Bradford’s biggest credit union could be part of a multi-million pound Government contract aimed at helping people on low incomes access credit more easily.

The Department of Work and Pensions announced yesterday that a £38 million contract to modernise and grow the credit union industry so it helps more people on low incomes had been awarded to The Association of British Credit Unions (ABCUL).

ABCUL was the successful bidder to deliver the DWP’s Credit Union Expansion Project to help meet the growing demand for modern banking products for people on low incomes.

A recent feasibility study showed that modernising the industry and helping it become financially self-sustainable would enable credit unions to help up to one million more people, giving them access to banking products, debt advice and affordable loans.

It is estimated about seven million people fall into the trap of high-cost credit, with some being charged more than 6,000 per cent in interest on short-term loans. The expansion project will save consumers up to £1 billion in loan interest repayments by March, 2019.

The Bradford District Credit Union’s chief executive Andrew Bowker said it was one of 82 credit unions which were now considering the benefits of joining the shared business model project which will be run by Cornerstone Mutual Services to which the BDCU was a member.

“The initial stages of consideration are under way and the joining credit unions will be phased into the project throughout 2013,” said Mr Bowker.

“BDCU is looking for expansion in the district and we are considering whether this opportunity will assist in offering additional services to the Bradford district population.”

ABCUL chief executive, Mark Lyonette, said: “We are delighted to have been selected to run this ambitious and timely project. I look forward to working with the DWP to ensure that credit unions can expand their collaborative work and create the levels of service which will attract many more people to use their products.

“More credit unions will offer a wider range of products including current accounts, Cash ISAs and innovative budgeting accounts.

“The centralisation and streamlining of day to day tasks and the introduction of innovative modern access channels will make credit unions a much more attractive proposition to many more people and secure a solid future for the sector.”