A group of Labour MPs, including several committee chairs, has called on Chancellor Rachel Reeves to support a significant expansion of credit unions in the UK. The MPs argue that this move would increase access to cheap credit for millions of low-income individuals, especially during the ongoing cost of living crisis.
In a letter to Reeves, the MPs propose enhancing the financial inclusion bill currently before Parliament. Key recommendations include requiring every housing association to promote credit union membership to their tenants and granting credit unions access to the government's Help to Save product, which currently is only available through mainstream lenders.
The MPs highlighted that credit unions have struggled to gain traction in the UK compared to other countries. However, membership grew by 9% between 2020 and 2025, reaching over 1.5 million members. Outstanding loans total nearly £5 billion, with almost half in Northern Ireland, though this remains a small fraction of UK household non-mortgage debt.
The letter, signed by figures such as defence committee chair Tan Dhesi and business committee chair Liam Byrne, calls for a plan to double the size of the credit union sector. They also urged the Prudential Regulation Authority to ease lending rules between credit unions to help them manage financial security and expand services.
Credit unions, including military-focused ones supported by Queen Camilla, are seen as ethical alternatives to high-cost lenders. The MPs noted the contrast with the US, where military credit unions have become major lenders, and called for renewed government focus to counter bank branch closures and loan shark activity.
