A COUNTY-WIDE scheme could help about 86,000 people who are routinely refused credit, according to new research.

The Association of British Credit Unions Ltd has examined the feasibility of setting up a union to cover the whole of North Yorkshire.

It has concluded that it is a credible idea and has come up with a plan that would initially see five staff running the union, from an office at County Hall, Northallerton.

It would take six years for the union to cover the entire county.

The report, which was commissioned by North Yorkshire County Council, will be discussed by councillors next week.

It claims that a credit union in North Yorkshire could become a flagship organisation, as long as it is set up properly.

Credit unions, or financial co-operatives, are run by boards of unpaid directors who are elected by the membership.

Members save together by buying shares in the union. These savings then provide a fund from which loans are made to members.

The report found that the number of adults in North Yorkshire who would be eligible to join such a union is approximately 432,000.

It looked at the current market place for credit in the county and found that about 86,000 people are routinely refused credit by conventional lenders.

A spokesman for the association said: "Credit unions plug the leaks in communities where money floods out of the poorest households.

"Because many of the poorest people in the community are forced to borrow from sources which charge high levels of interest and which distribute this interest outside the community, a huge outflow of earnings is created.

"This harms local individuals and enfeebles local communities.

"Our view is that a credit union for North Yorkshire is a feasible proposition, provided its development phase is adequately resourced and supported.

"Establishing it and bringing it to the point of sustainability will be a major task taking several years, but the benefits it will bring make this a highly worthwhile task."

The report will be discussed by the council's safe and sustainable communities overview and scrutiny committee on Thursday at 10.30am.