Site search
Login button Registration button

Scottish Parliament Welfare Reform Committee - UK Welfare Reforms

Executive Summary

The Association of British Credit Unions Limited (ABCUL) welcomes the opportunity to submit evidence to the Scottish Parliament’s Welfare Reform Committee. ABCUL is the main trade association for credit unions in Scotland, England and Wales. As a co-operative itself, ABCUL is owned, funded and democratically controlled by its member credit unions. The majority of Scotland’s credit unions are ABCUL members, and they in turn serve the majority of Scotland’s individual credit union members.

Credit unions are not-for-profit financial co-operatives owned and controlled by their members for whom they provide safe savings and affordable loans. Credit unions provide inclusive services to the whole of their communities rather than simply the better-off. Increasingly, some credit unions can offer more sophisticated products such as prepaid debit cards, current accounts, cash ISAs and mortgages.

There are currently 109 credit unions in Scotland serving around 280,000 members, holding over £210 million in savings and lending £180 million.

As has been well documented, the UK Parliament’s Welfare Reform Act 2012 will make significant changes to the experience of people across Scotland in receipt of benefits. A high proportion of those affected will on low incomes, with low or no savings, with limited access to financial services, and those considered financially vulnerable.

This submission will be focused purely on the issue of Universal Credit. ABCUL believes Scotland’s growing credit union movement can play a very important role in ensuring a smooth transition to Universal Credit, both in terms of helping the recipient to manage their finances, and ensuring service providers including landlords are not adversely affected by the changes.

The key points we will be expanding upon below are:

  • Credit unions are well placed as service providers which can play a key role in building financial capability in the population and helping recipients of Universal Credit to manage the changes and challenges in their budgeting;
  • Changes to UK credit union legislation in force from January 2012 make it much easier for credit union services to be available to every person in Scotland;
  • The UK Department for Work and Pensions (DWP) recognises the advantages of a thriving credit union movement across Scotland, England and Wales, and an announcement is expected very soon on the details of a programme to support the modernisation and sustainability of credit unions across the country, including their ability to help people manage their money;
  • Credit unions have an existing and potential future product range which can provide financial services to people currently excluded from mainstream products, both in terms of affordable credit and budgeting or “jam jar” accounts;
  • These credit union products can also ensure an individual’s service providers, including local authorities and housing providers, receive their payments on time – benefiting both the service provider and the individual, who does not need to worry about or face being pursued for bills.

The full response is available to download on the right.