4. Will the Cabinet Secretary clarify the allocation of Welsh Government funding to credit unions following the recent update to the Wales infrastructure investment plan? OAQ52191

Credit unions play a vital role in strengthening the financial resilience in our communities. As part of the Wales infrastructure investment plan mid-point review, I announced an additional £1 million over two years to support credit unions across Wales.

This week, I'm joining Michael Sheen as a new patron for Credit Unions Wales and I'm delighted to see this positive outcome of Welsh Government collaboration with credit unions in Wales as part of the financial inclusion strategy, which you've now endorsed with the allocation of financial transaction capital. Would you agree that this is precisely the way we should be using financial transaction capital, to meet Welsh Government goals of promoting social justice by supporting our credit unions? This allocation will help meet the challenging capital asset ratio requirements, which have changed in the last couple of years—particularly challenging for large credit unions—to ensure that we can help the growth and viability of credit unions in Wales. 

Can I begin, Llywydd, by congratulating Jane Hutt on her new role as patron of Credit Unions Wales? She's right to say that the reason we are able to provide financial transaction capital is because there are new challenging capital asset ratio requirements set out by the Prudential Regulation Authority, and those capital-to-asset ratios are mandatory. Some credit unions in Wales have struggled to make sure that they are able to match those ratios, but they are able to produce plans that show how they can meet them in the future. An injection of financial transaction capital allows them to shore up their balance sheets while those plans are carried out. That's why, in discussion with the sector, we've been able to put forward the assistance that we are able to. 

Can I just add our support to efforts to increase the capacity of credit unions? At the moment, according to the Money Charity, we spend £139 million per day on repayments and personal debt. It's absolutely incredible. And credit unions are a key part, I think, certainly for people in limited financial circumstances, but more generally as well, potentially. So, it's organisations like Dragonsavers in RCT that need to have their role expanded, and, you know, we can look at many countries—the United States and, much closer to us, the Republic of Ireland—that have a much more extensive financial services sector that embraces credit unions.

I agree with the Member entirely. Credit unions provide affordable credit and responsible lending and they are a lifeline for many people who, if they were obliged to borrow in more expensive parts of the market, would be part of that astonishing sum that the Member set out in his supplementary question that is being paid back all the time. In addition to the £1 million that I was able to make available through the Wales infrastructure investment plan, colleagues have recently announced £844,000 of Welsh Government funding to support credit unions over the next two years. There are 19 different projects that will be supported by that money, and they are all designed to do what David Melding suggested: to find ways of drawing more people into credit union membership in Wales.