Customers and Members
The evening rather cold, walking past down and outs and students into Cheltenham Rd. A person loomed out of the dark and offered a second-hand mobile but when declined the dealer asked for a pound. The destination was Bristol Credit Union AGM, the minimal operational democracy all went though on the nod. At the start an odd incident happened , there were 30 plus members in attendance out of a membership of 9000, a man started to harague the chairman on the platform in an angry Scottish accent, the chairman tried politely to ask the man to wait till after the meeting so that they could talk, but the man got up and walked out muttering, it seemed a portent. The chair man then introduced the speaker, she from the Curo Housing Association Bath.
She proceeded to give a talk about the changes being brought about to benefits to the so-called universal benefits. Next to her was screen onto which the main points were flashed up and a dismal and depressing set of facts they were. She was concerned for the tenants many who are on benefits but she called them “customers”, the now ubiquitous neo-liberal term of management speak. A list of changes to the benefits was described, these the route to pooling all benefits into the Universal credit from the current five categories. The conflation of benefits into the universal benefit has been an opportunity to slash each category. The assessment of mobility allowances is to be restricted. ATOS the company that assesses disability is liable to classify those that have limited ability, someone who might not walk but has the use of a hand or someone who is mentally disturbed but bodily fit as liable to be declared fit for work. For those on housing benefits the criterion of bedroom sharing by children will become more stringent and those with spare rooms will be taxed by a cut in housing benefits. Children will have to share rooms to an older age. Single parents will soon have to go to work when the children are 5; it was not that many years ago when that was set at 12 . The universal benefit will mean that in 90% of the cases benefits will be paid as a lump sum on a monthly basis so generally there will be no docking of benefits to pay bills directly. The people at Curo are concerned for their “customers” and consequently worried how it will affect the housing association seeing that many of their tenants are already find it difficult to make ends meet. They fear they will have to pick up the pieces so manage rent defaults and chronic debt. The housing association is likely to see a decline of revenue together with the added costs of dealing with other problems.
It seems that the Credit Union is being lined up to help manage the anticipated problems. They already manage the money for some claimants and may be geared up to help if problems arise. Will credit unions be able to cope? From limited observation is seems that credit unions are supported by well-intentioned people as semi charities for the poor, a means to encourage prudence and prevent some falling prey to loan sharks. Social housing tenants and debt advice agencies direct those on low pay or benefits towards the credit unions. Housing associations put credit union leaflets into their information packs. There is a whiff of paternalism and reminds one of the story of the Chinese Nationalist general who lined up his regiment and ordered them all of them to be hosed down with water and then declaring them baptised christians. It’s not quite so dramatic, for with credit unions for someone to an open an account they have to pay a small fee and show documents verifying identity and address before becoming a member.
Credit unions are often be seen as mainly a source for sub-prime lending. Is this good for the credit unions or their membership? What are the cost implications and if so who will pay? Ideally they are inclusive and equitable in all senses of the word , including as career pathways, reflecting to some degree the membership profile in the election of representatives to roles of governance and selection of workers. Mutual enterprises are based on one member one vote giving the associational relationship a base of equality. In Ireland 70% of the population are members of Credit Unions so they are universal whereas in the UK 2.2%+ of the population. The Credit Unions in Ireland have shown robustness in the face of the Great Recession. In the UK until recently they have been hampered by legal restrictions and a culture that all but suffocated them, with over regulation that restricted their use and size and preventing growth to “critical mass”. As saving accounts are guaranteed they need some regulation but not a dead hand. Financial mutual fund enterprises need to have sufficient size and financial base to be viable or effective. Their size and range were so limited that the conditions for viability were restricted to a few cases where there were already strong associations such as police forces. Recent changes in the regulations of credit unions prompted by criticism have gone a long way to unshackle credit unions and if they are prudently administered now have a chance to develop. If used in a smart and creative ways credit unions have the potential in the long-term to be the financial hubs for new developments in a self emergent social economy while also serving small business and continuing their core function which is as a cooperative means to save and provide loans to members. They act as retainers and recyclers of mutual wealth for the benefit of their communities.
The formalities of the AGM were run through, a long stop of minimal democracy that signs off and approves the accounts and appointments to board of directors. This rather overlooked process authenticates the mutual enterprises democratic character. The chief executive then got up and gave a short account of what had happened over the past year and then answered a few questions.. He talked of members and the someone from the platform said that they were acting on behalf of the members , which is the form of relationship in a mutual. The Bristol Credit Union is developing well, it is consolidated from several smaller credit unions from Bristol area, parts of Gloucestershire and Bath and North East Somerset, the area covered by the old Avon County. In the last year its membership has grown from 5898 to 6594 and total savings have grown from £1,513,896 to £2,061,894 in the accounting year-end in September 2012; a health growth. An interesting fact is that the average individual savings have grown from £256, £312 and £ 347 in the last three years. A tentative conclusion is that this shows the effect of the credit unions in building up the wealth of both the community in mutual association while also slowly help building up the savings of individual members.
A new dimension to the Bristol Credit Union is the Bristol Pound, this scheme is run through the credit union and can be transacted by using mobile phones. The Bristol pound is brought for a pound stirling. The idea is to set up a group of local traders who will accept the Bristol pound as currency which they and supporting members of the public can use within the group as a means of exchange so keeping trade within the city. Five hundred traders and four hundred members of the public have signed up. The Bristol pound can be cashed in for a pound stirling for a small fee of 3p. The public is invited to buy the Bristol pound to support the local economy. A similar scheme in Germany has been established in a significant way. As it is there may not be enough advantage for the Bristol pound to take hold. There is the possibility if legally acceptable that the local authorities be allowed credit in the Bristol Pounds subject to guaranteeing payment in stirling should there be a rush to convert from Bristol pounds to pounds stirling. This is a way of the community generating credit in its own currency and gives a positive advantage for the council in straitened times. This suggestion needs scrutinizing. A local currency belonging to the community in partnership with the credit union, if it works might benefit the community by anchoring wealth and trade.
The tenants of Curo are designated as “customers” by their directors and managers. Many are on benefits or on low pay. In the last thirty years the term customer has been subtly introduced and many have unwittingly assimilated this category without thought, so that passengers, patients and tenants are now all generalised as customers. This is not an innocent development but the result of the work of management consultants who seek to change management culture , to one which encourages each tenant to perceive themselves as an isolated particular. Sophisticated management seeks to control and manage throughout an organization, workers, small shareholders , clients and each category is more pliable as atomized individuals. This ethos for example was hostile to the nationalised railways were the relationship was seen as collective as passengers, who were then designated customers as part of the change of culture which went with the ideology of privatized railways. Designating the passengers as customers and ironically calling them sir and madam, is a smokescreen to cut subsidies and raise prices while he or she squeezes into a well painted but overcrowded carriage. The term “customer democracy ” has become prevalent but is an oxymoron for a customer is empowered in the market to the extent that they have purchasing power, while the democratic principle is based on one person one vote, an equitable designation! Of course customer rights should be respected and overseen by democratic governance which is the principle which must prevail if democracy is not to be undermined. The limited democracy we have is based on a universal franchise without property qualification and was established after prolonged struggles. But to return to the narrative, at the time that council housing in Bath was turned over to the Somer housing association which proceeded Curo some councillors talked of three elected tenants on to the governing body of the association, this would have resulted in some democracy based on tenant co-determination. Instead today Curo’s board of directors can co-opt a chosen token tenant director from the occasional person that puts themselves forward for selection. The tenants became customers instead enfranchised stakeholders, a status inferior to that of a council tenant, as flawed as that designation became.
Some will dismiss this as a “chattering class’ issue, such quips are meant to shut down critical examination and thought on the long-term detrimental effects on those cast into disempowerment. But it will often be the very same people who will go on about the dependency culture . There will always be some people who are disadvantaged through bad luck , those who are ill or handicapped and needing support. There will also be some cheats and freeloaders; these more thick on the ground among the better off than the worst off on close inspection! If people are cast into disempowered supplicant relationships then they will tend to become socially and economically disabled. It seems that the very agencies that are there to support people can unwittingly undermine them. The disconnect is illustrated by the fact that 95% of members of parliament ( MPs) are graduates, but only at most 30% of the population have degrees so making the principal councils of government seriously unrepresentative of the large category of people. An apartheid has developed where those without wealth or education are shut out of nearly all areas of governance and other avenues of reprentation. This imbalance of powers which goes with weak checks and balance in the governance is part of the current “take all” political economy. A socially unhealthy feature of this is the general attack and undermining of trade unions. In the past they acted as a check on the powers of corporate financial capital and represented at their best the common people. There are real consequences, the gap between the rich and poor grows and will continue if another direction is not taken.
Recovering Mutuality and Solidarity as Principle and Practice
There is a strong association historically between mutual enterprises, cooperatives and trade unions which was driven by social and economic stress. Over time this has loosened and the relationship has been all but forgotten. It is becoming clear that we have entered a period of prolonged economic and social stress which impacts badly on all but especially the poorer sections of our people, who apart from their woes are now being stigmatized and made scapegoats for the economic problems for which they are not responsible. It is also clear that the solutions presented by institutional power are inadequate and largely self-serving . They do not know how nor are capable of solutions for a significant sector of our people. There is a need to develop solutions that are inclusive by direct agency; communities in solidarity creating their own solutions as social enterprises. This does not exclude political driven solutions in the future. Mutuality and solidarity are not only principles but have very practical applications, unions, mutuals, and cooperatives are all solutions to problems and can be used in radically new and creative ways leading to the development of enterprises that work universally . They need working on. Recently Len Mccluskey gave a talk at the LSE indicating a change of direction for the UNITE trade union aiming to relating beyond just workers. They are extending their work into communities and one feature is working with credit unions to provide non exploitative credit and cut out loan sharks. Such alliances hold promise and can help develop more direct solutions. Credit Unions are a modest step towards inclusive solutions and are a move in the right direction which bring a bit of democracy and subsidiarity to finance Most people can join and support them so participating in helping the construction of more equitable outcomes . A change of attitude and how these social enterprises are understood might help. A credit union worker stated that few were interested in the credit union being a mutual as such, but democratic enterprises need a minimum of membership engagement to remain alive, so efforts ideally should be made to make membership more interesting, inclusive and meaningful. How can this be done?
Perhaps the man who walked out of the AGM might then feel more inclined to stay.
