The boss of a credit union in Bristol has described the removal of the £20-a-week uplift of universal credit as a "big blow".
The uplift, which was added to the payments at the start of the pandemic, was withdrawn from the beginning of October despite howls of protest.
At the time, Bristol mayor Marvin Rees said emergency plans were underway to help 17,000 Bristol families who would be hit by the benefits cut, as authorities braced for an increase of households in poverty.
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James Berry, CEO of Great Western Credit Union, has now said: "If you are on a very small income, which most of these people are, that £20 is a big proportion and something that you get used to - it means being able to put the heating on and getting food.
"You get used to it and not having to choose between the two.
"It has a big impact - it is about what people can no longer do."
He said that changes like that make it harder for the organisation to give loans to people, as one of their key tests is seeing whether someone can afford to pay the loan back.
Their aim is to give loans that are affordable to pay back, he explained, so if someone's income goes down, they would either have to reduce the amount they can borrow or spread the costs over a longer period of time.
Mr Berry said a demographic that often struggles to secure loans are single men who are on basic universal credit as their income is so low.
He added that it is really hard to give any sort of loan to someone when there isn't enough there for the repayments.
In those cases, they refer people to charitable organisations to help with things like food or clothes.
'The need is greater than ever'
"There is a real limit to what we can do, which is frustrating for us," he said. "The need out there for us is greater than ever.
"We have a lot of wealth in Bristol but we also have a lot of deprivation and poverty.
"There is a real need for solutions that can make people's lives better.
"Money is a big part of what makes a difference to people's lives and we would see ourselves as part of the solution and bringing people together across the city."
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The CEO said the union offers easy-access savings accounts and loans to people who may struggle to get services from a mainstream bank.
He said that, among others, their aim is to help people borrow small amounts of money in a way that is responsible and won't cost hundreds of pounds in interest.
Mr Berry said that they have a broad spectrum of clients across the South West, but that their typical borrower is a mum between the age of 25 and 45 who has two to three children and who works part time or doesn't work at all.
These mums are likely to be living in a council or housing association property, he continued, and to be living close to the place where they were born, together with owning an old car or not driving at all.
He said: "We try to know who our core members are to make sure what we offer works as well as we can.
"In general, they will be borrowing small amounts of around £400 and £500 for something like a washing machine that needs replacing or for Christmas time.
"That is a big thing at the moment as people want to spread out the cost of Christmas."
Mr Berry said that normal banks tend to offer loans of at least £2,000, but that these require a good credit rating.
However, they have found that people that go to a credit union do not tend to have much of a credit history at all, he continued, and that if they have borrowed before it tends to be from lenders with high interest rates.
"Learning about us gives them a new option to take advantage of," he continued. "We have not felt the full effect of the rising costs of living yet - there is a lag there, especially as the price cap applies at the moment.
"But this is going to affect our members more than other people as their income is more fixed."
Mr Berry said that other clients include people in precarious employment such as zero hour contracts or people born abroad who may struggle to borrow from a mainstream bank due to a lack of credit history.
These second group of clients tend to borrow larger amounts of money of up to £3,000 for things like vehicles, he explained.
"We encourage them to pay it back as quickly as possible so they pay less interest," the CEO said. "If someone is paid weekly or fortnightly, we can set up payments to that frequency - we can do a lot of tailoring that the big banks do not do.
"We like to keep things nice and predictable.
"It is important that we exist as people do not have other alternatives that work for them, or that work for them but just to an extent and in an extremely expensive way."
Mr Berry said that the danger would be that, without them, people would turn to illegal money lenders such as loan sharks if informal loans from family or friends are not available to them.
The CEO added that, since they started in 1999, they have now grown to have 20,000 members including 6,000 borrowers.
He said that people choose to save their money with them for a variety of reasons, including knowing that their money is being used to help other people in the community, adding that for them it is about people before profit.
"We get quite a lot of regular custom and 75 or 80 per cent are repeat borrowers," he continued. "We are looking for new members as we want to grow tenfold over 10 years.
"At the moment, we are giving out £7.5m in loans every years and we want to increase that to £75m in 10 years."
Mr Berry said that the organisation was known as Bristol Credit Union until earlier this year, covering the Avon area of the region, while they have now expanded to cover more of the South West.
If you would like to be featured in our Benefit Bristol campaign, or know any organisation we should include, you can contact our reporter directly on estel.farellroig@reachplc.com
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