Community finance: Where’s our Cathy Come Home moment?
In 1966 the film Cathy Come Home depicted the struggle of a once happy family thrown into poverty and misery after father and husband Reg is injured and loses his job. The journey of the family through bailiffs, homeless shelters, squatting, and finally the brutal scene where their children are taken into care was a catalyst for a generation of housing groups. Some were the forerunners of today’s housing associations. Others included campaign groups, such as the charity Shelter.
In 2013 Shelter have now published research showing nearly a million people are turning to pay day loans to meet their housing costs. This will undoubtedly lead to further problems for people.
For example, a few months ago I was observing a court case of someone accused of a domestic violence offence. The defendant’s solicitor argued that things began to break down for his client after taking out a pay day loan and struggling to meet the repayments.
What struck me about the problems created by pay day loans and other high interest loans was that, despite the clear links, there has yet to be a ‘Cathy Come Home’ moment in community finance such as credit unions.
Credit unions in the UK are somewhat of an enigma. Whereas in the US and Ireland (other ‘Anglo-Saxon’ economies) respectively 44.9% and 72.2% of the economically active population are credit union members, in the UK it is just 2.4%. The benefits of credit unions are well known (but in case you don’t know here’s a handy bit of info on the PCS union website) but just comparing APR percentages between some organisations shows the advantage:
Norwich Co-op (Credit union) 12.68%
Micro-credit like this isn’t without its dangers, and the fact that the US and Ireland have strong credit unions hasn’t stopped their economies from entering a recession, but they offer part of a move away from crude profit and towards community finance. Most importantly, in a credit union its members, not bankers, make decisions.