Agenda item

(1)       Mr K A Ferrin MBE, Cabinet Member for Environment, Highways and Waste; Mr R W Gough, Cabinet Member for Regeneration and Supporting Independence; Mr A Wilkinson, Managing Director; Mrs E Haswell, Economic Development Officer, Environment and Regeneration Directorate; and Mrs C Toher, Kent First, Chief Executive’s Directorate, attended the meeting for this item.

(2)       Mr Ferrin explained the background to the Credit Union proposals.  Cabinet had felt that there was a real problem of financial exclusion for deprived people in Kent and that Credit Unions should be looked at as a way of tackling that problem.  Mrs Toher had been commissioned to research the subject.  She had found that there were a variety of different Credit Union models and she had looked in detail at four existing Credit Unions – Bristol, Portsmouth, Canterbury and Thanet.  Her findings suggested that one of the most successful Credit Unions was the one at Portsmouth.  Unlike many others, it had professional managers, operated from town centre premises, and offered a variety of financial products, not just low-interest loans.  As such it appealed to a wide market, not just the financially excluded.  It had proved successful and was now in the process of expanding across Hampshire.  Mrs Toher also found that the existing Credit Unions in Canterbury and Thanet, both of which were run by volunteers, would welcome the establishment of a Kent-wide, professionally managed, Credit Union.  As a result of Mrs Toher’s findings, it had been decided to pursue the idea of a Credit Union, hence the report to Cabinet which was now before the Committee.

Financial Commitment by KCC

(3)       In answer to questions from Mr Law and Mr Horne, Mr Gough clarified that the Feasibility Study was expected to cost approximately £20k.  If the Feasibility Study suggested that further work on establishing a Credit Union should not be pursued, then that would be all that the Council would spend.  However, if the Feasibility Study suggested that further work should be undertaken – and Mr Ferrin gave an assurance that this would be subject to a new Cabinet decision – then the other £80k mentioned in the Cabinet report would be required for the staffing and other expenses needed to complete a full business plan. 

Risks to KCC

(4)       In answer to questions from Mr Simmonds, Mr Bullock, Mr Chell and Mr Lake, Mr Gough accepted that there would be risks to KCC – both financial and reputational – in establishing a Credit Union.  However, KCC had so far committed only £20k in order to carry out a Feasibility Study, one of the purposes of which was to identify and analyse the risks, so that these could be used to inform the decision on whether to proceed any further.

(5)       Mr Gough added that, if it was decided to proceed with the establishment of a Credit Union, it was likely to be on the basis of a free-standing body, with funding from sources other than KCC, and which would start operation in a relatively small area and then expand gradually to cover the whole of Kent.  Proceeding in this way would greatly minimise the risks to KCC.

(6)       Mr Ferrin pointed out that, while there were risks, there were also great potential benefits – for individuals, for KCC, and for Kent society as a whole – from tackling financial exclusion through measures such as the establishment of a Credit Union.  Financial exclusion, and the stresses it caused, was a significant source of family breakdown and was also a factor in criminal behaviour.

Services to be Provided by a Credit Union

(7)       In answer to a question from Mr Bullock, Mr Gough said that, as well as low-interest loans, a Credit Union would be expected to provide cash-processing services (eg cheque cashing), and could also encourage the financially excluded to take up the Child Trust Funds provided by the Government, and then assist them to build up those Funds. 

“Common Bond Area”

(8)       In answer to a question from Mr Simmonds, Mrs Toher explained that the “common bond” was the factor that members of any Credit Union had in common.  Thus the “common bond area” could be a geographical area or it could be the workforce of a particular employer, etc.

Other Sources of Assistance to the Financially Excluded

(9)       In answer to a question from Mr Simmonds, Mrs Toher said that the Credit Union alone would not solve the problems of the financially excluded.  There would be a need for other complementary services, such as the provision of financial advice by organisations like the CAB.

Other Sources of Information on Credit Unions

(10)     In response to suggestions from Mr Bullock and Mr Scholes, Mr Gough said that he would arrange for the outcomes of the research into the possibility of establishing Credit Unions previously undertaken by Kent District Councils, Kent voluntary organisations, and academic institutions, to be obtained.

(11)     In answer to a question from Mr Smyth, Mr Gough said that the Association of British Credit Unions (ABCUL) had been contacted and had provided information which had been included in the report to Cabinet.  He confirmed that they were one of the bodies which would be invited to bid for the task of carrying out the Feasibility Study.  Mr Gough added that discussions had also taken place with the Financial Services Authority (FSA), which was supportive.

Possible Partnership with District Councils

(12)     In answer to a question from Mrs Newell, Mr Gough said that he was willing to explore the possibility of working in partnership with Kent District Councils, and with Medway Council, which already had its own Credit Union.  Mrs Haswell said that she would be discussing the Credit Union proposal with District Council colleagues through the Kent Economic Development Officers’ Forum.

Member Involvement

(13)     In response to points made by Mr Scholes and Mr Smyth, Mr Gough offered to establish an all-party Informal Member Group to contribute to the Council’s work on Credit Unions.

Conclusions

(14)     RESOLVED that:-

(a)       Mr Ferrin, Mr Gough, Mr Wilkinson, Mrs Haswell and Mrs Toher be thanked for attending the meeting to answer Members’ questions;

(b)       in the light of the assurance by the Cabinet Members for Environment, Highways & Waste, and Regeneration & Supporting Independence, that the feasibility study was expected to cost approximately £20k, and that the incurring of any further expenditure on pursuing the Credit Union proposal would be subject to a further formal decision by Cabinet, the decision by Cabinet on 14 January be supported;

(c)        the Cabinet Member for Regeneration & Supporting Independence’s agreement to establish an all-party Informal Member Group (IMG) of Members with knowledge of and/or interest in Credit Unions to oversee the feasibility study be welcomed, and the Cabinet Member be urged to:-

(i)         include also on the IMG, Members representing areas of high deprivation; and

(ii)        establish the IMG as quickly as possible;

(d)       Cabinet be advised that, while the Committee was concerned at the potential risks of proceeding with the Credit Union proposal, it hoped that these risks could be mitigated by the carrying out of the feasibility study and the establishment of an all-party IMG to monitor that study.