CREDIT UNIONDEVELOPMENTACTIVITY INSCOTLAND

Centre for Economic Developmentand Area Regeneration (CEDAR) andthe Planning Exchange

The Scottish Executive Central ResearchUnit 2000

CRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRUCRU CRU CRU CRU CRU CRU CRU

Further copies of this report are available priced £5.00. Cheques should be madepayable to The Stationery Office and addressed to:

The Stationery Office71 Lothian Road

EdinburghEH3 9AZ

Order line and General Enquiries0870 606 5566

The views expressed in this report are those of the researchers anddo not necessarily represent those of the Department or

Scottish Ministers.

© Crown Copyright 2000Limited extracts from the text may be produced provided the sourceis acknowledged. For more extensive reproduction, please write to

the Chief Research Officer at the Central Research Unit,Saughton House, Broomhouse Drive, Edinburgh EH11 3XA.

CONTENTS

1 INTRODUCTION 1

2 SETTING BOUNDARIES TO THE PROJECT 3

3 METHODOLOGY 5

4 SCOTTISH CREDIT UNIONS IN CONTEXT 7

5 THE DEVELOPMENT AND SUPPORT INFRASTRUCTURE 11– AN OVERVIEW5.1 AN OVERVIEW OF DEVELOPMENT SUPPORT 115.2 REPRESENTATIVE BODIES 125.3 DEVELOPMENT AGENCIES 125.4 LOCAL GOVERNMENT 135.5 LOCAL ENTERPRISE COMPANIES 155.6 VOLUNTARY ORGANISATIONS 155.7 VOLUNTARY UNION GROUPINGS 165.8 MUTUAL SUPPORT NETWORKS OF WORKERS 165.9 FURTHER EDUCATION 175.10 FUNDING 175.11 AD HOC SUPPORT 185.12 CONCLUSION 18

6 THE DEVELOPMENT AND SUPPORT INFRASTRUCTURE 19– FINDINGS AND ANALYSIS6.1 CREDIT UNION DEVELOPMENT FUNDING 2000/2001196.2 THE AGE OF THE SUPPORT INFRASTRUCTURE 196.3 PAID STAFF 206.4 STAFF QUALIFICATIONS 206.5 LINE MANAGEMENT 206.6 DEVELOPMENT SUPPORT OBJECTIVES 216.7 TARGETS 216.8 SERVICES PROVIDED 226.9 IN-KIND SUPPORT 226.10 CREDIT UNION DEVELOPMENT FOCUS 236.11 THE SPATIAL DEVELOPMENT FOCUS 236.12 FUNDING TRENDS 246.13 SPATIAL DISTRIBUTION OF CREDIT UNION

DEVELOPMENT SUPPORT FUNDING 246.14 EFFECTIVENESS OF DEVELOPMENT FUNDING 276.15 CONCLUSIONS 28

7 CREDIT UNION DEVELOPMENT NEEDS 317.1 REGULATORY DEVELOPMENT NEEDS 317.2 SCOTLAND-WIDE DEVELOPMENT NEEDS 327.3 LOCAL DEVELOPMENT NEEDS 337.4 CONCLUSIONS 34

8 CONCLUSIONS 35

BIBLIOGRAPHY 39

APPENDIX ONE CREDIT UNION DEVELOPMENT SUPPORT 41 – KEY CONTACTS

TABLES

TABLE 1 QUESTIONNAIRE RESPONSE RATES 6TABLE 2 COMPARATIVE CREDIT UNION STATISTICS, SCOTLAND 7

AND ENGLAND AND WALESTABLE 3 MEMBERSHIP FIGURES FOR SCOTTISH CREDIT UNIONS 8TABEL 4 RELATIONSHIP BETWEEN CREDIT UNION 11

DEVELOPMENT SUPPORT AND SPATIAL SCALETABLE 5 LOCAL ENTERPRISE COMPANIES PROVIDING CREDIT 15

UNION SUPPORTTABLE 6 SOURCES OF DIRECT CREDIT UNION 19

DEVELOPMENT SUPPORT FUNDING 2000/01

TABLE 7 CREDIT UNION COSTS ELIGIBLE FOR GRANT AID 22TABLE 8 DIRECT FINANCIAL SUPPORT FOR CREDIT 24

UNION DEVELOPMENT 1998/99 TO 2000/01TABLE 9 SPATIAL DISTRIBUTION OF CREDIT UNION 26

DEVELOPMENT SUPPORT 2000/01TABLE 10 SPATIAL DISTRIBUTION OF CREDIT UNION 27

DEVELOPMENT SUPPORT AND MEMBERSHIP

1

1 INTRODUCTION

This report was produced for the Scottish Executive by the Centre for Economic Developmentand Area Regeneration (CEDAR) at Strathclyde University in conjunction with the PlanningExchange. The project was commissioned in April 2000 and reported in July 2000.

The project was commissioned to identify and analyse the scale and type of existing supportavailable for credit union development within Scotland. This was intended to inform the workof the Executive, in its formulation of a national strategy for credit union development inScotland.

The report is structured as follows:

q details of the way in which the support audit was restricted. This was felt to benecessary in order to make it both manageable and of use to the Executive

q an outline of the methodology usedq an overview of the current state of credit union development in Scotlandq an overview of the credit union development support infrastructureq an analysis of this development support infrastructure and its spatial distributionq an outline of credit union development needs identified by survey respondentsq some overall conclusions

The report is supplemented by a list of the development infrastructure identified. In additionthere is a limited bibliography and addresses of relevant websites.

3

2 SETTING BOUNDARIES TO THE PROJECT

The development and support needs of credit unions are many and varied, as a number ofauthors have stated (Donovan et al, 1999, Ferguson et al, 1997 and Forrester, 1996).Potentially these needs could be met by a host of organisations, not only credit union specificdevelopment agencies and staff, but bodies such as local authorities (Donovan et al, 1999),housing associations (People for Action, 1999) and banks and building societies (HMTreasury, 1999). A development support audit could therefore become so inclusive as to bemeaningless. One example of this tendency can be seen from the following quotation from astrategy report, which lists the support available from council departments for credit uniondevelopment: -

“The Energy Advice and Development Unit within the Construction ServicesDepartment is available as a point of referral for those credit union memberswho require information and advice on home energy efficiency".

(North Lanarkshire Council, 1998)

To adopt such an approach to this project would have resulted in an extensive list oforganisations and departments, which would ultimately have been of limited value to theExecutive.

In the course of the initial information trawl many examples were found of individual localauthorities and other agencies, such as Local Enterprise Companies (LECs) and banks, whichsupported credit union development. Many others were currently thinking of providingsupport. Yet such support was generally not part of any proactive development strategy butwas purely reactive, treating credit unions in a similar way to any other voluntary sectorinitiative that made an approach for assistance.

Accordingly it was felt that to produce a list of such ‘one-off’ support would be of limitedbenefit, being at best an indication of potential rather than of any strategic approach todevelopment and support. The identification of local authorities, development agencies andother bodies that support credit unions was therefore limited to those that had specific staff,strategies or ongoing initiatives intended to promote the development or support of creditunions.

A number of credit unions had salaried staff. Some of these had a development role. Howeverthis was intended to benefit the individual union rather than the wider credit union movement.Accordingly such staff were excluded from the infrastructure audit.

Working within these parameters the development information identified was felt to be acomprehensive audit of credit union specific support. It was not, however, claimed to be acomprehensive list of all existing and potential support. Individual credit unions may havereceived support from bodies that did not figure in the audit. In such cases the implication wasthat this support was not part of any strategic approach towards credit union development.

5

3 METHODOLOGY

The brief for this project indicated that credit union development infrastructure might perhapsbe identified through a review of relevant literature, but although literature and web searcheswere undertaken they proved to be of limited use. Much of the available literature relatedeither to credit unions themselves, or to non-project specific development infrastructure. Evenwhere specific development infrastructure was considered, this generally related to theexperience in England (for example Feloy and Payne, 1999), with some exceptions (Digest,1999). As such the proposed methodology was modified and far greater use was made ofpersonal contacts. Through these, other development agencies and workers were identifiedand the project team felt that this was successful in identifying most, if not all, of the existingdevelopment infrastructure in Scotland

To ensure that this was the case a list of contacts was compiled (Appendix One) and sent tothe following agencies to see if they could add anything: -

q Association of British Credit Unions Limited (ABCUL), the main representativeand lobbying body

q Credit Union Enterprise Services (CUES), the credit union agency funded byEdinburgh City

q Scottish representative of the National Association of Credit Union Workersq Scottish Council for Voluntary Organisationsq Strathclyde Credit Union Development Agency (SCUDA), the main development

body in the West of Scotland

Responses from 4 of the 5 agencies resulted in 2 additional contacts being added, whichseemed to suggest that the scope of the infrastructure list was as comprehensive as possible.

In addition to these changes a number of face-to-face and telephone interviews wereundertaken. These identified other contacts and explored some development issues in greaterdepth.

The other main methodological modification was to the questionnaire. Given the diversity ofsupport, 3 similar questionnaires were devised: for local authorities, the development agenciesand the various credit union voluntary groupings.

Changes were also made to allow the questionnaires to be targeted more efficiently. The initialdata trawl identified development support in around half of Scottish local authorities. It thenbegan to prove very time consuming to find out if the others provided support, mainly as therewas no obvious departmental home for such support. Accordingly a short questionnaire wasdevised and sent to the Chief Executives of these authorities. This simply asked if support wasprovided and, if so, for a contact name and address. The contacts so identified were theneither sent the full questionnaire or interviewed over the telephone if it seemed that the supportprovided was limited.

In the course of identifying contacts it also became clear that in certain areas some of the LECshad provided support to credit unions. In an attempt to see how widespread this was the samecontact questionnaire as used for the local authorities was distributed to all of the LECs in theHighlands and Islands Enterprise and the Scottish Enterprise areas. Given that support wasgenerally far more limited than from local authorities the follow-up was by telephone interviewrather than postal questionnaire.

6

Table 1 shows the questionnaire response rates. Although the response was lower in someareas, it seemed likely that non-respondents were not involved in supporting credit unions.This implies that the information analysed in Section 6 represents good coverage of Scottishsupport infrastructure.

Table 1 Questionnaire Response Rates

Questionnaire Recipients NumberDistributed

Number Returned Response Rate (%)

Local Authorityfull questionnaire

13 13 100

Local Authorityshort questionnaire

19 13 68

Development Agencies 3 3 100Voluntary Groups 5 3 60Scottish Enterprise LECs 13 11 85Highlands and IslandsEnterprise LECs

10 9 90

Total/ Average 63 52 83

7

4 SCOTTISH CREDIT UNIONS IN CONTEXT

As of September 1998 there were 603 credit unions in Great Britain and 124 in Scotland.Scotland therefore accounted for 21% of the credit unions in Great Britain. However thelarger size of Scottish credit unions meant that 42% of the 253,134 British credit unionmembers were located in Scotland. Table 2 gives a number of comparative statistics. It can beseen that:

q for most indicators, Scottish credit unions were larger than those in England and Wales e.g.they had more members, made more loans, had greater share capitals, greater assets andgreater income

q although average expenses per member were slightly higher in Scotland, Scottish credit

unions appeared to be in better financial health as can be seen from the amount added toreserves

Table 2 Comparative Credit Union (CU) Statistics, Scotland and England and Wales (September 1998)

Comparator Scotland England and Wales Scottish figuresas % of

English and WelshAverage number ofmembers per CU

855 307 278

Average number ofloans per CU

488 125 390

Average loan madeper CU

£966 £1,065 91

Average sharecapital per CU

£450,207 £148,107 303

Average loanportfolio per CU

£471,155 £132,666 355

Average total assetsper CU

£531,507 £171,399 310

Average totalincome per CU

£56,905 £16,973 335

Average totaladministrativeexpenses per CU

£21,794 £7,265 300

Averageadministrativeexpenses per CUmember

£25.48 £23.66 108

General reserves atend of year

£55,399 £11,975 463

General reserves perCU member

£64.80 £39.00 166

Source: - 1998 Annual AR 20 Returns

8

However, these average figures might be misleading as they were biased by the existence of alimited number of large credit unions. Table 3 looks at membership figures as of September1998, categorised by type and size of union. There were a total of 124 credit unions, 106 ofwhich were community based. From Table 3 it can be seen that: -

q work based credit unions had average membership some 5 times greater than the averageof those that were community based

q the community credit union averages hide the fact that there were 15 credit unions with

memberships in excess of 1,000 - these accounted for only 14% of community based creditunions but had 51% of members

q there were 8 work based credit unions with over 1,000 members - these accounted for 93%

of all work based credit union members, 43% of all Scottish credit union members

Table 3 Membership Figures For Scottish Credit Unions (September 1998)

Type of Credit Union Number TotalMembership

AverageMembership

Community Based Credit Unions 106 56,828 536Community Based Credit Unionswith more than 1,000 Members

15 28,691 1,913

Work Based Credit Unions 18 49,237 2,735Work Based Credit Unionswith more than 1,000 Members

8 45,957 5,745

Source: - 1998 Annual AR 20 Returns

Jones (1999) applied the classification of credit union economic viability developed byBirmingham Credit Union Development Agency to Scottish credit unions and concluded‘credit unions in Scotland outperform those in England and Wales’. Possible reasons for thiswere outlined by Heriot-Watt University’s School of Management. These included such thingsas effective local networks, large common bonds, containing a mixture of those in and out ofwork, and links with Ireland where the credit union movement has traditionally been verystrong (School of Management, Heriot Watt University 1999).

However, despite the existence within Scotland of some of the largest and most efficientcommunity credit unions in Britain there were still a very large number of small communitybased credit unions that would be unable to survive without public subsidy. Indeed the scale ofthis subsidy (estimated to be £20 million as against total union assets of £36 million) hadcaused some to question the effectiveness of this support (Toynbee, 1999).

Regardless of this issue, there was considerable interest in providing additional support tocommunity based credit unions, due to their potential contribution towards combating financialexclusion as part of the government’s wider social inclusion agenda. It was argued that manyof the ‘socially excluded’ lacked access to financial services and often had to resort to highcost forms of credit. Despite evidence that most credit union members were not the poorest insociety, and that the contribution credit unions made in this area was somewhat marginal(McArthur et al, 1993), central government was pushing forward initiatives to encourage thegreater development of the role of credit unions in promoting social inclusion.For this role to be an effective one there was a widespread, although not universally accepted,view that the support and management of credit unions needed to change. Development hadto be based far more on ‘sound commercial principles’ (HM Treasury, 1999) and credit unions

9

were to be ‘promoted as professionally managed, volunteer directed, community owned andcontrolled financial institutions’ (Local Government Association, 1999). Underlying theseclaims was the view that credit unions must move towards achieving financial self sustainabilityi.e. being ‘able to cover all costs including fidelity bond insurance, bad debt reserves, premises,volunteer expenses, staff salaries, marketing, training, rates, lighting, utilities etc.’ (GlasgowCity Council, 2000). The attainment of this goal was predicated on the general view thatcredit unions needed to increase the size of their common bond and thus the number ofpotential members. This bond should also cover a more diverse population, including not onlythose on low incomes. The recognition of this as a key development need was responsible forincreasing interest in ‘live-work’ credit unions which had a common bond encompassing thosewho lived and worked within an area: in essence a hybrid of community and work based creditunions.

The emerging central government agenda had also impacted upon the support provided inScotland and in addition two well-publicised credit union closures (Wester Hailes in 1998,Barlanark in 1999) had led policy makers to look again at the support provided. For example:-

q Within Glasgow City1 there were 27 community based credit unions, none of which, theCouncil claimed, were self-sustaining. In an effort to address this situation the City had setup inter-departmental and inter-agency working groups and was putting together a financialpackage so that the smaller credit unions could ‘benefit from a programme oforganisational development and review’ (Glasgow City Council, 2000)

q Within Edinburgh 2 of the 4 community based credit unions were said to be self-financing(City of Edinburgh Council, 1999). Despite there having been a development agency ofsome form for 12 years the Council concluded that credit unions had had a ‘limited impact’,there being, in total, fewer than 1,000 members with average shares of only £219 permember. Accordingly, the City was considering phasing out support for the developmentagency, Credit Union Enterprise Services (CUES) and was to put in place, as yetunspecified, alternative support arrangements

q A similar picture, of small community based credit unions unable to survive without localauthority support, could be seen in Dundee (Dundee City Council, 2000). Developmenthad been ‘slower than expected’ and the City concluded, ‘the existing policy of supportingsmall neighbourhood based credit unions is untenable’ (Dundee City Council, 2000).Accordingly the intention was to set up a Dundee-wide union with which the 4 existingcommunity based credit unions could amalgamate

q A number of other authorities, for example East Lothian and Borders, were considering theprovision of support to authority-wide ‘live-work’ credit unions. This reflected a view thatsmall, community based credit unions were unlikely to be financially viable

q Other authorities, such as Renfrewshire, were employing a development worker whoseremit was to expand existing credit unions rather than set up new ones (RenfrewshireCouncil, 2000). This was in keeping with advice from the Local Government Associationthat there should be greater stress upon measures such as membership growth andeconomic sustainability, rather than the number of credit unions established (Donovan et al,1999).

1 Some of the largest and most successful community credit unions in the UK (such as Dalmuir, East Kilbrideand Newarthill) are located outside the Glasgow City boundaries. These credit unions were shown by Jones(1999) to be self-sustaining, with large membership and high levels of assets, shares and loans. These creditunions are not included within the discussion of Glasgow City community credit unions.

10

It was perhaps not surprising that this greater stress upon financial viability and theimplications of this for the size of common bonds created tensions within the credit unionmovement. Some credit unions and activists felt that control of the credit union movement wasbeing lost to an externally imposed agenda to which they did not subscribe. For example, inDundee the four community based credit unions were said to be ‘lukewarm’ about theformation of a city-wide body and were ‘still of the view that small is best’ (Dundee CityCouncil, 2000). These tensions were more explicitly shown when the questionnairerespondents were asked for their views on development needs (Section 7).

The Scottish Office, through the then Urban Programme and the Social Work (Scotland) Act,allocated financial support to small areas characterised by high levels of deprivation. In someareas this support was used to employ credit union development staff. The Registrar required,at one-time, that common bonds be small (School of Management, Heriot-Watt University,1999). Funding and registration restrictions therefore limited a union’s ability to become self-financing, as they were being set up in areas of small populations and low incomes and oftenwith limited potential for developing strong volunteer commitment. Such commitment wasalso possibly not fully realised by the use of development workers who approached ‘creditunion development with ‘detached professionalism’ and not the personal commitment thattypifies volunteers’ (School of Management, Heriot-Watt University, 1999). In effect creditunions were seen as anti-poverty initiatives at a time when spatial targeting was seen to be thebest approach to tackling the problems of deprivation. Volunteers and development staffbecame involved in setting up credit unions against this background. More recently, however,a different role for credit unions has begun to emerge and guidance from central governmentand the Registrar of Friendly Societies changed, so that those who responded to the earlieragenda found themselves compelled to make, in some cases, difficult changes.

There were interesting parallels between credit union development and the development ofcommunity business in Scotland. Community business grew dramatically in the 1980s asconsiderable public money was spent on providing grant aid and setting up development units.By the late 1980s the lack of success in creating viable businesses, allied to some well-publicised business collapses, resulted in a reappraisal and a dramatic decrease in funding.Credit unions have received, and continue to receive, considerable public funding. Despitethis, relatively few of those that were community based have become self-sustaining. Thecurrent interest in social inclusion may, paradoxically given credit unions’ past record, seemore funding made available. However this support seems likely to be tied to a far greateremphasis upon achieving self-sufficiency, including the agreement of business plans, targetsetting and professional management, through volunteers or paid staff. The challenge is to domake these changes whilst ensuring that the movement retains its community and voluntarybasis. Yet, just as at one time community business was seen as being almost a magic cure forthe employment problems of many economically excluded areas, there is a danger that localauthorities and other public bodies overstate the potential of credit unions to solve theproblems of financial exclusion. Few local authority committee reports or strategy documentstook a strategic view of the role that credit unions could play, alongside other initiatives, inhelping the financially excluded. An exception was Edinburgh City which stated that ‘creditunions should not be regarded as the only answer to financial exclusion and a broader approachneeds to be pursued’ (Edinburgh City Council, 1999). It would be a pity if such a ‘broaderapproach’ were to be neglected. Credit unions can make a contribution. Yet they can only,like community business before them, suffer if they have, in the words of Glasgow City ‘tobear the weight of this new Government policy agenda’ (Glasgow City Council, 2000).

11

5 THE DEVELOPMENT AND SUPPORT INFRASTRUCTURE - AN OVERVIEW

Within Scotland there was considerable support of various types available for the developmentof credit unions. This support is summarised in Appendix One, whilst an associated databasecompiled as part of this project contains fuller information. 5.1 An Overview of Development Support The available support can be summarised as follows:-

q 2 credit union representative bodies, ABCUL and the Scottish Leagueq 3 development agenciesq local authorities, with 15 providing support in some formal way, whilst another 5

were considering developing some formal strategyq local enterprise companiesq voluntary organisationsq voluntary groupings of credit unionsq mutual support networks of credit union workersq education and training coursesq stand-alone development fundsq ad hoc support from bodies such as the banks and other agencies

The relationship between the support and the spatial scale at which it was available wascomplex and is illustrated in Table 4. This shows that support was available from the nationalto the local level. However it needs to be noted that the intensity of support, in terms ofnumbers of staff and the resources available, was inversely related to spatial scale. Thus at thenational level only ABCUL employed a full-time development worker with a Scotland-wideremit, whilst at the local level 7 local authorities employed, or hoped to employ, developmentworkers. Table 4 Relationship between Credit Union Development Support & Spatial Scale

Type of Support National Regional Local

Representative bodies * * * Development agencies * * Local authorities * LECs * Voluntary organisations * Voluntary credit union groupings * * Mutual support networks * * Education and Training * * * Development funds * * * Ad hoc support * * *

Note: - * indicates that support is available at the indicated spatial level.

12

5.2 Representative Bodies Until recently there were 2 credit union representative bodies, ABCUL and the NationalFederation of Credit Unions, both based in England. Affiliation meant that credit unions coulduse model rules, accepted by the Registrar of Friendly Societies, as well as giving access toadvice and support and well connected lobbying bodies. Recently the National Federation waswound up after it experienced financial problems. At the British level there is now thereforeonly ABCUL as a lobbying and representative body for the credit unions. The Scottish League of Credit Unions performs a similar role at the Scottish level to ABCULand was set up by union activists who wanted to have a stronger Scottish voice. Around 40of the Scottish credit unions are affiliated to the Scottish League, the remainder to ABCUL. Although both organisations covered Scotland their resources were limited. For exampleABCUL had a Scottish based business development manager whose remit covereddevelopment work, marketing, training and helping affiliate credit unions that encounterproblems. Given the impossible scale of this extensive remit a network of associates wasestablished who provided training on behalf of ABCUL on a consultancy basis. There werecurrently 5 of these. The Scottish League has a National Development Officer and funds aresearch student, who also works on behalf of the League. 5.3 Development Agencies There were 3 agencies with a specific remit for supporting and developing credit unions. Thesewere: -

q Strathclyde Credit Union Development Agency (SCUDA) - the longest established,best resourced and by far the largest of these agencies, working closely with stafffrom its parent body Community Enterprise in Strathclyde (CEiS)

q Credit Union Enterprise Services (CUES) - established in 1988 and now coversEdinburgh City

q Argyll and Bute Agency (ABCUDA) - the most recently established

All of the agencies had a geographic focus and worked within defined areas that generallycoincided with the boundaries of their key funders. In 2 cases these were local authorities.Local government reorganisation had a significant impact upon two of the agencies, whilst itwas indirectly responsible for bringing the third into being. CEiS/SCUDA originally had a Strathclyde-wide remit. Following the Region’s replacement byunitary authorities, not all were willing to continue to fund it. Accordingly its geographicalremit was now mainly the areas of 5 West Central Scotland unitary authorities. It did,however, undertake work elsewhere on a consultancy basis. CEiS/SCUDA was involved infunding education and training for credit union staff and preparing credit union business plans(with 15 plans prepared to date). The agency had also undertaken a £60,000 pilot programmeproviding ‘health checks’ for selected credit unions in the Strathclyde area to assist them inmeeting regulatory requirements and in developing as sustainable businesses. CEiS/SCUDAhad also been involved in setting up feasibility studies for two microcredit projects with creditunions loaning to sole traders. Credit Union Enterprise Services, the second agency, originally covered the whole of LothianRegion. Reorganisation saw financial support restricted to Edinburgh City. This had been

13

gradually decreasing so that currently there was only one development worker whosegeographical remit was Edinburgh-wide. The Capital City Partnership had commissioned astudy to assess the current situation of Edinburgh’s credit unions, the potential for a city-widecredit union framework and the potential role for the bank of Scotland in such a development.The Partnership would review the future role of Credit Union Enterprise Services pending theoutcome of this study2. The third agency covers Argyll and Bute and was currently being developed following theaward of Lottery funding. The catalyst to its development was SCUDA’s withdrawal from thearea following the new unitary authority’s unwillingness to provide financial support. 5.4 Local Government It is difficult, if not impossible, to obtain a comprehensive overview of the support that localauthorities give to credit unions. When support is formalised, for example by employment of adevelopment worker or by financial contribution, it is usually relatively simple to identify this.However the range of potential support is considerable and could include such things as givingrent free premises, rate relief, payroll services or advice and support from staff in manydepartments. This means that the authorities themselves were often unaware if they weresupporting credit unions and to what extent. For example Glasgow City states that ‘the overallpicture of what support the Council provides to the city's credit unions is unclear’ (GlasgowCity Council, 2000). Despite this lack of clarity it seemed that local government provided the majority of creditunion support. For example of the 32 local authorities, 8 either employed credit uniondevelopment workers or had committee funding approval to do so. Another 3 providedfunding for development agencies or voluntary bodies but did not directly employ staff, whilst5 had staff who provided support albeit that this was only a part of their remit. A further 4were currently considering providing support and had committed resources to feasibilitystudies or initial exploratory meetings. Of the other 12 authorities some, such as WestDunbartonshire, provided support on an ad hoc basis whilst others, for example Perth andKinross provided no support and would refer any requests elsewhere. Some of theseauthorities were also funding development agencies. It was possible to classify local authorities providing support into 6 broad categories albeit thatsome overlapped: - q those that fund, or were to fund, development staff whose sole remit was to support credit

unions. Such authorities usually had some written strategy. These authorities includedDundee, Fife, North Lanarkshire, Renfrewshire and Stirling. In addition to staff suchauthorities also usually provided grant aid and support in kind such as rent free orsubsidised premises

q those that funded development agencies, for example Edinburgh, Glasgow and North

Lanarkshire. North Lanarkshire also employed a development worker, whilst all may alsobe providing other support. In Glasgow's case this amounted to quite substantial fundsthrough the Council's own Social Inclusion Budget

q those that employed staff who had a number of responsibilities, of which credit uniondevelopment was only one part, for example South Ayrshire, Inverclyde and West Lothian.

2 The final report of this study has been published since the research was completed: Grierson Associates(2000) Edinburgh Credit Unions Study Final Report.

14

Again some of these authorities may also provide funding for development agencies as wellas providing grant aid and support in kind

q authorities that had what can be described as nascent strategies. Such authorities were

currently giving consideration, at both officer and member level, to providing some form ofsupport. This seemed to be happening for a variety of reasons:-

q because an individual member of staff had interest and knowledge of credit

unions and was trying to persuade the authority to provide support. This wasthe case in Shetland where an enthusiastic member of staff had recentlyorganised a workshop at which the concept of a credit union was outlined toelected members and other interested parties

q authorities that were beginning to develop strategies to cope with financial

exclusion. This had been motivated by developments such as the threat to thefuture of rural post offices caused by new methods of paying welfare benefitsand the long-standing withdrawal of facilities by the clearing banks. Most ofthese authorities were in the rural areas. Thus Scottish Borders had afeasibility study undertaken into the idea of setting up a Borders-wide creditunion whilst Highland Council had recently commissioned research to look atways of providing financial services for rural areas, one of which may be bysupporting credit unions

q authorities, which may include some of those in the earlier categories, that

were responding to the Government’s agenda in which the support for creditunions seemed to be an important policy strand

q authorities that had supported credit unions in an ad hoc non-specialist way. Typically this

had involved providing one-off financial support for such things as computer hardware(often from Common Good or other general funds) or making available buildings to act ascollection points. Such authorities treated credit unions as they would any other communityor voluntary sector group approaching them for support e.g. West Dunbartonshire

q authorities that provided no support and would refer any requests for advice or support to

other bodies. These could be existing credit unions, development agencies or othervoluntary sector organisations.

Although authorities could be placed into each of these categories it was still not possible to beabsolutely certain that all support had been identified. The only way to do this would be toapproach credit unions individually. However it was felt that the database identified the keysupport sources, certainly in terms of staffing resources.

15

5.5 Local Enterprise Companies The preliminary research indicated that a number of LECs were providing some support tocredit unions, especially in the Highlands and Islands Enterprise area. To identify the scale ofthis support a short questionnaire was distributed. The results are shown in Table 5 - aroundhalf of the LECs in both areas claimed to be providing support. Table 5 Local Enterprise Companies Providing Credit Union Support

LECs Number ofLECs

Numberprovidingsupport

Number notprovidingsupport

No response

Scottish Enterprise area 13 6 5 2 Highlands and IslandsEnterprise (HIE) area

9 4 4 1

TOTAL 22 10 9 3 The support provided in the Scottish Enterprise area was in response to the emerging socialinclusion agenda that the LECs were embracing. In the HIE area the LECs’ social developmentremit was the justification. However it was surprising, given that the LECs in the HIE area had been operating for almosta decade with this remit, that greater progress had not been made in providing support. Thesupport provided ranged from: -

q 2 LECs, one in the HIE area and the other Scottish Enterprise, which were fundingthe costs of credit union support staff, one through a development agency, the othera council for voluntary service

q grants to cover the cost of setting up a union and to cover administrative costsq a number of one off grants for equipment, for example £1,500 for computersq access to a business counsellor, albeit that this was a service available to other

community organisations With the exception of the 2 LECs, which were covering staff costs amounting to around£50,000, most of the support was very small scale. It also should be noted that no LEC had aspecific credit union support strategy. Credit unions were generally treated in the same light asany other third sector organisation. However support from the LECs may potentially expandfurther, given the importance of the financial and social exclusion agenda and the response ofthe national enterprise networks to this emerging agenda. 5.6 Voluntary Organisations Although not a major part of the support infrastructure, support had been made available, onan ad hoc basis from local councils for voluntary service in a number of areas. The only areaidentified where the council’s role was more significant was Falkirk. Here, the council washousing and managing 2 credit union support staff, albeit that funding came from elsewhere.However, generally credit union support was given by virtue of the credit unions beingvoluntary organisations rather than because they were credit unions as such.

16

5.7 Voluntary Union Groupings One of the key ways of gaining advice and support was through informal contacts. To facilitatethis, in many areas credit unions had come together to form support groups. These tended,originally, to be based on affiliation to either ABCUL or the Scottish League, although thereno longer seemed to be a bar on participation of non-affiliates. Both bodies had regional orsub-regional structures. The groups were known as ‘Chapters’ when they brought togetherABCUL affiliated credit unions and ‘Forums’ when they were made up of Scottish Leagueaffiliates. However this was not a watertight definition, more a reflection of the membership ofthe 2 associations being concentrated in certain areas. Thus ABCUL had strong representationin the Central Belt, whereas the Scottish League had its main presence on the East Coast andin the North East. There were 2 ABCUL Chapters: Strathclyde and Lothian, with the latter covering Lothian,Fife and Tayside. There were 3 Scottish League Forums covering Greater Glasgow3, Grampianand Stirling. Superimposed on this affiliate structure were a growing number of credit unions that mettogether because they were based in the same area. Four such groupings were identified:Clackmannanshire, Fife, the South Lanarkshire Network and West Lothian. In addition theCredit Union Business Forum4 met under the auspices of CEiS/SCUDA every 2 months todiscuss and hear presentations on matters of current concern to the movement. The groups tended to meet regularly and organise training and provide mutual support. Theyalso had a marketing and promotional role, such as providing displays and attending localmeetings. Some had modest funding; for example the Clackmannanshire Forum had grant aidof about £1,000 from the local authority which was used for such things as attendingconferences. There also seemed to be a move to try to obtain Lottery support. In one instancean application had been made to employ a development worker, whilst another group wastrying to gain support to purchase display boards. Increasingly it seemed that the distinction between the 2 different types of groupings (theaffiliates and the spatial) was of limited relevance. Although, for example, all 7 members of theSouth Lanarkshire Network were ABCUL affiliates there seemed to be nothing to stop thoseaffiliated to the Scottish League participating. 5.8 Mutual Support Networks of Workers The chief formal mutual support network was the National Association of Credit UnionWorkers, which, although represented in Scotland, drew most of its members from Englandand Wales. It had 120 members, with membership being open to any workers who wereemployed by credit unions, local authorities or development agencies. The Association alsoproduced an information pack, which was being updated. It had also developed a trainingprogramme in association with the Northern College for Residential Adult Education, whichwas accredited by the National Open College Network.

3 Greater Glasgow Forum covers Glasgow, Renfrewshire, Lanarkshire and East Renfrewshire.4 The average attendance of the Credit Union Business Forum was around 70, and sometimes as high as 120.

17

5.9 Further Education Given that credit union development requires a range of skills, from community and businessdevelopment through financial skills such as book keeping and accountancy to businessmanagement, a large number of courses offered by further education colleges could be relevantto this field. However, in an attempt to make the research both manageable and of use to theScottish Executive, the information trawl was limited to courses that were credit unionspecific. The Scottish Qualifications Authority had approved 5 colleges to deliver the HigherNational Unit ‘Credit Union Principles’. These colleges were: the Central College ofCommerce in Glasgow; Clydebank College; Cumbernauld College; James Watt College,Greenock; and Jewel and Esk Valley College, Edinburgh. However it appeared that only 2colleges (Central College of Commerce and Jewel and Esk Valley) currently offered the Unit.Jewel and Esk Valley were delivering the Unit by distance learning. Since 1998, a HNC in Financial Services had been delivered through CEiS at the CentralCollege of Commerce in Glasgow. Last year a tailored award in ‘Essential Skills for CreditUnion Volunteers’ was piloted. ESF match funding had, however, restricted expansion ofthese learning opportunities and take up had mostly been limited to those credit union staff andvolunteers living within travelling distance of the College (Ayrshire, Lanarkshire, Glasgow andDunbartonshire). This year a certificate in debt recovery had also been introduced at theCollege. As this was being delivered as an open learning certificate, take up had been fromwider afield. This year, CEiS had applied for Objective 3 funding with a view to extendinglearning opportunities to women across Scotland in the future. In the course of telephone interviews a number of development workers and activistsexpressed concern that there was no local provision for accredited training. There was felt tobe demand but potential students were either unable or unwilling to travel to take advantage ofexisting provision. It may be that the solution to this could be through distance learning ascurrently offered by Jewel and Esk Valley. 5.10 Funding Several public and private bodies provided funding for credit union development, either as partof a development strategy or as ‘one-off’ support. However, only 2 sources of stand-alonefunding, specifically for credit unions, were identified. Of these: -

q the Unity Trust Bank provided grants of up to £500 for marketing support. The money

was made available from a specific credit union deposit account. Unity paid 0.25% of thetotal balance of the account into a Credit Union Development Fund, from which grantswere made. Currently (May 2000) the Fund amounted to £5,000 and 5 grants had beengiven totalling £1,800. One of these had gone to a Scottish credit union. Decisions weremade by a panel of 11 members, 3 of whom were based in Scotland

q Capital Credit Union had a Trust, set up in 1997, which provided grants to individuals and

credit unions to support professional and personal development, including training.Funding for this came from the surplus capital gains from running a lottery

18

5.11 Ad Hoc Support Credit unions received a variety of ad hoc support, as did many voluntary organisations.However some of the organisations that had provided such support in the past may be movingtowards having a formal support strategy. The following can be identified, amongst others: - q the Bank of Scotland currently acts as the banker to about a third of the credit unions in

Scotland. It was involved in a range of support activities including: providing a secondeeto the Scottish Council for Voluntary Organisations to help develop its credit union; andfunding and ongoing discussions over the setting up of a national Central ServicesOrganisation

q the Scottish Co-operative, which had recently given £5,000 to the Inverness Credit Union

through its Community Dividend for the purchase of equipment as well as providing anoffice to act as a collection point. It also provided a collection point for the local union inits Govan store. It was currently considering the development of a more formal supportstrategy.

5.12 Conclusions There was an impressive list of support available throughout Scotland to support credit unions.However, with the exception of the local authorities, very little of this was provided as part ofa coherent credit union support strategy. Often support was reactive and was provided byvirtue of credit unions being voluntary organisations rather than because they were creditunions per se. The next Section looks in greater detail at the support provided and highlights the importanceof local government to the credit union movement. However in terms of potential thefollowing seem to have much to offer: - q the LECs - in a number of areas LECs were involved in putting together social inclusion

strategies with other partners. LECs could contribute to the development of a morecoherent approach towards supporting credit unions and providing additional funding

q the voluntary groupings of credit unions – these were on the increase, and could possibly

provide a suitable foundation from which to launch any national support strategy.

19

5 THE DEVELOPMENT AND SUPPORT INFRASTRUCTURE- FINDINGS AND ANALYSIS

This section is primarily based on the questionnaire returns from the 3 development agenciesand 13 local authorities. Where appropriate, it is also supplemented by information gainedthrough more informal contacts.

6.1 Credit Union Development Funding 2000/2001

In 2000/2001 identified funding for direct credit union support (including money spent on, andraised by, the development agencies, salary costs for credit union development staff and grantsto individual credit unions) amounted to £835,000. Table 6 shows the sources of this funding.It can be seen that: -

q local government was the largest single source of supportq the Social Inclusion Partnerships (SIPs) accounted for the next largest sourceq Lottery and European funding accounted for a total of 11%. However at least 3

voluntary groupings of credit unions had submitted Lottery applications and so thesignificance of this source could increase in the future

q one LEC was covering some of the costs of development staff. As discussedpreviously, a number of other LECs were providing support, but generally on a ‘oneoff’ basis with no guarantee of continuity - this was not included in the table

Table 6 Sources of Direct Credit Union Development Support Funding1, 2 2000/2001

Funding Source Amount (£) Percentage ofTotal

Local Government 443,000 53Social Inclusion Partnership 275,000 33National Lotteries Charities Board 45,000 5Europe (Social and Regional Development Funds) 52,000 6Local Enterprise Company 20,000 2TOTAL 835,000 100

Notes: -1. Direct financial support includes funding for credit union specific development staff and funds that are

allocated to individual credit unions. It does not include support in kind nor does it take account of thecosts of staff who may provide support to credit unions but do this as part of a wider remit. The figuresalso exclude any ‘on-off’ support that may have been provided by bodies such as the LECs.

6.2 The Age of the Support Infrastructure

Credit union support was first provided in 1988 for 4 of the respondents. There had thereforebeen continuity of support in some areas for over a decade. There was then a lull until the late1990s when a number of the new unitary authorities started to provide funding. This was, inpart, a result of local government reorganisation, which saw support withdrawn from someareas following the abolition of the regions. More recently some authorities, for exampleRenfrewshire, had begun to provide development support, in part as a response to localpolitical interest.

20

6.3 Paid Staff

The respondents employed a total of 18 staff who had a specific credit union support anddevelopment remit. Of these: -

q 7 local authorities employed 9 staff, of whom 4 were part-timeq 2 (1 part-time and 1 full-time) were funded by a local authority and LEC but were

managed by a local council for voluntary serviceq 5 were employed by the development agencies of whom 1 was part time. One of the

agencies also employed sessional staff to deliver services when and as neededq ABCUL had a full-time development officer who also employed a network of

consultants providing training on an ‘as needed’ basisq The Scottish League of Credit Unions employed a National Development Officer

and funded a research student, who also worked on behalf of the league.

In addition 5 local authorities claimed to have staff with the expertise and experience tosupport credit unions at various stages in their development. A further authority,Renfrewshire, was in the process of appointing a development worker.

6.4 Staff Qualifications

The staff were well qualified, both formally and in terms of their experience of either managingcredit unions or providing development support. In terms of formal qualifications, whilst manystaff had general degrees, some had relevant post-graduate qualifications in such fields ascommunity education, marketing and MBA.

The most common type of work experience was in the broad area of community developmentand/or community education and it was often through this route that staff had become involvedin credit union support. However, many staff also had experience of credit unions asvolunteers (in two instances staff had volunteered for 25 years). There was therefore noshortage of first hand experience and knowledge of credit unions amongst development staff.

6.5 Line Management

The background of staff in the community development or education field was reflected in thelocal authority department in which support staff were based or in which support policy wasformulated. Of the 13 responses: -

q 4 were based in either social work or education departmentsq 4 in corporate or strategic services departmentsq 2 in the chief executive’s departmentq 1 in an economic development departmentq 1 was based in a regeneration partnershipq 1 in a neighbourhood resources department

Significantly, given the current emphasis on treating credit unions as small businesses that needto develop better management and marketing practices (see Section 7), only one of the staffwas based in an economic development department.

21

6.6 Development Support Objectives

Further details of credit union development strategies are given in a database generated as anoutput of this project. Generally, local authorities wanted to expand credit union coverage sothat all of their area was included in some common bond. Approaches to achieve this included:-

q setting up new credit unions e.g. South Lanarkshire, South Ayrshire and Stirlingq expanding the common bonds of existing credit unions, increasing membership and

thereby making the credit unions more effectiveq establishing authority-wide credit unions to which existing credit unions could

either become affiliated or with which they could merge e.g. Dundee and this mayalso happen in Scottish Borders and East Lothian

A number of authorities, for example Edinburgh, Falkirk, and Glasgow, were currentlyreviewing their approaches. The outcome of this process could see revisions to the waysupport is provided. In the case of Glasgow, this could see the development, for the first time,of a corporate credit union support strategy.

The development agencies varied in the approach they adopted, which reflected their localcircumstances. Thus: -

q CUES, in Edinburgh, had funding guaranteed only until the autumn of 2000. Thefuture support strategy adopted by Edinburgh City would be dependent upon theresults of a joint consultancy study, which was currently underway

q CEiS/SCUDA was focusing more of its efforts upon consolidating and expandingexisting credit unions, through measures such as organisational ‘health checks’ andthe preparation of business plans. The agency was also involved in undertakingfeasibility studies for microcredit projects and in funding training.

q ACUDA was mainly concentrating upon setting up new credit unions. The agencywas involved in establishing study groups in Islay and Mull, reflecting the lack ofcredit unions in this rural area

6.7 Targets

Of the 16 local authorities and development agencies, 10 had targets attached to the supportthey provided whilst 6 did not. Often the targets reflected specific local circumstances. Themost common targets were to: -

q increase union membershipq ensure that the credit unions were moving towards self sufficiency as measured by

such things as increasing turnover and improving financial ratiosq extend the common bonds to give more residents access to a unionq achieve total coverage of the operational area, either by setting up new credit

unions or by setting up local-authority wide credit unions

Generally the targets reflected the need for credit unions to move towards self-sustainability.The corollary of this was that the funding going to them could be reduced and either used tohelp new credit unions or perhaps be redeployed elsewhere.

22

6.8 Services Provided

Perhaps surprisingly, the services provided by the respondents did not seem to vary accordingto whether they were provided by credit union specific support staff or by staff who had awider remit. The services provided included: -

q trainingq advice and informationq management supportq marketing and promotionq support with the registration processq support with gaining common bond extensionsq help with preparing and submitting funding applicationsq help in complying with the requirements of the regulatory bodyq supporting the development of mutual support groupings of credit unions

A number of respondents (12) were also able to provide grant aid. The eligible costs areshown in Table 7. The sums involved tended to be modest, the maximum being £20,000 thatcould be drawn down on an ‘as needed’ basis. Typically the totals available from any authorityor agency ranged from £5,000 to £10,000. In one instance, support was only available tosupport start-up costs and a credit union forum administered the funds

Table 7 Credit Union Costs Eligible for Grant Aid

Eligible Cost Number of Respondents1

Registration expenses 9Business plan preparation 11Premises2 9Equipment 11Training 11Staff wage subsidies 8Consultancy fees 7Other3 2

Notes:-1. There were 12 respondents to this question.2. Most respondents also indicated that in-kind support was at least as important, if not more so, than

any direct financial support.3. The ‘Other’ category included audit fees, travel costs and common bond extensions.

6.9 In-Kind Support

The type of in-kind support most frequently mentioned by respondents related to premises,which 9 respondents provided. Ironically this was also identified as the greatest developmentneed (see Section 7.3). Support covered: -

q giving premises either at no charge, on a charity or concessionary lease, or at anominal rental level to act as a base for the union

q letting the credit unions use Council premises as collection pointsq providing free accommodation for meetingsq providing free storage for union recordsq giving discretionary rate relief

23

Other support in kind, excluding staff time and expertise, covered the use of facilities forphotocopying, printing and typing. A number of authorities, including some such as Perth andKinross, which provided no other form of support, offered a payroll collection service foremployees who were members of the work based credit union covering the authority.

6.10 Credit Union Development Focus

The overwhelming focus of development efforts was upon community based credit unions,rather than work based ones. Of the development agencies or staff: -

q 11 focused their efforts solely on community based credit unions, although 4 of the localauthority respondents also indicated that their authority supported the credit union for theauthority’s employees through such things as payroll deductions

q the other 5 also provided support to work based credit unions, although this accounted for

a relatively small proportion of the work. Of those who were able to give an estimate ofthe balance of development efforts, around 80% of work was directed towards communitybased credit unions. One respondent indicated that the parent local authority was in theprocess of setting up an employee union whilst another was supporting an employee studygroup

The literature, and Scottish experience, has shown that community based credit unions havedifficulties in becoming sustainable (see Section 5). The explanation as to why, despite this,most development efforts are focussed upon community based credit unions reflects theimportance of the social inclusion agenda and the role credit unions are seen to play inaddressing this.

6.11 The Spatial Development Focus

There were a number of contradictions and tensions in the current geographical focus ofdevelopment activity. At one end of the spectrum were the 6 authorities that were targetingsupport at defined small areas. The driving forces behind this were twofold:-

q the perception that credit unions were primarily poverty alleviation initiatives (although thisseemed to be a dwindling belief)

q the availability of funds through a succession of small area initiatives, most recently the

area-based SIPs. The significance of these as a funding source can be seen from Table 6.Undoubtedly this was the main factor underlying the small area focus.

At the other extreme were the 6 authorities that provided support for the whole of their area.There was also a move amongst some authorities, for example Dundee and East Lothian,towards setting up an authority-wide union. This ‘whole area’ approach was in response to 2factors: -

q the lack of progress made by most community based credit unions supported by theauthorities in moving towards sustainability

q advice from development agencies and development workers that this was the desired

route to achieve sustainability

24

However, even those authorities that provided support for the whole authority area tended togive greater priority to the poorer areas. The development strategy, albeit that it was notarticulated in this way, tended to be proactive in the poorer areas and reactive elsewhere. Theimpact of such a strategy may in effect be one of small area targeting.

The development agencies tended to follow a similar approach. The ones based in urban areasgave greater priority to the SIPs, as this was where funding was available. The exceptions tothis were the agencies and authorities in the rural areas where a scarcity of SIPs meant that theavailability of funding was not the key driver of development efforts.

6.12 Funding Trends

Table 8 shows the funding trends over time. It can be seen that funding fell between 1998/99and 1999/00 by 11% but increased over the whole 3-year period by 24% due to a fundingincrease of nearly 40% in 2000/01.

Table 8 Direct Financial Support1, 2 From Credit Union Development1998/99 to 2000/01

2000/01 1999/00 1998/99

Total financial support £835,000 £598,000 £671,000Percentage increase on previous year 39% -11%

Notes: -1. Direct financial support includes funding for credit union specific development staff and funds that are

allocated to individual credit unions. It does not include support in kind nor does it take account of thecosts of staff who may provide support to credit unions but do this as part of a wider remit. The figuresalso exclude any ‘on-off’ support that may have been provided by bodies such as the LECs.

There seemed to be 2 reasons for this funding increase in 2000/01: -

q more local authorities had started to provide credit union support, for exampleRenfrewshire which was in the process of employing a development worker

q the introduction of the SIPs had provided more funding opportunities for credit

unions. For example, within Glasgow credit unions had been allocated £127,000through the SIPs, whilst within Edinburgh around £100,000 had been provided.

6.13 The Spatial Distribution of Credit Union Development Support Funding

As Section 6.3 shows, the numbers of staff employed to support credit unions was small.Accordingly the spatial distribution of this type of support was not scrutinised. Instead thedistribution of total funding, including staffing, was analysed.

Within Scotland there was assistance for credit union development and support (either throughdedicated staff and/or earmarked funding), through a broad band which stretched from Argylland Bute through Clydeside, most of the Lothians, the former Central Region, Fife and endedin Dundee.

25

Outside of this ‘formal support belt’ there was no dedicated support. In these, mainly ruralareas, any existing support came through: -

q in-house local authority or enterprise agency staff who had a credit union support role andsome expertise. However this task was not a major, or even perhaps a recognised, part oftheir remit, and was done in addition to other activities e.g. City of Aberdeen and SouthAyrshire

q voluntary groupings of credit union activists and supporters as through the Grampian

Credit Union Forum or the Keith based Rural Enterprise Action Project. Usually suchsupport was unfunded

q staff who had no particular credit union expertise but would be willing to try to provide

support were the authority to be approached. Angus, for example, seemed to fall into thiscategory

q approaches to the national bodies such as ABCUL and the Scottish League which may be

able to provide support, albeit that they had limited resources q approaching a variety of agencies and bodies that may be willing to provide support as part

of a community development or corporate responsibility remit. This had been the case fora number of credit unions within the Highlands where support had come from LECs and, inone instance, the Scottish Co-operative

This relatively simple picture was complicated by a number of authorities outside of the ‘formalsupport belt’ who were considering facilitating the establishment of credit unions or financingsome form of development support. These included East Lothian, Highland Council, Shetlandsand Scottish Borders (see page 7).

Essentially, outside of the ‘formal support belt’, credit unions were in a similar position to anyother community or voluntary body. Approaches would have to be made for support and thiswould be approved or rejected according to the resources and remit of the body approached.

Within the ‘formal support belt’ the amount of support varied widely as Table 9 shows. It canbe seen that when funding per head of population was considered: -

q there was a range from £0.47 to £0.11, with the average for the ‘formal support belt’ being£0.27

q according to this simple measure the ‘best’ resourced area was Clackmannanshire,

followed by Stirling and then Argyll and Bute. This however was a reflection of the smallpopulations of these areas. Such a comparison also made no allowance for populationdensity that, in the case of Stirling and Argyll and Bute, as the Table shows, made suchcomparisons relatively meaningless

q the 2 local authority areas where the majority of support was available in absolute terms

(Edinburgh and Glasgow) were respectively at, and slightly above, the average in terms offunding per head

26

Table 9 Spatial Distribution of Credit Union Development Support 2000/20011

Area Expenditure per head ofpopulation

Population density(people per hectare)3

Clackmannanshire £0.47 3.10Stirling £0.46 0.37Argyll and Bute £0.38 0.13Clydeside2 £0.33 4.71Edinburgh £0.27 16.83Inverclyde £0.21 5.56Falkirk £0.21 4.76Dundee £0.20 23.63West Lothian £0.15 3.45Fife £0.11 2.65Average £0.27 1.97

Notes:-1. The expenditure figures are derived from the questionnaire returns.2. Clydeside is defined as the unitary authorities of North and South Lanarkshire, Dunbartonshire,

Renfrewshire and Glasgow. This is the main operational area for SCUDA.3. Density figures derived from The Scottish Office, 1995, The New Councils, Government Statistical

Service, Edinburgh, May.

One explanation for the spatial variations in funding were political decisions made at the locallevel to provide support, whilst in the case of Argyll and Bute this reflected success in winningLottery funds. Population density, which might have an impact upon the ability to generatesustainable credit unions, in so far as rural areas might find it harder to develop unionmemberships, bore little relationship to the funding variations. Calculation of a regressioncoefficient between the 2 datasets in Table 9 (r = –0.31) was indicative of a weak negativerelationship.

To look in greater detail at the expenditure patterns Table 10 considers expenditure in eacharea and the percentage of Scottish community based union membership each accounted for in1998. Calculation of a regression coefficient between the 2 datasets (r= +0.97) indicated avery strong positive relationship. This meant that development spending was a very goodpredictor of union membership. One conclusion that could be drawn from this was thatexpenditure had been reasonably effective in increasing membership. Although membershipwas clearly a lagged variable, in that membership growth would take place after expenditurehad been incurred, it seemed likely that past expenditure patterns were broadly similar to thoseshown in the Table. If this were the case this would vindicate this interpretation.

27

Table 10 Spatial Distribution of Credit Union Development Supportand Membership

Area Percentage of total directexpenditure 2000/20011

Percentage of Scottish communitybased credit union members2

Clydeside3 55.4 82.7Edinburgh 15.0 1.3Fife 4.9 1.3Stirling 4.8 0.8Argyll and Bute 4.3 0.6Falkirk 3.8 1.0Dundee 3.7 1.2Clackmannanshire 2.9 0.5West Lothian 2.8 1.1Inverclyde 2.4 4.2TOTAL 100 94.7

Notes:-1. The expenditure figures are derived from the questionnaire returns.2. These figures show the percentage of members of Scottish community based credit unions in the

indicated areas. The figures relate to 1998 and are derived from the AR 20 returns.3. Clydeside is defined as the unitary authorities of North and South Lanarkshire, Dunbartonshire,

Renfrewshire and Glasgow. This is the main operational area for SCUDA.

6.14 The Effectiveness of Development Funding

This study was not an evaluation of the effectiveness of credit union development support.However the earlier analysis showed that: -

q support expenditure was related to membership numbers. From this it could be postulatedthat spending had resulted in membership growth, although it was more difficult to know ifthis was cost effective, given the inevitable time lag between cause and effect

q the attainment of self-sufficiency was more problematical. The credit unions that were self-

sufficient would seem to be, according to Jones (1999), those that had been established fora number of years. Yet within Glasgow, to give but one example, there was concern thatmany years of providing support seemed to have had a limited impact in terms of creatingsustainable credit unions (Glasgow City Council, 2000). This concern was mirrored inDundee, Edinburgh and Falkirk, all of whom were currently reappraising how they shouldsupport credit unions

To some extent this pattern, growth in some volume measures but limited progress towardssustainability, was reflected in the questionnaire responses. Respondents were asked what theyfelt the support they provided had achieved. The responses fell into 2 broad and sometimesoverlapping categories: -

q those that emphasised the numbers and types of credit unions that had been or were to beestablished, citing such things as the numbers of study groups formed, community basedcredit unions set up, a union for disabled people, live-work credit unions and an employeesunion

28

q those that placed more emphasis upon the move towards sustainability. These highlightedsuch things as increases in membership, bond extensions, the creation of a self-sustainingunion, the production of a training manual, improvements in the quality and accuracy of thestatutory returns and the commissioning of a review of union performance. The extreme ofthis group was the authority that highlighted the fact that, although 2 credit unions hadclosed, total membership within the authority's area had increased by 180%.

Cross cutting these groups were a number of responses indicating that development work hadraised the profile of the credit union movement, although this was not always related toincreased membership.

Comparison with the stated targets (Section 6.7) is interesting in so far as the targets stressedsustainability. It may be that the survey was undertaken at a time when the supportinfrastructure was being refocused. In the past, support may have stressed the need to set upnew credit unions as part of a community development or poverty alleviation remit. This isreflected in some responses on the impact that support has had. The focus was now uponmoving towards sustainability, with an emphasis upon issues such as membership growth. Thiswas reflected in the targets and it seemed a valid assumption that there had not yet beensufficient time for this new emphasis to emerge in support outcomes.

Although it is outwith the brief to evaluate effectiveness, one can broadly conclude that interms of the current agenda for credit unions, that places great stress upon attaining selfsufficiency, past support had been less than effective. However, this is a judgement thatevaluates past performance against a new set of criteria. Support in the past seemed to havebeen given to support small area based poverty alleviation initiatives, which by their naturewere unlikely to become self-sustaining. The challenge to funders, development staff andvolunteers is to be able to respond to this new and still emerging agenda.

6.15 Conclusions

On the basis of the above it seems clear that without local authority support, credit uniondevelopment would have been very limited. Funding from other sources was very scarce. Withthe exceptions of ABCUL and ABCUDA, the development agencies were either totally orheavily reliant upon local authority support.

Although the targets set for support were increasingly emphasising sustainability, this might infact be made more difficult by the impact of SIP funding availability. This was often restrictedto small areas whose characteristics may render the establishment of viable and sustainablecredit unions a difficult and time-consuming process

Further examples of tensions were evident when the type of credit unions supported wereconsidered. Most effort went into supporting community based credit unions. However,despite over a decade of support funding, especially in the West of Scotland, few communitybased credit unions had achieved self-sustainability. As a result, a number of authorities werecurrently reconsidering their approach to credit union support.

There seemed to be a clear relationship between expenditure and union membership, with themajority of spending taking place in a belt across the Centre of Scotland where the majority ofunion members were based. However membership growth was not necessarily correlated withcredit union sustainability. The potential for further growth in these areas, given the pastevidence, can be questioned.

29

What emerged from the analysis was a strong feeling that credit union support was at a turningpoint. In the past funding had been given to support credit unions because of their communitydevelopment and poverty alleviation potential. One consequence of this approach was to setup credit unions in areas whose size and poverty meant there was little chance of therebecoming sustainable without on-going public subsidy. The evidence for this can be seen inthe respondents’ views on the impact of support, which often stressed volume rather thansustainability measures, and until recently this was not necessarily a concern. However, thependulum had now swung towards credit unions being in effect small businesses and thisimplies a far greater need to increase and diversify the memberships of individual credit unionsrather than to set up new ones. The diversity of responses indicated that some respondentswere willing to embrace such a change of direction, whilst others were less sure.

31

7 CREDIT UNION DEVELOPMENT NEEDS

Respondents were asked to identify local credit union development needs, which availabledevelopment infrastructure was currently unable to meet, and also the Scotland-wide creditunion development needs which a national strategy should seek to address.

One of the strengths, and paradoxically perhaps one of the weaknesses, of the credit unionsupport infrastructure in Scotland was that many of those involved as salaried developmentworkers often had many years experience as volunteers and indeed were often still activevolunteers. One consequence was that some development staff had difficulty in taking adetached ‘professional’ view of development needs and the current political context withinwhich these were to be met. This was reflected in the differing views of development needs.Respondents fell into 2 broad groups: -

q those who saw credit unions as not simply a type of small business, but as a communitybased initiative with a strong ethical dimension. Whilst this group wanted developmentsupport, it felt it should be given with limited external control so that the credit unionscould develop ‘organically’, at their own pace. This group tended to resent what were seenas externally imposed studies and development initiatives. It felt that the credit unionsshould be in charge of their own destiny but were currently in danger of losing theirautonomy in the face of externally imposed agendas from Westminster and the ScottishParliament. In the words of one respondent the movement needed to coalesce and developa greater degree of solidarity to protect itself from ‘party political control freaks’

q the other group, whilst recognising the roots of the credit union movement, felt that greater

efforts had to be made to achieve sustainability, which essentially meant reducing relianceon external support. To do this there had to be a stronger approach to business planningand target setting and attainment. Essentially this group saw credit unions as smallbusinesses with conventional small business development needs and problems

To some extent these different development philosophies had been formalised through theestablishment of the Scottish League which was established, to some extent, to prevent theperceived erosion of the movement’s community foundations. Against this background theneeds identified by the respondents can be categorised as: -

q regulatory - in so far as they would require legislative or regulatory changes;q strategic - relating to action needed at the Scotland-wide level to promote and

consolidate the movementq local - essentially relating to the needs of individual credit unions.

7.1 Regulatory Development Needs

Respondents identified 4 regulatory needs:-

q having credit union registration and regulation overseen by a Scottish based body whichhad an awareness of the context within which credit unions operated within Scotland and aknowledge of the area’s geography, particularly outside of the Central Belt

q the introduction of a Statutory Instrument in Scottish Law so that credit unions in Scotland

were treated on a similar basis to those in Northern Ireland

32

q introducing a compulsory share protection scheme for members q addressing the issue of the size of common bonds, many of which were felt to be too small

and restrictive to allow credit unions to move towards sustainability

7.2 Scotland-Wide Development Needs

A range of Scotland-wide needs were identified, with a particular focus on the need for a morestrategic approach to bring together, consolidate and expand the current piecemeal approachto development. The main needs were: -

q the promotion of a more strategic, pan-Scottish approach to credit union development

One way of doing this was felt to be to have a Scotland-wide credit union business planwith national targets. This would then be underpinned by local strategies with associatedtargets. Individual credit unions would have business plans and they would be expected tooperate according to stringent standards. Both the national and local targets and theindividual business plans were to be related to the attainment of sustainability. This modelhad similarities to the centralist approach recently suggested for local economicdevelopment by the Executive’s Enterprise and Lifelong Learning Committee, whichproposed a Scottish economic framework underpinned by a series of local strategies. Akey element in the development and implementation of such an approach to credit uniondevelopment was felt to be agreement of a shared agenda. To attain this there had to beclarity on the part of funders, the Executive and the Financial Services Authority (FSA)over what they expected credit unions and local authorities to achieve. These bodieswere, in their turn, to develop a better understanding of credit unions and what they canrealistically deliver. This call for a common agenda would seem to reflect concern overthe mixed messages that credit unions were receiving, in part as a result of the suddenpolitical interest in them as having an important role to play in combating social exclusion.The differences of opinion between those promoting an ethical line and those seeing creditunions as small business (page 28) were most conspicuous here. The ethical lobby, whilstwanting credit unions to grow, did not want this to be against a background of externallyimposed targets

q related to the need for a strategic approach, and perhaps a prerequisite for it, was thesetting up of a Scotland-wide credit union network that would pull all the credit unionstogether and enable them to speak with one voice.

That this was suggested by 3 respondents may reflect a degree of unhappiness at the currentsituation where there were several networks which were either poorly developed or whichmay be promoting different views on the direction credit unions should be going. There wasalso a view that better networking was needed to enable rural credit unions to overcome theisolation they faced

q greater equity in the availability of development support across Scotland

It was felt that some areas had no development support whilst elsewhere, including areaswhere there were already many credit unions, there was considerable support available

q access to information technology training, equipment and software, which was felt to beimportant if credit unions were to become more efficient in their operations

33

q having a national marketing and promotional effort. There were felt to be a number of

overlapping elements to this:-

q the promotion of the credit union ethos, philosophy and the practical benefitsof membership

q the recruitment of more membersq promotion of the merits of acting as a volunteer

q establishing a national fund that credit unions could draw upon to help them put togetherfunding bids to bodies such as the Lottery

7.3 Local Development Needs

The identified local needs focused, inevitably, upon the requirements of individual creditunions, although there was some overlap with those identified at the Scotland level, inparticular marketing and networking. The main ones were: -

q premises that were visible and affordable were identified as the key local need by 12respondents.

Suitable premises were seen as helping to attain 2 aims: raising awareness of the union’sexistence thereby attracting more members; and helping it move towards sustainability asthere would be a fixed base and collection point

q accessible and affordable training and support for study groups, start ups and established

credit unions were highlighted, again by 12 respondents.

For existing credit unions it was felt there were particular needs: business plan support tohelp them to expand and grow and therefore become more sustainable; a ‘fire fighting’service to offer immediate and intensive help to credit unions that might be in trouble;and a body that could act as an intermediary between credit unions and the FSA

q related to this was access to in-depth specialist support

It was felt that often one development worker was expected to support credit unionsthroughout all stages of their development when their needs, and the degree of expertiseneeded to meet these, varied significantly according to a union’s development stage

q establishing some form of formal succession planning for union management so that

individual credit unions were not vulnerable should a key volunteer leave q local marketing campaigns to promote the concept of credit unions, recruit more members

and gain more volunteer involvement in running credit unions q the setting up of local networks to promote mutual support and facilitate joint working

q funding, which was behind many of the needs identified above

This was required for a variety of purposes, for example: undertaking feasibility studies,employing staff, purchasing information technology equipment and premises and creatinga loan fund.

34

7.4 Conclusions

The development needs identified were varied and often had financial implications at either theScottish or the local level. However, some respondents were cautious in their approach,especially over funding and premises. With regard to funding, the point was made that theprocess of accessing funds was often a vital stage in the development of a cohesive group ofvolunteers and in the growth of their commitment to the union. Were funding to be too easilyavailable then one of the movement’s greatest strengths, its ability to mobilise volunteers,might be undermined. Likewise two respondents sounded a note of caution over premises.They felt that the lack of premises was often seen as a panacea for all of a credit union'sproblems, whereas the reality could be that the inability to gain premises was a symptom ofmore fundamental problems, rather than a cause.

The needs identified also seem to indicate some dissatisfaction with existing structures. Forexample, at both the Scotland-wide and the local levels the need for networking was identified.This was despite the existence of a number of chapters, forums and national bodies that claimto represent credit unions and staff. Whilst this need may indicate that existing structures wereineffective, a more likely explanation was that they were perceived as being too fragmented toindividually speak for the whole of the Scottish credit union movement. Unfavourablecomparisons can be drawn here with Wales where the Wales Co-operative Centre had beenable to bring together activists and development staff to draw up a 5 year development strategywhich had now been submitted to the Welsh Assembly (Wales Co-operative Centre, 1999).On the basis of this study it was difficult to see any single credit union development agencybeing able to undertake a similar exercise for Scotland that would have widespread supportfrom the various groups.

What was also clear, from the list of needs, was that both of the groups identified in Section 7wanted more support to be made available. This was despite a less than impressive record ofachievement. However those advocating a more business like development approach, tied totargets and plans, seemed willing to accept that the past record of under achievement meansthat there was a need for change. Those adopting a more ethical stance wanted such supportto be given without any strings attached. There were attractions and risks in both approaches.

What can be called the ‘small business approach’ seemed likely to be able to move creditunions more rapidly towards sustainability and reduced reliance upon external support.However, the degree of centralisation and external influence that seemed inherent in thisapproach could undermine the essence of credit unions: their community base and strongvolunteer involvement. The ‘ethical approach’ was firmly based upon the credit unionsdeveloping at their own pace in line with the wishes of their management committees, anapproach that was unlikely to alienate volunteers and should enhance community roots.However this ignored the fact that this type of approach had been relatively ineffective, ascould be seen from the few credit unions that were self-sustaining. This ineffectiveness wasresponsible for a number of local authorities looking carefully at the support they provide andtrying to develop approaches that would promote sustainability. This approach also ignoredthe whole move towards relating funding to targets and outcomes in the public sector. Itseemed unlikely that any public body was going to provide funding without some clearindication as to what it would attain.

35

8 CONCLUSIONS

This project has mapped the support available within Scotland to support credit uniondevelopment and growth. It needs to be stressed that what has been presented is a snapshot. The support map, at the time of writing, is exceptionally dynamic. To give oneexample, local authorities in Edinburgh, Glasgow and Falkirk are all currently reviewing thenature and effectiveness of the support they provide. Given this, even though a reasonablycomprehensive picture of support throughout Scotland has been obtained, this is likely to daterapidly.

Although there will be change, it seems likely that the following broad conclusions will still bevalid:-

q There was a considerable amount of support for credit union development that could bedrawn upon throughout Scotland

q This support was, however, highly concentrated in West Central Scotland. This

concentration seemed likely to increase in the short term, given that some authorities andsupport groups were either committed to funding development workers or were trying toaccess funding for this purpose

q Local government reorganisation, and the financial constraints that local authorities were

under, had seen support withdrawn or reduced in several areas. To counter this in one area,Argyll, funding had been obtained to set up a development agency whilst in the formerGrampian Region the Support Forum had submitted a Lottery application to employ adevelopment worker

q In some rural areas, for example the Highlands and the Borders, there was increasing

interest in credit unions as a way of overcoming the problems of isolation from financialservices. As the various initiatives were at varying stages of development it remained to beseen what would develop

q Despite this interest from the rural areas the available support was very limited, even more

so when geography and population density were considered, all of which increasedconsiderably the development effort needed to set up and run self-sustaining credit unions

q There had been a move towards setting up mutual support groups of credit unions and

activists on an area, as opposed to an affiliation, basis. Working through these structuresmay be an effective way for any national framework to engage with the credit unions at thelocality level

36

The project also identified a number of emerging issues, both from the research and theliterature review. The key issues were: -

q the concentration of development resources in West Central Scotland, an area where, as anumber of authors had pointed out, some of the most successful credit unions in the UnitedKingdom were based (School of Management, Heriot-Watt University, 1999, Jones, P,1999). There were two issues here:-

q the fact that most, if not all, of the large credit unions in the West of Scotlandpredated the setting up of any development agencies or support workers. The keyto their development (School of Management, Heriot-Watt, 1999) seemed to havebeen committed volunteers and mutual support. This raises issues about how best todeploy support and the role of development staff

q given the scale of existing development in the West, the extent to which there wasscope for further growth through the setting up of new credit unions and theexpansion of existing ones, regardless of the amount of development support

q the extent to which the funds spent on credit union development to date had been costeffective. For example Toynbee (1999) argued that around £20 million was spent eachyear on support by the public sector. Despite this, total assets were only £36 million andmembership was 108,000. A similar, although less extreme, picture emerged in Scotlandwhere at least £0.84 million in direct expenditure was incurred every year, yet few self-sustaining credit unions existed

q related to this was the issue of the focus of development support. This goesoverwhelmingly to community based credit unions, yet few of them were self sustaining,something that was of increasing concern to local authority funders

q a danger that some local authorities, despite warnings in much of the literature (for

example HM Treasury, 1999, School of Management, Heriot-Watt, 1999), still regardedcredit unions as small area based initiatives whose main role was to combat socialexclusion. It has been shown, through years of experience in Scotland, that this approach tothe role of credit unions is unlikely to lead to the development of viable, sustainableproviders of financial services and is, in fact, more likely to result in credit union failure

q if credit unions were to become self sustaining this raised issues about the development

support needed, the staff skills necessary to deliver this and where best to locate supportstaff within local government

q related to this issue of self-sustainability were some apparent contradictions in central

government policy making. The Treasury has urged credit unions to become morebusiness-like and seek to achieve self-sustainability. However, the Executive’s provision ofarea-based funding for Social Inclusion Partnerships (which tend to be relatively small anddeprived areas) results in the common bonds of credit unions being restricted, thusconstraining the development potential of community based credit unions established inthese areas. Another example was the recent announcement of the ‘Universal Bank’ and thequestion as to whether its success would be dependent upon accessing the same marketthat credit unions must access to become viable. This does seem likely and could mean thatboth initiatives fail to realise their potential. This seems to indicate a need for a morecoherent strategy to tackling the problems of financial exclusion

37

q a more philosophical issue related to the danger that employing development workers topromote credit unions might mean that the ‘personal commitment that typifies volunteers’(School of Management, Heriot-Watt, 1999) was missing. Any credit unions set up mightbe totally dependent upon external support and might collapse should this be withdrawn

q underlying these issues was a tension between those who, although wanting public funding,

wished for credit unions to be left to develop at their own pace with limited externalinterference, and those who felt that to have any future credit unions needed to reduce theirreliance upon public funding and become self sustaining

The Scottish Executive’s interest in credit unions was occurring at the same time as a varietyof other initiatives were underway which would undoubtedly influence the form and content ofany development strategy. For example: -

q the Treasury Task Force recommended that some form of Central Support Organisationfor credit unions be set up (HM Treasury, 1999), as exists in other countries, for exampleAustralia. The business plan for this Central Support Organisation has now been published5

q the Financial Services Authority was in the process of taking over the credit union

regulatory function from the Registrar of Friendly Societies. The implications of thischange were unclear, although it was causing concern to some credit unions

q a number of other bodies, such as the clearing banks and the LECs, seemed to be taking a

greater interest in the contribution that credit unions could make both to the provision offinancial services and to the wider issue of regeneration

q the Secretary for Trade and Industry had recently announced plans for a ‘Universal Bank’

to be run by the Post Office and targeted at the financially excluded. The intention was toprovide basic bank accounts for the estimated 3.5 million that were without them. Whilstthis was laudable it may be difficult to access the resources and commitment to both set upthe Bank and promote credit unions, especially as it seemed that the high street banks hadbeen given a key role in both initiatives by Central Government

All these factors indicate that this piece of research, despite its modest budget and aims, is verytimely and should be able to make a useful contribution to the Executive's policy makingprocess.

5 ABCUL (2000). Achieving Financial Inclusion through a Sustainable Credit union Movement – DraftBusiness Plan for a CSO.

39

BIBLIOGRAPHY

Reports and Articles

City of Edinburgh Council, 1999, Credit Unions: Policy Review, Urban Regeneration Sub-Committee, Director of Corporate Services, July.

Digest, Banking on poverty, Digest, No. 21, Summer 1999, pp. 12-13.

Donovan, M. et al, Sustainable credit unions: guidance notes for local authorities, LocalGovernment Association, London, 1999.

Dundee City Council, 2000, Credit unions in Dundee: Future Development, A Report to theNeighbourhood and Development Committee, Director of Neighbourhood Resources anddevelopment, Report no. 329/2000, May.

Feloy, M. and Payne, D., People communities and credit unions: a report of the Birminghamcredit union research project, Birmingham Credit Union Development Agency, Birmingham,1999.

Ferguson, C. and McKillop, D., The strategic development of credit unions, Wiley,Chichester, 1997.

Forrester, C., Credit union development: a new platform. A public awareness strategy forcredit unions in Britain, National Consumer Council, London, 1996.

Glasgow City Council, 2000, Glasgow City Council’s potential role in assisting communitybased credit unions. Policy and Resources (Social Inclusion Strategy) Sub-Committee,Development and Regeneration Services, June.

HM Treasury, Credit Unions of the Future. Taskforce Report, HM Treasury, London, October1999.

Jones, P., Towards sustainable credit union development. A Research Report, Association ofBritish Credit Unions Ltd, March 1999.

McArthur, A., McGregor, A. and Stewart, R., 1993, Credit unions and low incomehouseholds, Urban Studies, Vol. 30, No, 2, pp. 399-416, March

North Lanarkshire Council, Credit Union Support and Development Strategy, Motherwell,1998.

People for Action, Housing associations and credit unions: issues and options, People forAction, Birmingham, 1999.

40

Registry of Friendly Societies, no date, Extracts from the Report of the Chief Registrar, 1997-98. Credit Unions.

Renfrewshire Council, 2000, Development of Credit unions in Renfrewshire, Report by theChief Executive, March.

School of Management, Heriot-Watt University, A report into the rapid growth of creditunions in Scotland, Heriot-Watt University, Edinburgh, 1999.

Toynbee P., Finance, The Guardian, 8 February 1999, p. 14.

Wales Co-operative Centre, 1999, Development through Partnership. A Strategy for CreditUnions in Wales, 2000-2005, September.

Credit Union Websites

www.abcul.org

The website for the Association of British Credit Unions Limited. Includes information onaffiliated unions and a discussion forum.

www.socialeconomy.co.uk

The website for Community Enterprise, the parent body for the Strathclyde Credit UnionDevelopment Agency. It has a number of social economy related links.

www.woccu.org

The website of the World Council of Credit Unions, the trade association and developmentagency for the international credit union movement. Particularly useful for overseas links.

41

APPENDIX ONE

Credit Union Development SupportKey Contacts

42

Credit Union Representative Bodies

Association of British Credit Unions Limited (ABCUL)

Contact: Ian McCormackBusiness Development ManagerRobert Owen House87 Bath StreetGlasgowG2 2EE

Tel: 0141-304-5553Mobile : 07939-014594

Scottish League of Credit Unions

Contact: Stephen Walsh/Helen KanePO Box 16455GlasgowG21 1PH

Tel/Fax: 0141-774-7036info@scottishleague.org

Development Agencies

Argyll and Bute Credit Union Development Agency (ABCUDA)

Contact: Sheila Houston33 MelanteeClagganFort WilliamPH33 6PQ

Tel: 01397 701495

Credit Union Enterprise Services (CUES)

Contact: Tom McVayc/o Capital Credit Union LtdCredit Union House46 Hamilton PlaceEdinburghEH3 5AX

Tel: 0131-332-1008 (home number)

Strathclyde Credit Union Development Agency (SCUDA)

Contact: Mary Ferris, Eunice LancasterStrathclyde Credit Union Development Agency101 Gorbals StreetGlasgowG5

Tel: 0141-429-8089

43

Local Authorities That Employ Credit Union Development Workers, Are To Employ Them Or WhichFund Development Agencies

Clackmannanshire Council

Contact: Leslie CassidyBowmore CentreScot CrescentAlloaClackmannanshireFK10

Tel: 01259 215150

Dundee City Council

Contact: Sally AndersonNeighbourhood ResourcesDundee City CouncilMitchell Street CentreMitchell StreetDundeeDD2 2LT

Tel: 01382-435829

Falkirk Council

Contact: Sharman Kirkwood/Martin OliverFalkirk Voluntary Action Resource CentreOld Sheriff CourtHope StreetFalkirkFK1 5AT

Tel: 01324 636571

Fife

Contact: Helen KaneWest Fife Local Services10 Wilson StreetBlairhallFifeKW12 9PS

Tel: 01383-852879

Glasgow

Contact: Michael RodgersGroup ManagerEconomic and Social InitiativesGlasgow City Council229 George StreetGlasgowG1

Tel: 0141-287-7217

44

North Lanarkshire

Contact: Jennifer LeesChief Executive's DepartmentNorth Lanarkshire CouncilPO Box 14Civic CentreMotherwellML1 1TW

Tel: 01698 302349

Renfrewshire Council

Contact: Richard RollisonChief Executive's DepartmentRenfrewshire CouncilCouncil HeadquartersCotton StreetPaisleyPA1 1TR

Tel: 0141-840-3208

email: Richard.Rollison@renfrewshire.gov.uk

South Lanarkshire

Contact: Bill LawsonEnterprise ResourcesMontrose House154 Montrose CrescentHamiltonML3 6LL

Tel: 01698- 453644

Stirling Council

Contact: John KerrViewforthStirlingFK8 2ET

Tel: 01786 443322

45

Local Authorities That Provide Support From In-House Expertise

Aberdeen City

Contact: John TomlinsonSt Nicholas HouseBroad StreetAberdeenAB10 1GZ

Tel: 01224- 522304

East Ayrshire Council

Contact: Helen SinclairService Officer, DevelopmentCivic Centre SouthJohn Dickie StreetKilmarnockKA1 1BY

Tel: 01563 576909

Inverclyde

Contact: Gus FergusonInverclyde Regeneration PartnershipProgramme Development Officer9 William StGreenockPA15 1BT

Tel: 01475 731700

South Ayrshire Council

Contact: David SutherlandCommunity Education ServicesSouth Ayrshire Council25 Wellington SquareAyrKA7 1EZ

Tel: 01292-267- 278

West Lothian

Contact: John Harper/Paul WhiteStrategic ServicesLennox HouseAlmondvale BldLivingstoneEH54 6PQ

Tel: 01506 77794401506 777942

46

Authorities Considering Providing Support

Scottish Borders Council

Contact: Robin Tennant,Strategic Policy and PerformanceScottish Borders CouncilCouncil HeadquartersNewtown St BoswellsMelroseTD6 0SA

Tel: 01835 824000 Ext. 5831

Contact: Roger HemmingCo-ordinatorBorders Local Rural PartnershipTweed HorizonsNewton St. Boswells.

Tel: 01835 824125

East Lothian

Contact: Brian DuncanJohn Muir HouseHaddingtonEH41 3HA

Tel: 01620-827827

Highlands Council

Contact: Ken McCorqudale (boss Ann Clarke)Policy UnitChief ExecutiveHighland CouncilGlenurquhart RoadInvernessIV3 5NX

Tel: 01463 702000

Shetland Islands Council

Contact: Linda CouttsArea Development OfficerDevelopment DepartmentGreenheadLerwickShetlandZE1 0PY

Tel: 01595 744243

47

Local Enterprise Companies

Scottish Enterprise Ayrshire

Contact: Steve Shanta17-19 Hill StreetKilmarnockKA3 1HA

Tel: 01563 526623

Scottish Enterprise Borders

Contact: Phil McCreadieBridge StreetGalashielsTD1 1SW

Tel: 01896 758991

Scottish Enterprise Dunbartonshire

Contact: Aileen Edwards

2nd FloorSpectrum HouseClydebank Business ParkClydebankGlasgowG81 2DR

Tel: 0141 951 2121 Ext. 3043

Scottish Enterprise Forth Valley

Contact: Murray AllanLaurel HouseLaurelhill Business ParkStirlingFK7 9JQ

Tel: 01786 451919

Scottish Enterprise Lanarkshire

Contact: Robert HunterNew Lanarkshire HouseStrathclyde Business ParkBellshillML4 3AD

Tel: 01698 745454

Scottish Enterprise Renfrewshire

Contact: Colette McGaughrin27 Causeyside StreetPaisleyPA1 1UL

Tel: 0141 842 3555

48

Argyll and Islands Enterprise

Contact: David HaworthThe Enterprise CentreKilmory Industrial EstateLochgilpheadPA31 8SH

Tel: 01546 605417

Lochaber Limited

Contact: Charlotte WrightSt Mary’s HouseGordon SquareFort WilliamPH33 6DY

Tel: 01397 704326

Moray Badenoch and Strathspey Enterprise

Contact: Roy AndersonUnit 8Elgin Business CentreMaisondieu RoadElginIV30 1RH

Tel: 01343 550567

Ross and Cromarty Enterprise

Contact: Nicola Ewing69-71 High StreetInvergordonIV18 0AA

Tel: 01349 853 666

49

Voluntary Groupings Of Credit Unions

Clackmannanshire Credit Union Forum

Contact: C/O Ian HunterCommunity Economic DevelopmentRoom 28Lime Tree HouseAlloaFK10 1EX

Tel: 01259 452463

Fife Forum of Credit Unions

Contact: Brian OwensC/O Cupar Credit UnionCounty BuildingSt Katherine StreetCuparFife

Tel:

Greater Glasgow Credit Union Forum

Contact: Stephen Walsh

c/o Barrhead Credit Union116 Main StreetBarrheadG78 1SG

Tel: 0141-881-1353

Grampian Support Forum for Credit Unions

Contact: Mike CookGrampian Credit UnionSummerhill Education CentreStronsay DriveAberdeenAB15 6JA

Tel: 01224 323976

South Lanarkshire Credit Union Network

Contact: Bob McGuirec/o Hamilton Credit UnionFairhillCivic CentreNeilsland RoadHamiltonML3 8HJ

Tel: 01698-282200

50

Stirling Credit Union Forum

Contact: Mrs Mary McInlayStirling Credit Union Forum4 WoodsideRaplochStirlingFK

Tel:

Tayside Credit Union Forum

Contact: C/o Sally AndersonNeighbourhood ResourcesDundee City CouncilMitchell Street CentreMitchell StreetDundeeDD2 2LT

Tel: 01382-435829

West Lothian Credit Union Forum

Contact: Liam Murphy/ Mary BrannanBlackburn and Seafield Credit UnionBlackburn Area Housing Office10 Sycamore WalkBlackburnWest LothianEH47 7LQ.

Tel: 01506-650198

51

Mutual Support Networks Of Credit Union Workers

National Association of Credit Union Workers

Contact: Mick BrownWales Co-operative Centre26 Market StreetNewtownPowysSY16 2PD

Tel: 01686-623741

Scottish Credit Union Field Workers Forum

Contact: Sally AndersonNeighbourhood ResourcesDundee City CouncilMitchell Street CentreMitchell StreetDundeeDD2 2LT

Tel: 01382-435829

Education And Training Courses

College of Commerce

Contact: Central College of Commerce300 Cathedral StreetGlasgowG1 2TA

Tel: 0141 552 3941

Jewel and Esk Valley College,

Contact: Peter MoirJewel and Esk Valley College Eskbank CentreNewbattle RoadDalkeith MidlothianEH22 3AE

Tel: 0131 657 7319

52

Stand Alone Development Funds

Capital Credit Union Trust

Contact: Capital Credit Union LtdCredit Union House46 Hamilton PlaceEdinburghEH3 5AX

Tel: 0131 225 9901

Unity Bank

Contact: Vince McErlaneDevelopment Manager, ScotlandUnity Trust Bank plcFountain House1-3 Woodside CrescentCharing CrossGlasgowG3 7UJ

Tel: 0141-332-6924

Ad Hoc Support

Bank Of Scotland

Contact: Morag FenwickDirector of Social BankingCherrybankPerthPH2 0NJ

Tel: 01738 474576

Scottish Co-operative Society

Contact: Martin MeteyardMembership and Community Affairs DepartmentRobert Owen House87 Bath StreetGlasgowG2 2EE

Tel: 0141-304 5400