Budget opportunities for credit unions
17 Mar 16
The Budget unveiled by the Chancellor on Wednesday (16 March) has presented potential opportunities for credit unions.
A new Help to Save initiative was announced for those in receipt of benefits for non-working households and some recipients of Working Tax Credit or Universal Credit. The scheme will allow account-holders to save up to £50 per month, with the Government paying a bonus of 50% of the amount saved after two years.
Announcing the policy, Chancellor of the Exchequer George Osborne MP said: “This government is determined to improve the life chances of the poorest in our society and our new Help to Save scheme will mean millions of low income savers across the country could now receive a government bonus of up to £1,200 to help them build up their savings.”
A new Lifetime ISA – which will allow people aged under 40 to save up to £4,000 per year and receive a 25% bonus from the Government on every £1 saved – was also announced. It is expected that a number of credit unions will be interested in offering both new products.
ABCUL has been very active in discussions around the new Help to Save initiative, including organising a recent joint meeting of the All Party Parliamentary Group (APPG) on Credit Unions and the APPG on Debt and Personal Finance to discuss this topic.
ABCUL is making the case for credit unions to be approved as providers of the new accounts, so that all those credit unions that wish to take part in the scheme will be able to do so.
Chair of the APPG on Credit Unions Robin Walker MP welcomed the announcement, saying: “The new Help to Save scheme is great news and an early victory for another cross party campaign on financial inclusion. I was delighted to host a special breakfast with credit unions and debt advice organisations such as the Money Advice Service and StepChange in order to discuss boosting savings for lower income families and I am thrilled to see that our advice from that event has been taken up and acted on so quickly.”
“The one thing that we don’t yet know is which financial institutions will be delivering this scheme and I am keen to engage with the Government to make sure credit unions can have a part to play.”
ABCUL Chief Executive Mark Lyonette said: “Credit unions are all about promoting financial wellbeing and good money habits, so we welcome the Government’s new Help to Save scheme.
“Credit unions have years of experience helping people to save and make the most of their money – whether by working with employers to let staff save direct from payroll, letting people tuck away savings alongside their loan repayments, or helping people plan and afford expenses like Christmas, weddings and holidays – so many credit unions will be keen to provide the new Help to Save accounts.”
More information about all the Budget measures relevant to credit unions are available in ABCUL’s exclusive members’ briefing here (an ABCUL member login is required. If you don’t have one, members can request one by registering here).