Credit Unions

Lord Martin of Springburn Excerpts

Thursday 2nd February 2012 Lords Chamber

[Lord Freud]

My Lords, I am the driver. I commissioned a report on credit unions last year. The DWP is the paymaster for the credit union movement. We have spent £113 million in the past six years. We are determined to go on funding this really important element of financial inclusion and to create an industry that will be viable in the long term and will support the poorest in our society.

[Lord Martin of Springburn]

My Lords, what limit is there on individual credit union loans? Will the Minister say what figure the credit unions are restricted to? I am very keen that self-employed tradesmen and women who want to start off with a small quantity of tools and equipment are able to go to a credit union in their locality rather than a bank, because banks at the moment are not very helpful to self-employed people.

[Lord Freud]

My Lords, there are various restrictions on credit unions at the moment. I am not aware of an absolute limit on loans. Clearly, the unions need a financially viable business structure. They do not have one at the moment. A typical loan from a credit union is about £500. It costs the union more than £75 to make the loan and it earns less than £63, so getting a new mix of business is vital.