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More people will use loan sharks, warns credit union

Charles Heslett
BBC, Yorkshire•@CharlesHeslett
Reporting fromBradford
BBC A man in a purple-and-white stripped shirt, standing outside the window of the Bradford and District Credit Union.BBC
Ian Brewer said Bradford and District Credit Union was focused on providing advice to members on how to save and manage money

More people will be forced to turn to loan sharks when the "triple whammy" of bill increases hits this month, a credit union has warned.

On Tuesday, household bills such as council tax are set to rise, alongside increases in energy and water charges in the coming days.

Ian Brewer is the community development officer for the Bradford District Credit Union (BDCU) - an ethical credit union that encourages savings, budgeting and lending. It has more than 10,500 members.

Mr Brewer believes people are already struggling with the cost of living and inflation, and the latest bill increases will leave many needing to borrow money, often from "unscrupulous lenders", to make ends meet.

A young woman with long, blonde hair, sitting at a desk with a computer screen and laptop in front of her.
BDCU apprentice Janka Brabcova is working with younger people to help them avoid taking out bad loans

Mr Brewer said: "Our fear is that [more] people will be turning to loan sharks and unscrupulous lenders.

"But they're going to get themselves into more financial difficulties as result.

"We're seeing a triple whammy. We've got the council tax bills going up, energy prices going up, and the water bills.

"And they are going to be sucking out people's disposable income - which is going to make things much more difficult for families that are already cash-strapped."

He highlighted Bradford Council's 9.9% council tax increase, one of the highest rises in the country.

"It's the obvious, knock-on effect," he said. "You take away people's disposable income, or even money they don't have already - and they've got to find credit somewhere else.

"And usually that is going to get them into dangerous territory, into dangerous lending practices."

'Last-chance saloon'

Last year, the not-for-profit BDCU piloted a scheme for 300 people who would normally not be given loans because their credit score was too low.

Mr Brewer said: "We got permission from the Bank of England to do to this, along with funding from the West Yorkshire Mayor Tracy Brabin.

"We modelled that 60% would not pay back the loan...it turned out to be 27% - which meant we saw a lot more people paying back their bills than we thought if they're given the opportunity to do so, because it is the last-chance saloon.

He added: "Those people have been able to increase their credit score because they've been able to get a loan and pay it back."

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