As I wrote yesterday, the announcement via interview by the Archbishop of Canterbury that he intended to do Wonga out of business appeared to lack a certain amount of planning. After I had posted my blog I travelled to Hove Town Hall for a meeting with some Faith Leaders and Council Officers. The meeting had been planned months earlier and it was intended to explore how the Rabbis, Imams and Priests could help build up community resilience as we undergo a period of severe challenge for many of the poorest in our communities. One of the presentations was by the East Sussex Credit Union and the discussion inevitably turned to the decision by the Church of England, to work with Credit Unions.  All present were of the opinion that any reduction in Pay Day Lending and its much more insidious cousin, Doorstep Lending was to be welcomed. However it was clear that none of the people attending from the Church of England had received any warning of the Archbishops announcement and those involved in the Credit Union were equally unprepared. Later on in the day it was revealed by investigative journalists that the Church of England itself was investing money from its pension fund in Wonga, albeit through a circuitous route, and completely inadvertently. A route that no doubt will be closed very soon.

More is now emerging of the interview itself and the context including this article. As the Third Sector piece points out, one of the challenges if the Archbishop is to get his way, is that Credit Unions are not commercial banks. A recent DWP report has suggested they are not sustainable, needing grant funding to ensure that the costs of running these organisations can be met. A great deal has been done to improve matters and one of the challenges is attracting enough blue chip borrowers to the organisations who can be charged commercial rates of interest, so that people on low incomes can borrow and invest at discounted rates. The DWP itself, according to the article have just raised the rate that the Credit Unions can charge from 2% to 3%. This is clearly far lower than any rate set by a bank, and bearing in mind the Billions that the state has ploughed into Banks that were ultimately rewarding shareholders, it is clear that we need the Government to get their ducks in a line too.

None of these issues are easy to resolve. There are competing cultures and complex structures to circumnavigate. At the Hove Town Hall meeting (which began at 11.45am) it was revealed that the Council had already written to the Bishop of Chichester to ask what plans he has to respond to the announcement from the Archbishop that emerged around 4 hours earlier. Local Government can respond to opportunities at that pace. It is likely that for the Bishop to respond with a meaningful answer having consulted the 40 or so Priests in Brighton & Hove, and for them to have consulted their parishioners will take several months. In the meantime the newscycle will have moved on, but many individuals may well have turned up at their local church expecting to borrow some money. It seems incomprehensible for the Archbishop not to know that around £100,000 of Church money was invested in Wonga. However if you have a Pension fund of some £5.2Bn that you want to invest ethically in a manner that the Archbishop would approve is a real challenge. This is money that will be needed to pay pensions for decades to come and ethical investments that can provide good returns are more limited than one might imagine. Finally to run credit unions across the country in a manner that reduces dependency on lenders like Wonga in a professional and sustainable way, yet that ensures that local ownership is achieved is far from simple. To then place the decisions about lending rates in the hands of a Government Department, the same department that is implementing the welfare reforms, being run by the Minister who thinks that foodbanks create poverty shows that the challenges here are immense. If we communicate effectively we can hope to address some of those challenges. However without reliable communications we will really struggle.