Credit union's charge threat; Cash wrangle over hard-up workers' savings scheme

Evening Chronicle (Newcastle, England), May 29, 2008

Byline: By PETER YOUNG Political Editor

A CREDIT union which helps hard-up families could face an uncertain future unless a cash wrangle is resolved.

The threat is to the MoneyWise project, opened in Newcastle in 2003, following proposals by the city council to levy a new payroll charge.

Many of MoneyWise's members are low-paid council workers and their savings are deducted by the Civic Centre from wages.

The council does this free, but is now planning to introduce a 1% service charge which would cost the project around pounds 29,000 a year.

The charge has been suspended for a year after protests and Liberal Democrat council leaders say they are seeking a solution with project managers. Labour councillors are urging the Lib Dems to scrap the idea.

MoneyWise is a non-profit making co-operative, owned and run by members, formed following the amalgamation of 13 credit unions, including one for employees of Newcastle Council.

It has around 4,500 members, including 2,300 council workers, who save money regularly and are then able to borrow at low rates of interest.

Chief executive officer Andrew Breese welcomed the decision to waive the charge for 2008-09 and urged the council to make a long-term commitment. "Charges would undoubtedly effect the long-term operation of the credit union he said.

"The union receives deposits from more than 2,300 members via the payroll deduction and as a mutual cooperative these payments form a significant contribution to the Money Wise business plan.

"Any charges will be passed on to the whole membership. "At a time when credit unions are seen as a key tool in the Government's financial inclusion strategy, we would urge the council to consider the long-term sustainability of the credit union and recognise the important role it plays One Labour councillor, Sir Jeremy Beecham, said: "The credit union is faced with a proposed charge which could have serious consequences. It's a rather mean-minded cut the council is trying to impose Labour councillor Veronica Dunn, who will raise the matter at the council next Wednesday, said: "Credit unions play an important part in combating financial exclusion.

"Proposals to levy a charge would endanger the existence of the credit union The Lib Dem executive member for community safety and regulation, Coun Anita Lower, said: "The proposal to charge an administration fee to the credit union for managing payroll deductions has been waived for the current financial year.

"The council has met with the credit union to identify opportunities to reduce the administration involved in processing payroll deductions and ensure value for money is achieved for its members and the council tax payers of Newcastle.

"We fully appreciate the valuable work undertaken by the credit union and we will continue to support it."

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OPPOSED: Sir Jeremy Beecham