Challenge Poverty Week: Affordable Lending

The impact of Universal Credit has led to soaring debts. Rent arrears owed by Fife Council tenants have now reached £120,000 a month – money which should be used to build new homes and repair existing council properties.

In August a report which went before town councillors confirmed that two thirds of 3060 council tenants in Fife receiving Universal Credit are now in arrears.

It’s a situation in danger of spiralling out of control and it’s being fuelled by the fact that Universal Credit is forcing people to wait five weeks or more for a first payment – five weeks in which they have to somehow pay the bills and feed their children.

Under the Universal Credit system people awaiting a first payment can also be offered a loan to tide them over, but this must be paid back; an unacceptable solution which penalises people already on the breadline.

The Scottish Welfare Fund offers emergency payments but applicants must be referred through, for example, Citizen Advice or the Job Centre.

People on benefits have always struggled to make ends meet, as are an increasing number of ‘working poor’ trapped in zero hours contracts. Payday lenders who charged eye-watering interest rates for short term loans cynically exploited vulnerable people and I certainly won’t lose sleep over Wonga’s misfortunes.

However there is an alternative. Credit unions are a not-for-profit financial co-operatives which provide accessible savings, low cost loans and help members to manage their money more effectively.

As they are owned locally and controlled by individual members and volunteers, not by external shareholders or investors, their emphasis is on providing the best service to members, not maximising profits.

Kingdom Credit Union – recently rebranded as the Kingdom Community Bank – is based in Glenrothes but serves the whole of Fife with satellite branches in Kirkcaldy.

It’s popularity is increasing – so much so that a new collection point opened in Cowdenbeath today (Thursday), and can be accessed at the Maxwell Centre every Thursday between 11am and 1pm.

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