Policy & Resources Cabinet Member – Minutes – 27 August 2014

147       (20)  LOCAL WELFARE PROVISION – CREDIT UNION FUNDING The Director of Policy and Resources submitted an urgent report seeking approval to support North Lincolnshire Credit Union (NLCU) with funding and the option to access an interest free repayable loan if required, in order to enable the expansion of NLCU through a merger with the much larger Hull and East Yorkshire Credit Union (HEYCU).

The matter was urgent due to the timescales set within the Credit Union project plan.

In September 2013 Cabinet considered a report which outlined the current and potential use of a new grant funding stream for Local Welfare Provision.  Cabinet agreed in principle to explore the potential to support the work of the NLCU by providing funding for loans and resource to deal with additional demand, subject to a satisfactory business case.

Subsequent discussions took place with NLCU regarding the support they required and their capacity to expand and modernise in order to best support the residents of North Lincolnshire.  The Credit Union was seen as a key partner who was ideally placed to support people with managing their finances, both at present by managing payments of Housing Benefit to ensure that rent payments were made to private landlords, and in future, when claimants moved onto monthly payments of Universal Credit (UC). The Credit Union also offered a responsible alternative to high-cost doorstep and payday lending for people on low incomes who struggled to access mainstream credit facilities.

NLCU recognised that in order to ensure sustainability they needed to be able to offer a wider range of products and services which was attractive to members from all parts of the community.  At present NLCU members were concentrated in low-income groups and the recommended membership target of 2% of the population equated to a tripling in size.  NLCU did not currently have the financial or other capacity to expand at a pace that would be required in order to be in a position to effectively support potential UC claimants as well as offer an attractive service to other members of the community.

The NLCU board had identified that a merger with HEYCU would enable them to transform their service offer on a longer term sustainable basis, which would be far more beneficial to the community than a short term top-up to their loans fund as previously suggested.

HEYCU was a well established Credit Union with a successful expansion record and already offered many of the services needed, such as current accounts and card-based products.  The HEYCU board was in principle keen to extend its services to NLCU, subject to an impact assessment and due diligence.

NLCU and HEYCU had jointly produced a business case which outlined the benefits and risks around a merger, and provided a detailed breakdown of the estimated cost, the process required to achieve the merger, and anticipated timescales. If funding was provided as recommended the target date for the merger to be complete was April 2015.

Resolved – (a) That the offer of a £25K grant to NLCU, in order to facilitate and promptly progress the proposed merger, be approved; (b) that the proposal to set aside a reserve amounting to £33K from the Local Welfare Provision budget, which may be accessed by NLCU as an interest free loan, repayable within a five years of the date of the decision, be approved, and (c) that the proposal to delegate monitoring of the merger progress to the Poverty Working Group.