Credit Unions

Treasury written question – answered on 10th September 2021.

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Photo of Steve Reed Steve Reed Shadow Secretary of State for Communities and Local Government

To ask the Chancellor of the Exchequer, what assessment he has made of the levels of local authority support for credit unions.

Photo of John Glen John Glen Minister of State (Treasury) (City), The Economic Secretary to the Treasury

The Government recognises the vital role of credit unions in the financial wellbeing of their communities, providing an ethical home for their members’ savings and affordable loans to those who may otherwise have to resort to high-cost lenders.

Local authorities have significant freedoms to choose what investments they make and how to finance them. The Government funded £617m for the Local Authority Discretionary Grants Fund, as well as further funding for the Small Business Grant Fund. Both funds closed in August 2020. The Government has also provided £2 billion of discretionary grant funding for local authorities in England through the Additional Restrictions Grant, to support businesses in the local area, which credit unions may have benefited from. Local authorities determine how much funding to provide to businesses and exactly which businesses to target.

Separately, the Government has provided significant support for credit unions. In total, £96 million of dormant asset funding has been released to Fair4All Finance, the independent body set up by Government to distribute dormant assets funding to support financial inclusion. Fair4All Finance has so far provided over £15m in financial support to the community finance sector, including credit unions, as part of their COVID-19 response. This includes £12m of equity investments in community finance providers and £3.6m in COVID-19 grants, including funding from their £5m COVID resilience fund. It also includes an expanded Affordable Credit Scale-up Programme, which aims to improve the access and availability of affordable credit, and which I expect to be of benefit to credit unions.

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