Among this week’s headlines was the stark figure that one in four families in the UK have fewer than £95 in savings. When £95 would barely cover some of the most basic car repairs, a boiler breakdown or the latest gadget for a child’s birthday, the fact that 25% of British households have so little in savings should be a cause of grave concern for the Government.
Clearly the solution to this is the investment in infrastructure and better paid jobs, which I’ve consistently called for, that would drive economic growth, and also the ending of public sector pay restraint which has meant that wage growth has been outstripped by rising prices for many years now. Unfortunately for my Council colleagues and I, these are matters that are currently out of our hands. However, where we can make a difference as the local authority we do.
For example, last week we heard news that our local Credit Union, Cash Box has recruited 50 new members since December via an initiative that gave a cash incentive for new joiners using money confiscated from illegal money lenders. A partnership between Tameside Council, Cashbox and the England Illegal Money Lending Team had recovered £1250 from loan sharks and used this to award a £25 savings boost for each of the first 50 new members who made at least two monthly payments in to their account.
This scheme follows our ‘Generation Savers’ pledge last year to encourage a culture of saving amongst our residents from an early age. The pledge provided a £10 bonus for 11 year olds who opened an account on their transition from primary to secondary school. There has been good interest and uptake in this, but we are clear that we need to improve further in order to truly embed the culture of saving that we desire for Tameside.
It is hoped that the new members who joined as part of these two initiatives will continue to be regular savers and will have money set aside, that they otherwise wouldn’t have had, for any future emergencies.
In addition to being a safe place to deposit your savings (and the opportunity to earn a dividend on them which, owing to record low interest rates, can be better than savings rates offered by banks) Credit Unions also act as a responsible lender, offering loan products to those who haven’t quite saved enough for any eventualities. Borrowers can take out a loan knowing that the provider is a fair and legal lender, and also that the interest being paid is reinvested back in to members and the community given that the Credit Union is a mutual organisation.
Promoting and growing Credit Union membership therefore meets two objectives. Firstly it encourages our residents to put away some of their earnings for a rainy day, and secondly it provides an alternative to expensive payday lenders and loan sharks.
I therefore welcome this growth in membership and will support any initiatives that seek to grow the credit union further.