Bias to the Poor (part 1)
It came as something of a surprise to me when I realised late last year that I had managed to clock up twenty-five years as a member of a credit union. Doesn’t time fly when you are having fun?
My first credit union was the impressively named Birmingham City Council Employees’ Credit Union (now more succinctly known as ‘Citysave’). Launched in 1987 and despite working in what was then known as ‘anti-poverty’ and being a believer in all things co-operative and mutual it still took me a couple of years to get round to joining. It is a truth universally acknowledged that a single woman in possession of a good salary must be able to save. This was far from the truth in my case. I was not in debt, and I managed somehow to keep my head above water by earning more than I spent, but only just. In the late 1980s, lunch was for wimps, we worked hard and partied harder and I shudder to think how much I fed into the economy of various clubs, curry houses and private hire car companies as three out of every four weekends were spent out on the toot.
Joining the credit union was spurred on by the need to pay for a holiday, I had enthusiastically and without much thought agreed on a jaunt to Mexico. The £50 deposit was fine, the £750 balance was another story, so some kind of savings scheme was required. The credit union was brilliant! The twin factors of the convenience of having savings deducted directly from my salary combined with the inconvenience of having to go to Baskerville House in the centre of Birmingham to withdraw them resulted in a tidy nest egg. And if I hadn’t managed to save enough in the time available well back in October 1990 the Bank of England’s base rate was 13.875% making the credit union’s capped interest rate of 12.68% a very attractive prospect indeed.
As a credit union member in the 1990s I considered myself an adult with a responsible attitude towards money, rainy day savings and access to cheap and ethical loans, what I never considered myself was poor.
My next credit union started life in 1989 as Erdington & District Credit Union. Erdington was a mixed area of Edwardian terraced housing popular with first time buyers and smaller pockets of social housing. Members of the local Catholic social club, St Thomas’s joined forces with the local West Indian Welfare Association to form a credit union, the concept of community finance being familiar from its popularity ‘back home’. At the time the members of the then Erdington & District CU were, on the whole, working in skilled or semi-skilled jobs in the public sector, light industry or construction, or retired from the same. They rarely used high cost door step finance (payday lending was almost unheard of), and also rarely touched their shares. They tended to be savvy about money, conscientious when it came to saving and cautious when it came to borrowing. What they were not was financially excluded.
So how then in the last 25 years have credit unions changed from employee benefit payroll savings schemes and grass root community finance to their common perception as the ‘lender of last resort’ and the ‘poor man’s bank’?