£25,000 grant is a credit to city council

City of York Council leader Steve Galloway is set to use part of a £100,000 underspend in the authority's annual budget to help the fledgling organisation, which is being set up to help fight poverty in the city.

The union - which will encourage members to save and gives access to cheap loans - had originally sought financial support during the annual grant allocation process, but the application had been deferred because of the council's difficult financial position.

An assurance was given that, if there was an underspend on the 2004/05 budget, then the grant application would be reconsidered.

A report to the authority's executive meeting, to be held on Tuesday, reveals that the council has underspent its £158 million budget by about £100,000 - opening the way for the application to be reviewed.

Coun Galloway said: "Officers of the council and executive members have been very prudent in the way that they have managed the council's budget.

"The full contingency provision has not been needed and we are now in the position to reconsider this application from an organisation which we believe could make a lasting impact on poverty in the city. I am pleased therefore to confirm that the council will be providing additional funding to help with the setting up of the York Credit Union."

It is expected that the credit union will become self funding after four years of operation. The union offers cheap finance arrangements to those who otherwise would have to pay interest rates of as much as ten times the credit union rate.

Mike Horncastle, York Credit Union study group development manager, said: "We are absolutely delighted. It is something that we are working long and hard to achieve.

"Now that we are in a position for the council to make this grant, it will allow the credit union to launch this year.

"Our target is to recruit 1,000 members in the first year and this is a very important grant."

Updated: 10:29 Friday, June 24, 2005