the credit union movement. Not only do I congratulate the speakers in the debate today but, looking at the speakers list, it is clear that we are going to be well served by experience.

My two pennyworth goes along these lines. The Co-operative movement relies on people helping each other. We are speaking in a year known by the United Nations as the International Year of Co-operatives. Recently, 10,000 people from all over the world from all kinds of co-operative societies and movements gathered in Manchester to celebrate what the Co-operative movement had done for them. Having worked with the movement all my life, I pay tribute to the fact that the zeal still burns in the breasts of those who call themselves co-operatives.

I am very grateful for a document called the Mutuals Yearbook which came through my door. It deals exclusively with mutuals. Not that we get confused, but what we are talking about comes under different names in different places. For instance, the yearbook shows that within the mutual sector there are 424 credit unions. However, that figure may vary and is part of a total of 17,897 mutual organisations in this country, all of which are part of the family of co-operative ideas. The sector includes clubs and societies, football trusts, employee-owned businesses, mutual insurers and building societies, all of which have impressive totals. The co-operative movement has recognised not only that it needs a number of shops, bank accounts and insurance policies but that it is part of a family.

I am heartened by the previous speaker, who encourages me to believe that there is a way of developing the credit union movement. Looking at the general nature of credit unions, we see that they are modest and ambitious. However, the previous speaker was right that we need some fundamental thinking to take us forward to the next step. I was delighted to hear that this was not a new idea. I pay tribute to the Government, their agencies and Ministers as they have certainly recognised the value of credit unions to ordinary working people. We can see the extent of the growth of the credit union movement in this country. I have met many enthusiasts who do what they can, but it is big business as well. For instance, there are credit unions in the police force and retail banking in higher education. When I queried that I was told that the Open University has a credit union. I am very pleased about that as I am a graduate of the Open University, and it warmed the cockles of my heart.

The fire service, the Post Office and local authorities are involved. Local authorities have a great opportunity. I am not saying what they should or should not do. It is incredible to think of it but 50 years ago I was the leader of the London Borough of Enfield, so I recognise the complexity and width of the responsibilities. I believe that for anyone who is serious about helping ordinary people, a credit union is a good adjunct to that.

How we go about widening and deepening the credit union movement is a very big topic. I am conscious of the financial situation of the nation and for individuals. We all know about the banking crisis and its effects, the amount of pay-offs, and so on. It is a different world from the credit union movement, which is what I am talking about. It is heartening that in the past 12 months, 100,000 people have changed their banking arrangements and transferred to the Co-operative Bank, which has a reputation as the ethical bank. Trust is the most important factor. People must feel secure and there must be modest profitability.

The greatest issue for ordinary people is security—they want to know that their money is safe. The number of credit unions going out of existence because they have put their members’ money in peril or difficulty is infinitesimal although one or two do fail. The greatest contribution this debate can make is to ask the Government—because the Government are the Government and they want to do their best—to look seriously at ways and means of providing a service for training and an understanding of the money world. Some people, perhaps naively, believe that all they have to do is make an announcement in the newsletter of the tenants’ association. Unfortunately, in this world, that is not all that is needed.

My contribution to the debate is to thank the opening and second speakers and hope that noble Lords will congratulate the third speaker in due time. However, whether or not they do, as far as I am concerned the credit union movement is part of the family of co-operatives, which have been in existence for a very long time. I hope sincerely that when the dust dies down and Ministers are talking about us all being in this together, they will see that there are people at the bottom end of the scale who are desperate and need encouragement and support. The reputation of bankers and banks has gone down and the reputation of credit unions and their ilk has gone up. That is simply because of trust. People who have great responsibilities to run a family or a community are beside themselves with perils and we need to build up the picture, even more than now, that credit unions are not only worth while but that they are safe and sound.

I congratulate the mover and second speaker on bringing their experience to the debate. The House has been very well served.