Credit Unions

Clive Jones Excerpts

Wednesday 16th July 2025 Westminster Hall

[Clive Jones (Wokingham) (LD)]

It is a pleasure to serve under your chairship, Mr Twigg. I thank the hon. Member for Cumbernauld and Kirkintilloch East (Katrina Murray) for securing this very important debate.

I must give some credit to my friend, Councillor Beth Rowland, at Wokingham borough council for helping with some of the detail for this speech. Beth has worked in the credit union sector in Berkshire for over 20 years, and it is unlike any other job in finance. People like Beth do not go to work for credit unions to make big money—not for any company, and certainly not for themselves. Instead, it is about dedication to the local community, a desire to help people, and an uncompromising desire to be a force for good in the world for those who need a bit of extra support. That is what drives people like Beth who make a career out of working in this industry. That speaks to Liberal Democrat values instinctively. I thank Beth, not only for helping me with this speech but more importantly for her long record of public service.

In my constituency of Wokingham, we are lucky to be able to call upon the services of Boom community bank. When I was leader of the local council, we began a relationship with Boom. It provides non-profit finance and banking services to more than 12,000 members, not only across Berkshire but across west Sussex, Surrey, parts of Oxfordshire, Hampshire, London and Buckinghamshire. It is not traditional high street banking. For many of its 12,000 members, Boom provides a lifeline service. Credit unions certainly provide loans if people need one and a place to store savings safely, but their real value does not come from offering those financial basics. It comes from the continuous support that is on offer.

Members of credit unions are often in more vulnerable positions than the average high street banking customer. That could mean that they are simply more financially vulnerable and consequently unable to access more traditional forms of credit. However, it can also mean they are vulnerable in other ways. For example, they might, for whatever reason, struggle to navigate technical language and complex arrays of products, or need extra help to create the structure in their lives that allows them to put money away regularly for a rainy day. Access to a friendly face who is on their side, and not looking to make a profit from them but willing to talk about their needs and goals, is invaluable for such people. Frankly, it is the kind of community support that we are sadly losing in our society as it becomes more distant from us as individuals over time. The people I have described cannot afford to lose the service of a credit union.

One case study on Boom’s website refers to a man who was experiencing a debt crisis, with some of his loans imposing an eye-watering 1,295% annual interest burden. I am not sure how we as a society are supposed to read that as anything other than a profound failure. How did we ever allow that kind of exploitation to happen? The man that Boom refers to as John, although that is not his real name of course, could not refinance his debt on the traditional market; he was simply too high-risk. However, the credit union sector was there to help. John’s monthly costs were more than halved and within three years he was debt-free.

It is hard to imagine a version of John’s story that ends well without the support of a credit union and without its willingness to identify a person in genuine need, and to offer help, support and security. Traditional finance viewed John first as a target for high-profit, personally crushing credit and then as a risk—someone to be avoided, in case he could not swim in the choppy waters that it had stirred up for him. Instead, the credit union sector viewed him as a person. I do not know John, but I am certain that that was more valuable to him than just the money on offer.

We know that membership of credit unions is rising, having increased by a third between 2014 and 2024. Over the same period, however, the number of credit unions feel by about the same proportion. That can partly be explained by smaller credit unions—in 2023, the average credit union employed only seven people—seeking to merge and become larger organisations, in order to streamline their operations, but it must be a cause for alarm whenever we see demand rise and supply fall at the same time. What are we doing wrong on a policy level, such that this vital industry is not growing, even though people clearly value it? I ask the Minister to ponder that question carefully.

In bringing my remarks to a close, I make a plea to the Government: bring forward a fair banking Act, which is something we have been calling for for some time. Financial exclusion in the UK is worse than in most other comparable economies. High-cost lenders—or worse, loan sharks—prey on that to target some of the most vulnerable. In 2022, an estimated 1 million people turned to illegal lenders. When people need help, there is usually a credit union they can turn to, but too many people do not realise that. With better legislation, they need not be put in that position in the first place. A fair banking Act could improve the lives of millions and could also help ethical lenders such as credit unions to deliver vital support. Will the Minister say whether the Government might consider introducing such an Act?