STAFF at the long-running Blackbird Leys Credit Union have vowed to find new ways to keep the service going after being refused funding by Oxford City Council.

Based at Blackbird Leys Community Centre, the credit union has offered a financial lifeline to the community for decades, with about 100 users a month.

At a meeting of the council’s city executive board on February 11 last Thursday it was agreed not to award any of the £10,000 which the union requested for the second year running.

Jim Hewitt, who has helped run the credit union for 20 years, said: “This means we will continue to struggle. We don’t look like closing, but we may reduce do look like reducing services.

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“Credit unions are treated far more strictly than banks. By law we have to keep a certain amount of reserves and if that starts to drops we have to cut our expenditure.

“Unless we get some funding in the very near future, we will have to lose our staff and probably cut our opening hours.”

At present the credit union has three paid staff members and is open four days a week. It offers low-cost loans of between £500 and £2,000 to people in Blackbird Leys and Greater Leys and also lets its members save money or cash benefits and wages. At the moment about £150,000 worth of savings is stored at the credit union.

Loans are generally paid in a timely fashion but Mr Hewitt said this was because staff were “very careful” about making the loans and who receives them.

In a statement included in the minutes from the meeting, the reason given for rejecting funding was: “With only 8.75 per cent of members’ savings out as loans, the panel were very concerned about the lack of sustainability for this organisation.

“It is unclear what overall service the organisation is providing because their main business appears to be payment of benefits, wages and cashing cheques free of charge.”

Mr Hewitt, 70, was made an MBE in the 2012 New Year’s Honours List for “services to financial inclusion in Oxfordshire and to the local community”.

He added: “There is a need for the credit union and it provides a valued service.

"Unfortunately it isn’t one that generates a profit. We have a huge number of people saving and a high level of savings, but all the work we do arranging for people to get cash has no charge.”

For some time staff have been looking at a merger with one of Oxfordshire’s larger credit unions to give them extra security.

The process could take one or two years but would remove the uncertainty around grants.

Mr Hewitt said the credit union was “very keen” on a merger, adding: “There would be room to use the big stack of savings we have to make safer loans in various parts of the city, while increasing the amount of lending here in Blackbird Leys.”