As the UK grapples with a deepening cost-of-living crisis, a group of influential Labour MPs have called on Chancellor Rachel Reeves to support a major expansion of credit unions. These community-based financial institutions, supported by Queen Camilla, are seen as an ethical and affordable alternative to high-cost lenders, particularly for service personnel and low-income individuals.
The MPs, including several parliamentary committee chairs, have urged Reeves to enhance the upcoming Financial Inclusion Bill by adding a duty on every housing association to promote credit union membership to their tenants. They have also requested that credit unions be granted access to the government’s Help to Save product, which offers a 50p bonus for every £1 saved by those on low incomes.
The letter, seen by The Guardian, states: “Since 2010, many opportunities to help credit unions expand in the UK to offer more affordable credit and better savings rates to far more people have been missed. Given the cost of living crisis, the need to encourage more investment in all our communities, continuing activity by loan sharks and the ongoing retreat of banks from all but the wealthiest high street, a renewed cross-government focus on the future expansion of credit unions is overdue.”
Credit union membership in the UK has grown by 9% between 2020 and 2025, reaching over 1.5 million members. Outstanding loans amount to almost £5 billion, with nearly half of this accounted for by credit unions in Northern Ireland. However, this figure is still less than one-twentieth of the estimated £120 billion of outstanding non-mortgage financial debt held by UK households.
Gareth Thomas, the Labour MP for Harrow West and one of the signatories, highlighted the success of military credit unions in the US, which have become a model for the three such institutions in the UK. These include Serve and Protect, First Defence Finance, and Forces Finance.
In 2014, Queen Camilla revealed that she is a member of London Mutual, a credit union that serves those who live or work in the boroughs of Southwark, Lambeth, Westminster, or Camden. The Queen has previously commented that credit unions should be seen as an alternative to the payday loan industry.
The signatories, which include the chairs of the Defence, Business and Trade, and Justice committees, as well as several backbench Labour MPs, have called on the Chancellor to adopt a series of measures to double the size of the credit union sector. These include a “right to save” for all employees, with the option to have contributions deducted directly from their pay, and a requirement for social housing providers to promote credit unions to their tenants and staff.
With the cost of living crisis deepening and the retreat of traditional banks from many communities, the expansion of credit unions could provide a vital lifeline for low-income Britons, offering ethical and affordable access to financial services.