The Scrutiny Officer presented the report on behalf of the Finance Panel. He outlined the following points in the report:

·         Regret of the failed merger between Oxfordshire and Blackbird Leys credit unions due to the different operating models.

·         Oxfordshire credit union would like funding for a part time development manager and they have been informed of the Council’s grant funding process.

The Panel recommended to the Board that the Council promotes Oxfordshire credit union to Council employees.

Cllr Brown said she would be happy to promote Oxfordshire credit union to Council employees at the point that they are paying a dividend.  Promotions could involve the credit union having a ‘stall of offer’ at Council and emails and leaflets advertising its services. All promotions of the credit union would have to be put in the context of other services offered to staff.

Cllr Simmons, Chair of Finance Panel presented the report.

The Scrutiny Committee resolved to approve the report of the Finance Panel to be submitted to the City Executive Board on 15 September 2016.

The Revenue and Benefits Programme Manager talked through the Council’s approach to supporting credit union services over recent years, which was an essential part of supporting the Council’s Financial Inclusion Strategy. The

Panel heard that the evaluation report was commissioned after the breakdown of a proposed merger of the two credit unions operating in the City, whereby the smaller Blackbird Leys Credit Union (BBLCU) would have been effectively subsumed by Oxfordshire Credit Union (OCU). The evaluation report had set out what actions the credit unions could take in order to become sustainable and how the Council could support them. A meeting had been held to discuss the outcomes of the report with the credit unions. The Panel heard that OCU had followed the recommendations and addressed a number of issues, including budgeting to pay dividends, but BBLCU was now thought to be pursuing a merger with a credit union based in South Northamptonshire.

The Board Member for Customer and Corporate Services said that the evaluation report was a valuable piece of work that had made useful recommendations following an impasse over the failure of the proposed merger.  She said that the Council had spent some £100k on supporting credit unions, which was a lot of money to spend without realising the aim of having self-sustaining credit unions.

The Chair of OCU said that OCU had 100 new members, had increased lending and was trying hard to expand. OCU had also increased their capital asset ratio from 3.4% to 5% and had budgeted to pay a dividend of 1% this year, although that would be subject to a decision at their annual general meeting. The Panel heard that OCU was now self-sustaining but had some further asks of the Council. These were to activate the payroll deduction facility and promote OCU to Council staff, and to consider contributing funding for a part-time development manager who would promote OCU much more extensively on the ground.

The Panel noted regret that the merger had failed and heard that there was no prospect of this proposal being resurrected because the two credit unions had very different operating models. BBLCU wanted to continue to have a presence in the community that would not be compatible with OCU’s operating model.

In response to a question, the Panel heard that OCU did not require funding to continue to operate but would require funding to continue to expand. The Panel advised OCU to submit a funding application through the Council’s open grants programme when it next opened. The Revenue and Benefits Programme Manager advised OCU to be clear when making a bid as to what tangible outcomes the funding would deliver, such as increases in membership and income.

The Board Member for Customer and Corporate Services said that she was pleased with the progress made by OCU. In terms of promoting OCU to staff, this would require further thought and she would want to be sure that this would be in the best interests of Council employees. Most  ...  view the full minutes text for item 14

Mark Luntley, Chair of Oxfordshire Credit Union (OCU), introduced the work of OCU.  He said that OCU had been going for ten years and had £0.5m in savings, £250k out in loans and 800 active members.  This represented a 10% increase in membership over the last six months and had been achieved by working with local employers.

It could be assumed from national figures that there were approximately 2000 people in Oxford with pay day loans and that some £1.7m was taken out of the local economy in interest payments on these loans.

A proposed merger with Blackbird Leys Credit Union had not taken place because, while OCU were happy with BLCU running a volunteer based office if demand was there, an office-based cash-based model was not considered to be practically or financially viable for OCU.  OCU had found that cash cards were popular with its members and they had received only seven visitors in a six month period as opposed to 700 telephone contacts.

Mark Luntley said that the ‘Evaluation of Credit Union Services in Oxford’ report that had been commissioned by the Council was an excellent report and that OCU had implemented or was in the process of implementing all 12 recommendations.  The report also made 21 recommendations to the Council.  Of these, there were four things that the Council could do to support OCU that would be of most benefit in terms of addressing financial exclusion in the city.  These were promoting OCU to council staff, promoting OCU to council tenants, providing a tapering grant to OCU until it is fully viable and providing a subordinated loan to build OCU’s capital reserves.

In response to a question about promoting OCU to council staff, the Panel heard that the Council already had a pay in advance scheme (which had low take up) but that some staff may not wish to make their employer aware that they were in financial difficulty.  OCU provided a different scheme which required borrowers to save and would over time steer them out of debt.  OCU had agreed with other employers not to promote the higher interest rate short-term loans that they had started to offer, within very tight constraints, following a recommendation in the evaluation report.

The Panel heard that OCU had not yet asked the Council for a subordinated loan but several other local authorities had provided loans to credit unions and any loan would be paid back with interest.

In discussion the Panel observed that:

• The Council did not appear to have provided a response to the recommendations made to the Council in the evaluation report.
• Clarity was needed as to whether the Council’s Treasury Management Strategy would preclude it from providing a subordinated loan to a credit union.
• There may be an opportunity for the Council to do more to integrate Discretionary Housing Payments with credit union services.

The Panel AGREED to:

• Request a written report setting out the Council’s response to the recommendations made to the Council in the  ...  view the full minutes text for item 4