JUST when the government was displaying all the coherence of an inebriated three-legged giraffe on roller skates, it goes and makes a "joined-up" decision.
This week, for instance, it proposed relaxing the restrictions imposed on credit unions. The changes would make it easier for low-income families to access the largely affordable levels of credit offered by the unions, which operate by using savings
invested by members to offer loans to other members. These loans are only available to credit union members, who typically work or live in the same area.
Under the proposals, unions would be able to form alliances with other unions, employers and housing associations, allowing them to compete with mainstream financial services companies by making their services available to a wider range of people.
There has been some criticism of the idea. One problem is that credit unions are not always financially stable, so they should have to demonstrate financial strength in order to benefit from the new rules.
But the motive is a sound one – to protect those in dire financial straits from some of the more extortionate doorstep loans around, and from illegal loan sharks.
According to Equifax, almost a third of those worried about their credit status have taken out a so-called doorstep loan, primarily people finding it increasingly difficult to get loans or credit cards on the high street. Most doorstep options are perfectly legit but they tend to charge extortionate rates of interest. Unsurprisingly, borrowers under severe financial pressure are going to have problems making repayments of that scale. Provident doesn't levy default charges, but the financial burden isn't eased in the long-term.
The likes of Provident are far preferable to illegal loan sharks – a point the debt charities accept – but the massive rise in the numbers of people prepared to pay for such expensive loan schemes underlines the need to do more for such borrowers. Inviting credit unions to branch out is a positive step in the right direction.
NEW indicators of the economy's health came thick and fast this week, and none made for enjoyable reading. But while most were clear-cut – the gloomy manufacturing outlook for example – some needed closer inspection.
Nationwide's monthly house price survey was greeted with hysteria, with headlines implying a house-price crash akin to that in the early nineties. But while prices fell in June for the eighth month in a row, the 0.9 per cent decline represented an improvement on May's 2.5 per cent fall.
In all, it means the average price of a home in the UK is 6.3 per cent lower than it was in January, which in most areas represents merely a tiny dent in the house price growth of the last decade or so.
Unfortunately, the Bank of England mortgage approvals data released on Monday suggested that in months to come we'll be looking at more severe price falls. At which point the hysterics of recent weeks may come to seem twee and understated.
FINALLY, the Building Societies Association has revealed that savings levels increased in May. One reason for this was implied by separate BSA research, which found that 74 per cent of its customers expect house prices to continue falling in the next year. Of course, when times are tough we're more aware of our financial vulnerability, more defensive and more conservative in our spending and saving habits. And financial institutions desperate for deposits to bolster their mortgage funding are offering increasingly attractive savings rates. But although evidence that people are putting more money away for a rainy day is positive, that this generally happens when the rainy day is already upon us is a great paradox.
