The Growth Fund
Modernising and expanding the third sector
The lack of affordable credit for the financially excluded (people on low incomes in deprived areas) has long been a source of concern for Government, and community-focussed organisations. Although DWP offers budgeting and crisis loans through the Social Fund, this lack of affordable credit often means that financially excluded people turn to high cost doorstep lenders and even illegal loan sharks which can result in spiralling debt problems.
In 2004, government announced the Growth Fund to increase the availability of affordable personal loans via third sector (not-for-profit) lenders such as credit unions and community development finance institutions. HM Treasury invited DWP to administer the Growth Fund.
The Financial Inclusion Fund, which paid for the Growth Fund, ended March 2011. A full evaluation of the Growth Fund is available on the HM Treasury website.
Support for the third sector, building on the former Growth Fund, will continue from April 2011. We are providing up to £73 million, over the next four years, to support third sector organisations that are ready to expand their service. This is to benefit many more financially excluded people by giving them access to affordable bank and savings accounts and other financial services that meet their needs.
We are coordinating a six month feasibility study to examine the scope and the options for the modernisation and expansion of the sector.
During the period of feasibility testing credit unions and other community financial institutions that already hold DWP contracts will have the opportunity of extending those contracts, subject to DWP selection criteria.
Following feasibility testing, decisions will be made on the way forward and a further announcement will be made.
