An Interview With Gareth Thomas MP

Updated: Jun 29




The cost of living crisis is having an undoubted impact on the financial well-being of families across the UK.

Zync Digital caught up with Labour MP for Harrow West, Gareth Thomas, to discuss the vital role that credit unions and community banks can play to build resilience in the face of rising energy and living costs.

Zync Digital

Gareth thank you so much for joining us today.

At Zync Digital, a big part of our mission to raise awareness about credit unions and ethical lenders in the UK. Where was it you first became aware of credit unions and community banks, and what has changed in the sector since then?

Gareth Thomas MP

I first became aware of credit unions when I was a young councillor in in Harrow. Harrow then was seen as very much a leafy well off borough, but there there were clearly pockets of real poverty and I was just really interested in how to tackle poverty, and what I as a counselor could do about it.

That let me to the co-op movement, and in particular to credit unions. I think credit unions are a great force for good. I'm struck by the power of credit unions, particularly in the United States and in places like Ireland and the Caribbean and pleased at the growth of the credit union movement in in the UK.

They’re becoming slowly more recognized in the UK, and are seen as an ethical alternative to payday lenders and the exorbitant amounts of interest that they can charge.

Zync Digital

You mentioned credit unions becoming more recognised.

For us, the biggest obstacle we find is not enough people know about credit unions, especially amongst younger generations. In your words, how would you describe a credit union to somebody who hasn't heard of one before?

Gareth Thomas MP

A credit union is an organization that will help you improve your finances by everybody poolling their funds together, it'll provide you with easy access to affordable cheap loans when you're in a crisis situation and you can also earn interest on your savings.

Whilst your money generates interest, it’s also going to help other people who may be in desperate need of financial help too.

Zync Digital

I suppose we've spoke about what is important about credit unions to an individual, but from a wider perspective, why would you say that they're important at national level?

Gareth Thomas MP

Well, I think credit unions are important because they help people to manage debt. They help people who don’t have much by way of savings to get access to finance very quickly when they need it.

As you know, we're in the middle of a cost of living crisis now and people budgets are really, really tight in many cases, so if something goes wrong - say you suddenly need to buy clothes for your children to go to high school, and you needed to get a loan to do that, instead of going and having to pay exorbitant sums of money and having a fairly unappreciative computer chase you for that money you can go to a a credit union, get a loan, and not have to pay huge rates of interest.

You can talk to someone about how you pay that loan back, and it's just a much calmer, less stressful way of getting a bit of help.

Zync Digital

Gareth, you've discussed in the past the ‘right to save’ - how would you describe that for us?

Gareth Thomas MP

In my view, everybody should have the right to go to their employer and to say I want to save with a credit credit union and I want you, my employer, to deduct an amount from my earnings and send that to a credit union. So it's like a direct debit, but it's done by the employer into the credit unions.

Ultimately, it’s your decision, you can stop it at any point., but your employer should should help you to save where they can.

The good employers do that already and we've seen from work that has been done with Leeds Credit Union with employers in Leeds, that where people are given that right to save, not only do they save money with the credit union, it improved their sense of wellbeing, it increases the credit union’s strength and it helps to make a real difference to the lives of people who are often on lower incomes.

Zync Digital

Absolutely, and even from the businesses’ perspective, the things associated with financial exclusion and stress created by debt - if those things are taken care of, then workforces tend to be more productive, more happy and mental health tends to improve as well.

Gareth Thomas MP

Definitely. And thee right to save with the credit union is not going to lead to huge costs for business. Most businesses will already have some sort of arrangement whereby people can give to charity through their pay packet or can belong to a trade union and and pay directly to the trade union. So what we're simply saying is just extend that to to credit unions and allow people to save with their with their local credit union.

Zync Digital

What would you say sets of credit union apart from High Street banks, for example?

Gareth Thomas MP

What sets a credit union apart is that there will always be someone you can talk to about your finances, you won't have to pay big rates of rates of interest, you get a competitive rate.

And your money instead of when it makes a, surplus or a profit, it's not going to some overseas shareholders, or some already very which rich person it's going to make a difference in your in your community. So I think actually the government should go out of its way to promote credit unions. It isn't doing so at the moment, but it seems to me that they are an obvious part of the response to the the cost of living crisis.

Zync Digital

What are the biggest sort of financial challenges that are faced in the UK at the moment?

Gareth Thomas MP

I think for many people it’s energy prices, which have rocketed. For an average household you're paying about just under £2000 per year. That, if all the predictions are right, could rise as high as £3000 by October, as energy bills potentially go up again. You add into that mix the impact of inflation on food prices, and people's finances are being squeezed very severely and in incomes are not rising to match.

Any way that you can reduce your costs is crucial - and this is where credit unions come in, who may be able to help reduce the amount of interest you're paying on loans and credit cards, for example. A credit union can make a can make a small but considerable difference to the quality of life for people.

Zync Digital

The cost of living crisis is something we're finding a lot in our work with our credit unions clients. How do you think things are going to play out in the next 12 months - do you think we'll still be in a cost of living crisis?

Gareth Thomas MP

I'd love to say that we will be through it very quickly but I fear that's not going to be the case, because it doesn't look like the the government has a plan to help people.

With the costs of energy bills and inflation, the worry is, the Bank of England and others have talked about potential recessions and certainly talked about inflation being around for a while. So I fear for the future for many people in my constituency. What I would like to see is a windfall tax and an immediate reduction in people's energy bills - that's something that other countries have been able to do. I think we're going to have to lift benefits for people, particularly Universal Credit. It's worth remembering that many people who are in financial trouble, or in work, as well as people who for all sorts of reasons are not able to work

Those would be my top immediate things, but actually you need a range of support. This is where I think the the government should be thinking slightly longer term.

There is some talk that there are going to be a some changes to financial services legislation, with a few measures to help credit unions, and I'm certainly going to be pushing for those measures to be to be expanded.

Zync Digital

If families are facing financial difficulties at the moment, what support is out there for them?

Gareth Thomas MP

Well, if if you're in a credit union now, certainly talk to your credit union for advice, because the credit union will know where where the best agencies are with the best advisors to help you in terms of your personal circumstances.

But, Citizens Advice is always a great starting point, as well as a great organization called StepChange which helps people who are in debt to get out to get to a place where they're managing their debt and and out of trouble.

Zync Digital

In terms of the future, is there anything that you think credit unions could be doing more of in the future?

Gareth Thomas MP

I'd love credit unions to offer a whole range of financial services to be more visible on high streets to draw to draw people in. And I'd love them to work with employers to advertise credit unions - some do already and that’s fantastic.

And in a sense we need to persuade bigger organisations to work with local credit unions, to advertise credit unions, so that people can see more of their services and so that credit unions become more visible.

Access to insurance would be one thing, and access to mortgages which some credit unions do, or providing more of the quick loans which most credit unions are now doing. As credit unions can can build their financial strength, more of these services can be can be offered. And I would love to see credit unions being as big in the UK as they are in in the in the United States, Ireland and the Caribbean.

Zync Digital

If Labour were to come into power how would they help credit unions in the ethical lending sector generally?

Gareth Thomas MP

If I'm honest with you, I haven't had that conversation directly with a with Rachel Reeves and the Shadow Treasury team, but I know they're sympathetic to credit unions and are keen to see how we can expand their impact.

I'd hope to persuade the the Shadow Treasury team, if we haven't persuaded this government, that we should commit to th eright to save, to give that guarantee right for people to be able to save with a with a credit union. And I just like to see huge amounts more marketing of credit unions because they're one of the great secrets of British financial services. You know they are such a huge force for good if if people can only be put in touch with with credit union and become aware of them.

Zync Digital

We've noticed how active and supportive you are of the ethical ethical lending sector. In your experience of social media in particular - how has that fit into into your performance as an MP, has it being positive or negative?

Gareth Thomas MP

Well, it's probably one of the biggest changes in in communications, I suppose, over my time as an MP. Instead of spending huge amounts of energy producing leaflets to put through the doors of your constituents, you're now needing to communicate through social media. And I think that's only going to increase, so the great thing about an organization like yours is that you're offering access to digital communications which the bigger financial services players take for take for granted.

So, you know all power to your elbow in working with with credit unions on those issues. I think that's my sense of the biggest thing that credit unions continue to need is that access to communicate, that access to explain who they are and what they are with with more people.

Zync Digital

Thanks Gareth! Anything further to add?

Gareth Thomas MP

I suppose the last thing I'd say is every employer over a certain size should be required to offer that access to to a credit union. You know the good ones already do it, but I I can't understand why councils and housing associations and civil service departments don't all do that anyway. It should be a standard thing, so that's certainly one thing I'll keep pushing for. Thanks for your time and all the power to your elbow in helping credit unions and community banks.




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