Behind the row is the commendable aim of getting more people to join credit unions, to save small amounts regularly and thus have recourse to a loan fund in times of need. Credit unions don't make profits for wealthy bankers; they can pay out a dividend of no more than 8% to their savers, and are restricted from charging more than 2% a month interest on loans. Most charge 1%. Members need to have saved regularly for a while (usually about 12 weeks) before they can apply for a loan.
Politicians of both main parties have long stolen responsibility and self-sufficiency from the poorer classes. As the IEA's Arthur Seldon said in a conversation with Ralph Harris;
I was appalled by the insensitivity of governments to the efforts of the working classes to help themselves - the belief that they could not do all the necessary things. I began to sense a sort of anti working class sentiment in all parties. They wanted the State to do these things. They didn't like people to do things for themselves. They thought that ordinary people weren't capable. They forgot all the history of the working classes. The records are that the working classes were sending their children to schools by the 1860s. They were insuring for health cover and so on by 1910 - 11 when all parties in England, the main ones Tory and Liberal, with people like Lloyd George and Churchill and Beveridge at the centre, passed the infamous act of 1911 which forced the working class to insure with the State despite the fact that nine tenths of them were already covered by private systems. Politicians seemed to me to be saying you are not capable, you need us to ensure you take care of your families, which was nonsense.Many Tories and Labourites committed to the role of the central State will, like Grayling and Rooney, condemn this move. Neither trust people with responsibility for their own lives. Encouraging people to save with credit unions - and cut their ties of dependence on the State - is a good first step in allowing our people to win back control of their own lives and futures.
Hayek would approve of Purnell's suggestion. And so do I.