Universal Credit (Credit Unions) – Parliamentary Written Answer

Mr Love: To ask the Secretary of State for Work and Pensions what arrangements are in place to allow for the payment of universal credit to those without a bank or building society account; and if he will make a statement. 

Esther McVey: For those without a bank or building society, the Department can pay universal credit into a credit union current account, Post Office card account or by Simple Payment. A Simple Payment is a cash transfer service, which has been designed to pay those people who DWP cannot pay into any type of account.

Salix Homes Scoops Top Award for Helping Tenants Get Online

A social housing provider is celebrating after scooping a national award for helping its tenants ‘go digital’. Salford-based Salix Homes won an NFA Award (National Federation of ALMOs) in recognition of its ‘Connecting Customers’ project, which teaches tenants essential IT skills and money management. Salix Homes launched the project in January to help prepare tenants for the introduction of Universal Credit.  Tenants who are unemployed and claiming benefits, have been taking part in free computer classes where they’ve been learning essential IT skills as well as tips and training on job searches, CV writing and interview techniques. Judges were impressed with how the project taught tenants’ essential computer skills while also encouraging people to save, as a requirement of the course is that all participants must open a savings account with Salford Credit Union, which they could then use to purchase a low-cost lap-top through the scheme. Read more on the Salix Homes website.

Social Landlord Optimises Rent Payments Ahead Of UC

A social landlord is optimising rent payments from tenants ahead of universal credit through a pioneering agreement with its local credit union. Newark and Sherwood Homes is working closely with East Midlands Credit Union to ensure account-holding tenants pay their rent on time - without having to lift a finger. Under the agreement, tenants can have their wages or benefits paid directly into the credit union account, which then pays the rent to Newark and Sherwood Homes. There is no need for tenants to physically make a payment or even set up a direct debit on their account. Read more on 24dash.

More Borrowing under Universal Credit

More benefit claimants are having to borrow money from family, friends, payday lenders, banks and credit unions to make it through the month under universal credit, a survey has shown. The first review of pilot projects found 34% of people are resorting to asking for money from other sources under the new system, which rolls all benefit payments into a lump sum – up from 19% under jobseeker's allowance. Claimants are now paid monthly rather than weekly, in a system that ministers claim will foster more responsibility and budgeting skills. However, the number resorting to payday lenders, bank overdrafts, credit unions and advances from the government has risen under the new system. Read more on the Guardian website.

Credit Unions – Parliamentary Written Answer

Mr Bain: To ask the Chancellor of the Exchequer what recent discussions his Department has had with the Association of British Credit Unions to broaden the range of financial services provided by them to their members in areas of social deprivation.

Steve Webb: I have been asked to reply on behalf of the DWP. DWP is providing funds of up to £38 million to support credit unions. A contract has been awarded to the Association of British Credit Unions Limited (ABCUL) to develop the sector. This will support participating credit unions to become financially sustainable while offering an increased range of financial services to a million more consumers, many of whom reside in areas of social deprivation. Since the commencement of the contract on 1 May 2013 my officials have held numerous meetings with ABCUL, both informally and as part of the formal commercial governance.

Council to Partner with Credit Union on Universal Credit

Wandsworth Council has agreed to enter into partnership with a credit union to help its residents cope with Universal Credit.  The flagship Conservative council is exploring the possibility of offering new financial services - including 'jam jar' type accounts - to help people manage their budgets under the new benefits system.  The council believes providing financial support services could help many claimants adjust to the changes – and prevent them turning to loan sharks or payday loan companies should they struggle to adapt to the new system.  Read more on the Wandsworth Council website.

Credit Union in First National Tie-Up

More than 160,000 social tenants are set to be the first to get a financial kick-start following the Government's relaxation of "common bond" geographic credit union rules.  The national housing association Affinity Sutton will offer its residents the opportunity to join Leeds City Credit Union, giving many of them access to basic financial services for the first time. The residents will be offered a range of online and phone-based services, including "jam jar" budgeting accounts, savings and low cost loans. Read more on the Independent website.

Council’s Plan to Combat Poverty

More than 2,400 council tenants have fallen behind on their rent in Leeds since changes to housing benefit came into effect.  The city council said it needed a new anti-poverty strategy to deal with the effects of welfare reform.

It also proposed a campaign to promote credit unions and deter people from using payday or doorstep lenders. 6,728 council tenants had been affected, by the ‘bedroom tax’ and 2,436 of those had fallen into arrears.  It said a plan also needed to be put in place to help families deal with the introduction of universal credit.  Read more on the BBC website.

Welfare Reform Workshops

To help landlords prepare for Welfare Reform changes, HouseMark is running 4 service improvement workshops covering a number of the key areas and issues for landlords.

28 February - Coventry

5 March - London

7 March - Manchester

19 March - Cardiff

 Content/Speakers

overview session from Sam Lister, CIH

a session on the impacts of the bedroom tax from Sharon Wheeler, CIH

speakers from credit unions, direct payment pilots & payment card providers

a closing workshop session where you can share and learn from your peers

Find more details on the HouseMark website.

Interest Rate Rise to Help Credit Unions

The government has launched a consultation on raising the maximum interest rate credit unions are able to charge.  Under proposals released by the Treasury, the mutual financial organisations would be able to charge 3 per cent a month interest on loans, rather than the current limit of 2 per cent. The Treasury said this would allow unions to ‘break even’ on smaller, short-term loans, where they can currently lose money due to high administration costs.  Read more and download a copy of the consultation on the Treasury website or check the Consultations page in this blog.

Council to Open Credit Union Accounts

A north London council is opening credit union accounts for all new tenants as part of a move to minimise the impact of welfare reform.  Catherine West, Labour leader of Islington Council, speaking before a Department of Work and Pensions select committee, said: ‘Every time we sign up a new tenant in council housing we give them a credit union account even though they may not know what it is at the time.  ‘By putting £2 in it opens up an account and helps deal with loan sharks prevalent on the high street. This is maybe something that can be suggested to all housing associations.’  The select committee was taking evidence as part of an inquiry into universal credit.  This, along with an average 10 per cent cut in council tax benefit, has led to fears that tenants may struggle to pay their rents.  Read more on Inside Housing.

Landlord Offers 'Budgeting Accounts' Ahead Of Universal Credit

Walsall’s largest housing association, whg, is signing tenants up to new budgeting accounts – offered through its local credit union – ahead of Universal Credit next year. The budgeting accounts were set up by Walsall-based credit union, Walsave, two years ago for private rented sector (PRS) tenants receiving local housing allowance (LHA).  They offer a way for landlords to safeguard income and allow tenants to ensure their rent is paid on time. Find out more on the Walsave website.

Credit Union Services Should Be Offered Through Post Office Network

Credit union services should be expanded by offering them through the UK’s Post Office network, a new report from Consumer Focus argues.  The  research shows a third of consumers would be interested in joining a credit union, but two-thirds of these say they cannot because they do not think there is one nearby.  The 'Credit where credit’s due' report argues that offering credit union services through the Post Office would significantly increase their potential to provide a long-term alternative to High Street banks, especially for people on low incomes.  This could help plug a credit gap for low income consumers who turn to high interest, short-term loans, such as payday loans, as they can’t access affordable credit through banks.  It could also provide low income consumers who do not always trust High Street banks, with transactional accounts offered through a trusted provider. This would allow many to benefit from cheaper goods and services only available online or by direct debit.  Download a copy of the report from the Consumer Focus website.

Consortium Launches Tenants' Discount Site

More than 80 housing providers across the north of England have signed up to support a new scheme offering social housing residents discounts on household goods.  The Northern Housing Consortium (NHC) launched the Smarterbuys website on Monday 16 April as an alternative to high-interest high street lending and loan sharks.  The site will offer tenants of the organisations that have signed discounts of up to 50 per cent on white goods and furniture, and will direct shoppers to seek credit from local credit unions.  The Northern Housing Consortium, the organisation launching Smarterbuys is a not for profit organisation.  The website whilst initially promoted within the social housing sector, is inclusive to all so private rented tenants will also be able to access the site.  Find full details on the NHC website.

Residents Encouraged To Join Credit Union

Thames Valley Housing (TVH) residents in Hounslow and Richmond are set to benefit thanks to a unique agreement between the Association and a local Credit Union.  TVH has donated £3, 700 to Thamesbank Credit Union (TBCU) from its Community Investment Fund.    The money will be used to target TVH residents in the Boroughs to promote financial stability, encourage saving and help them if they are in debt.  Hilary Ellwood, Volunteer Development Worker at TBCU,  said, “Thanks to TVH this donation will help us reach out to people in Hounslow and Richmond,  who may not be able to get bank accounts or may be struggling with debt and illegal loans.  People in deprived areas are the most vulnerable to these sorts of financial problems. We can help these people manage their money effectively and provide low cost loans which ensure they still have the day to day income.  These areas have been particularly identified in Hounslow as areas with social housing, however we have no specific funding to target them.”   Read more on the TVH website.

Minister Calls On Landlords to Boost Credit Unions

Welfare reform minister Lord Freud has called on councils and social landlords to help boost their local credit unions in a bid to ensure the poorest in society have equal and fair access to financial services. The Government has spent £113 million in the past six years on the movement and sees it playing a key role in the role out of Universal Credit. Responding to a question in the House of Lords on whether councils should be encouraged to help with the start-up costs of credit unions - in particular with the very high council taxes that are levied on premises - Lord Freud agreed. Read what Lord Freud had to say on the Parliament website.

Housing Tenants Set To Benefit From New Credit Union Powers

From 8 January, housing tenants and employees will begin to benefit from new credit union powers to reach many more members, communities and housing organisations. The new powers are the result of legal changes which will give credit unions more flexibility to choose who can access their services. This means that new partnerships will allow all of a housing organisation’s tenants and employees to join one credit union, no matter where they live or work. For the first time, housing and other community organisations will be able to join a credit union and use the services it provides, and credit unions will now be able to pay interest on deposits, instead of a dividend, helping to mobilise community savings. Although many housing providers already work with credit unions in their communities, up to now they have been hampered by outdated restrictions which meant all of a credit union’s members had to have something in common – such as living in the same geographical area or working for the same employer – and only individuals were able to become members, not companies, community groups or social enterprises. Credit unions no longer have to prove that all the eligible members have something in common. Read more on the Housingnews website.

'Huge Interest' For Credit Unions in Universal Credit Roll-Out

From next month social landlords will be able to choose their credit union provider – whatever their location – at a time when the sector is already seeing “huge interest” from housing associations ahead of the roll-out of Universal Credit. Changes to the Credit Union Act free unions up to compete more effectively with banks, but it is the move to link the network of unions up with the 11,500 Post Office branches that could give unions a ‘common platform’ on the high street. The Government has pumped investment into the sector to make it more consistent and sustainable as it sees it playing a key role in its welfare reform. From 2013, social housing tenants will receive their benefits directly instead of it going straight to their social landlord. Associations are keen to work with unions who provide ‘benefit direct accounts’ where tenants can elect to have benefits paid into their union account, but where the housing element can be paid to the landlord before it’s withdrawn by the tenant. Some unions already provide the product for a number of private landlords who pay for the service as it maintains higher levels of rental income. Read more on 24dash.

Law Change to Help Credit Unions Extend Services to Social Tenants

Credit unions across Britain have welcomed news that Parliament has approved changes to legislation which will free up credit unions to reach many more members, including community groups and housing association tenants. A Legislative Reform Order (LRO), which makes changes to the Credit Unions Act 1979, has been approved by Parliament and new rules that enable credit unions to compete more effectively with banks and other lenders will be in place by January 2012. The Order makes a number of changes, including allowing credit unions to provide services to community groups, attract investment from local businesses and extend services to new groups, including housing association tenants and employees. Credit unions will also be able to pay interest on savings, instead of a dividend, so people will more easily be able to compare rates. Read more on the Association of British Credit Unions website.