Citizens Advice Scotland has today written to all the main party leaders in Scotland, urging them to agree to a new policy of providing all Scottish S1 school pupils with a £10 credit union account.
The idea is to help prevent young Scots falling into crisis debt, by encouraging them to save, and by making them aware that when they do need to borrow money there are alternative lenders, other than payday loans. In particular Credit Unions - which charge much less interest, and which operate more fairly in general.
The scheme is already being introduced in Glasgow, where the City Council announced it earlier this year. CAS believes it should be extended to all Scottish children, and that the Scottish government should fund all 32 Councils to do this. The cost of this would be around £500,000 per year – which we regard as ‘a bargain if it helps young Scots avoid the misery of debt’.
CAS Policy Manager Keith Dryburgh says,
“Debt is one of the most common issues seen by CAB advisers now. Currently one in four of all Scottish CAB cases are debt cases. And increasing numbers of them (around 100 a week) are in debt to payday lenders.
“So our advisers see people every day how debt really does destroy peoples’ lives. Not just their finances but their health and relationships too. It is particularly distressing to see young people in this sort of crisis, and sadly we find that young Scots are among the groups most vulnerable to it. So we need to find ways of raising awareness of the problems that high-interest loans can bring – starting at the youngest possible age.
“Debt itself is not necessarily a bad thing. So many families are finding it hard to make ends meet that frankly they have to borrow sometimes. So our message is not that people must avoid debt altogether, but that they should be savvy about it. They need to think about how much they can afford to pay back, and always read the small print and shop around to find the lender who offers them the best deal. The fact is that the big payday lenders tend to charge huge interest rates and operate in ways which trap people in debts they can’t control. So we want people to know there are alternative lenders who charge less. And credit unions are one of the best options around.
“If we can get people thinking about these things while they are still young, then that could have a huge influence on how they manage their finances throughout their lives. That’s the thinking behind this idea. We have costed it at just over £500,000 per year – which we think would be a bargain if it meant that young Scots from the misery of crisis debt.
“The debt crisis in Scotland needs many solutions, from many different quarters. We support the cap that the UK government has announced, and the other new regulations that are being introduced. But there are other things that can be done. This idea is just one more contribution to that process of helping people avoid problem debts. We look forward to hearing back from the parties and hopefully advancing this policy in the New Year so that we can promote a culture of savvy saving and safe borrowing for Scotland’s next generations.”
The letter has been sent to the Enterprise Minister, Fergus Ewing MSP, and to the opposition party leaders, Johann Lamont, Ruth Davidson, Willie Rennie and Alison Johnston. More details on the policy are in our report at /publications/mayday-payday