29.06.2012
CDFA’s Ben Hughes welcomes investment into the social lending sector – but says more is needed to reach all communities across the UK.
The Department for Work and Pensions recently announced that up to £38m of investment over the next three years, in addition to the £13m invested last year, will be made available to modernise and expand ‘credit unions’ – that is, third sector social lenders, including Community Development Finance Institutions (CDFIs). The fund is intended to help social lenders to purchase new IT systems and infrastructure.
DWP had announced in March that it would be making an investment of up to £73 million over four years. However, the £51m in total funds announced is based on recommendations put forward by the DWP Credit Union Expansion Project Steering Committee. It is unclear why the committee recommended investment significantly lower than originally envisioned.
CDFA Chief Executive, Ben Hughes said:
“Investment into the social lending sector is always welcome. Indeed, such investment is critical in helping to ensure fair access to affordable credit by all households across the UK. It is estimated that around three million low income households lack access to the appropriate finance they need.
Social lenders can make a real difference, but the sector would require substantially greater investment – not only into existing credit providers but also in support of new social lenders where none exist – in order to reach all communities across the UK. CDFA urges DWP to recognise the increasing range of social lenders operating in this market in addition to credit unions, such as CDFIs and other ‘social investment finance intermediaries’ to reflect the increasing diversity of provision.”
Where next?
- What is a CDFI?
- JUST Finance
- CDFA Members’ directory of Community Development Finance Institutions
- DWP Press release on the £38m fund
- Third Sector magazine article, “Credit union fund will be worth 30 per cent less than government promised.”