Why we're losing interest in union credit cards

Modernise or die' was Tony Blair and Gordon Brown's gloomy message to Britain's trade unions at last month's TUC conference. Card-carrying members will know that their unions have moved with the times, in one respect at least - their enthusiastic embrace of consumerism.

Union mailshots landing on doormats are now stuffed with bumph about cut-price credit cards and unsecured loans and the websites feature glitzy pop-up boxes with tempting offers on CDs, holidays and cut-price PCs.

You could almost be forgiven for thinking that today's unions are more concerned with flogging financial products than they are about manning the barricades. But, brothers and sisters, it isn't true. What has been called 'arcade unionism' - unions selling insurance and holidays - is very much a fringe activity and has little to do with any effort to stem the flow of members, say the unions.

'The core services unions offer are effective representation at work and a voice in the workplace,' says Paul Novak, TUC national organiser. 'If you don't deliver that, it is difficult to recruit people just on the back of membership services.'

The 'best recruitment sergeant' for trade unions remains the employer, says Richard O'Brien, of Amicus, the largest private sector trade union. 'People don't join trade unions like they join the AA for its secondary services,' he says. 'They join because they need to feel secure at work and we negotiate their wages. So what better reason is there to be in a union?'

While union membership has been haemorrhaging since its 1979 peak of 13 million, there are still seven million people who are trade union members, more than a quarter of the employed population. Such numbers apparently do give unions some collective clout in the financial services market, reckons Novak. 'You have the bargaining power of seven million and products like the TUC credit card are good value and good quality products,' he says.

Not everyone is convinced that the unions do deliver. 'They seem to be having difficulties in offering terms that are much better than those that could be gained on the high street,' reckons Gregor Gall, professor of industrial relations at the University of Hertfordshire. 'The gap between the two [the unions and the high street] has narrowed over the years as more and more providers have entered the market offering new products. If a union goes to a financial provider, then that's potentially a big market for, say, an insurer, but it isn't a real market until people start subscribing.'

Gall believes that unions' emphasis on individual-based services, such as financial products, as opposed to its collective bargaining powers in the workplace, has taken 'a back seat' since the mid-1990s.

'At one time unions did see such services as a panacea for falling membership,' says David Metcalf, professor of industrial relations at the London School of Economics. 'But they have realised that strong competition with the likes of the AA means they haven't quite delivered in the way they hoped.'

One service offered free to union members that can be a lifesaver is access to legal advice. 'That alone is worth far more than their member's fee,' says O'Brien, of Amicus.

Unbeknown to many union members, legal cover goes way beyond accidents and disputes in the workplace, and often covers the wider family (see the case study on page 2).

Forward-thinking unions are racking their brains on how best to change with the times. 'We are now approaching a position where 50 per cent of people at work have never been in a union,' comments John Lloyd, the head of policy and strategy at Community, the result of a merger between the Iron and Steel Trades Confederation and the Knitwear, Footwear and Apparel Trades last year. 'We are fast losing the social habit of being in a union. Unions fight like hell to be relevant these days.'

So how does the modern union do that? Community will formally relaunch in the new year and, as the new name suggests, will represent its members 'where they live as well as where they work'. At the moment it is consulting on what members want out of a union and, in particular, it is looking at legal services (including cover for 'domestic and personal difficulties'), lifelong learning ('the most successful trade union function of the modern era', it claims), as well as the traditional role of representation in the workplace.

Forays into commercialism are not on the agenda for Community. 'People don't join unions for cheap credit cards or deals on insurance,' says the TUC's Paul Novak. 'If you work in a unionised workplace then you are likely to earn 17 per cent more than a non-unionised workplace. That's the key financial benefit of being in a union.'

What the union did for us

Two years ago the Dewison family, of Morpeth in Northumberland, were holidaying in Tenerife when 14-year-old Natalie had a horrendous accident. She was following her father through the hotel foyer, when he passed through a glass swing-door and she put out her hand to stop the door hitting her. The glass instantly shattered and she was scarred on her upper arm and face.

'We thought Natalie was going to die because she had lost so much blood and, at best, we thought she was going to lose her arm,' said Natalie's mother, Lorraine.

She didn't lose her arm but a doctor spent three hours sewing up the wounds. Every three months since the accident Natalie has had to go to a plastic surgeon in the UK to reduce the scarring.

The family decided to take legal action against the travel company. 'I wanted to ensure this sort of accident did not happen to anyone else and to cover the cost of medical treatment in Tenerife and ongoing plastic surgery,' Lorraine said.

A work colleague advised her to contact Unison. She was doubtful. What would her union have to do with an accident in Tenerife which didn't even involve her? In fact, many unions provide free telephone access to legal advice for members and some schemes cover legal help for accidents abroad and for family members.

The dispute went to court and the Dewisons won. The lawyers were able to prove that the mechanism that caused the door to swing back broke the equivalent of a royal decree for the manufacture of safety doors. Damages were assessed at £11,540. According to law firm Thompsons, solicitors working on a 'no win, no fee' basis wouldn't have touched the case.

Lorraine, who has been a Unison and Nalgo member throughout her 25 years in local government, said: 'I have no worries about the mounting legal fees, all thanks to my Unison membership.'

What the experts think

So is there still financial power in a union? Cash road-tested some union products to see how they fared against their high street competition.

Drew Wotherspoon, of independent financial adviser John Charcol, rated the Amicus credit card, which is provided by Bank of Scotland, as 'good but ... no different from the rest of the market'. It is 'a bit of a cheek' to call it 'an exclusive', he adds. A similar card is available to members of 23 separate unions - endorsed by both the TUC and the individual unions. The card has an introductory interest rate of 0 per cent for nine months, which then reverts to between 12.9 and 15.9 per cent.

Wotherspoon was impressed, however, with the National Union of Teachers' mortgages (through Teachers Building Society), which he reckoned were 'very competitive'. For example, its three-year fixed rate mortgage has a rate of 4.39 per cent, free legal fees plus £100 toward union membership. The best three-year deal at the moment has a rate of 4.24 per cent, but no freebies.

Pensions expert Tom McPhail, at financial adviser Hargreaves Lansdown, checked out the TUC stakeholder pension scheme. 'It is doing enough so that it's not open to criticism, but it isn't hugely impressive either,' he says. He calls it 'an adequate proposition'.

'It seems that members of unions would, in the vast majority of cases, be better doing what the rest of the population does and shop around,' says Wotherspoon.