Must The Poor Pay More? Wigan's Community Credit Union
| DOI | 10.1177/026455058903600404 |
| Date | 01 December 1989 |
| Published date | 01 December 1989 |
| Subject Matter | Articles |
Must The Poor
Pay More?
Wigan’s
Community
Credit Union
The strong link between poverty and high crime rates is a
famliar argument. Less articulated is the link between
poverty and the compounding impact of high interest
rates. As part of a multi-agency project based at a
neighbourhood centre on a Wigan local authority estate,
Platt Bridge, Roger Homewood of Greater Manchester
Probation Service helped to establish a Community
Credit Union. He describes
the development of this
imaginative and practical
self-help resource to
beat the loan sharks.
ommunitles in England,
Scotland and Wales are now
catching up with those in Ireland and fur-
ther afield in Canada, Australia and as the
United States as the Credit Union
Movement gathers momentum. This
encouraging development
can
be assisted by the Pro-
bation Service which, the
author would argue, is
ideally placed to aid the
movement and, furthermore,
159
should feel no qualms about including
regularly for a given period, often at
the work within either a specialist
least 10 weeks, they are entitled to re-
Crime Prevention brief, or a ’patch’-
quest a loan. The upper limit upon
orientated team’s overall work.
loans will have already been decided
In Wigan we recognised the
and set by the elected loan/credit com-
massive interest rates being paid by
mittee made up of other members or
local people
founder members of the Credit Union
to ’loan sharks’ and even
and
apparently legitimate credit companies
they will ultimately decide
whether
and
to allow the loan.
organisations operating in the
They will
area.
have information about the
These
reason for
people had no access to
the loan
preferential credit and
application and some basic in-
practices such
formation from the applicant about
as retention of benefit books was
their financial arrangement in order
common.
that they
In November
may fix the level of
1985, the Wigan pro-
re-payment.
bation team committed itself to engag-
All Credit Unions in Britain are
ing with its local community, ultimate-
bound by law to fix an interest rate
ly leading, among other things, to in-
which does not exceed one per cent
volvement with a multi-agency
per month or, as it is often expressed,
neighbourhood project, based upon a
12.68% APR. This means that a loan
local ’problem’ estate suffering the
of £100.00 would cost the borrower
stresses of long term unemployment.
~~ 50 if repaid within a one year
The multi-agency team decided to try
period. The ~10~.50 re-payment con-
to establish the first Credit Union in
trasts sharply with perhaps at least
Wigan Metro.
&140.00
from even an average loan
company and far more from some. It
1 ~ I i~:l ~ E-~:1~J ~~! (I l 1 i TG7 W
is known that loan sharks in this area
’A Credit Union is a serious business
have charged up to 1000%.
Credit Unions
run by the community for its own
are ’bonded’ by in-
benefit.’ This description
surance
was
put to the
cover, and officials and
members are indemnified
team by Len Nuttall of the Association
against loss
of British Credit Unions
or bad
during
debt, though it must be said
our
first
that, based
meeting with him. There
upon ABCU
figures, Credit
are other
Unions
bodies concerned with the
actually lose an insignificant
promotion
amount of
of
Credit Unions, including the Federa-
money through any of these
causes. It is said that during a recent
tion of British Credit Unions, but the
financial year Credit Unions in Britain
Wigan experience has been with the
wrote off three-quarters of 1 °~~ of their
former approach.
turnover due to bad debts, while a ma-
The ’Union’ is a group of people
jor Clearing Bank wrote off 4% of
or potential shareholders...
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