New council-backed credit union could help Sunderland's most vulnerable families avoid loansharks
It is thought Wearside could lose up to £12 million every year just as a result of combined interest payments being siphoned off in charges to payday lenders, ‘rent-to-own stores’ and others.
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Hide AdBut council chiefs hope £50,000 will be enough to get a new fairer service off the ground which will be able to staunch the flow of cash out of the city.
“I think there’s been a real gap in this city with regards to the options for individuals to get out of the trap of having to go to a loan shark,” said Coun Paul Stewart, cabinet secretary.
“People who have been involved in the credit union movement know how vulnerable some residents of this city can be, especially at this time of year, in the run up to Christmas.
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Hide Ad“I recognise this as a really good step forward for the council and I’m pleased to see we’re looking to become involved with a trusted credit union which is already stable and has a good record.”
He was speaking at a meeting of Sunderland City Council’s ruling cabinet, which approved plans for the credit union.
It is expected this will be set up with the help of one of the established ‘large regional Credit Unions’.
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Hide AdServices will initially be offered to council staff, before being rolled out to the rest of the city.
However, a report for councillors warned the new venture would have to ‘learn from the previous experiences’ of failed credit unions.
Coun Graeme Miller, the leader of the council, said: “After 10 years of austerity politics, which has clearly now been acknowledged as a failure, I’m delighted this council is taking a step to enable the access to cheap credit for the working families who have been most affected.
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Hide Ad“The key thing for [the credit union] is to get people to save, that is the way this will work.
“Theresa May once said there was no ‘magic money tree’, now Boris Johnson seems to have found an orchard, but this is our response in a small and measured way to help our residents.”