VOLUNTEERS at a community savings scheme that has hit financial difficulties are pinning their hopes on an eleventh hour rescue package.

South West Durham Credit Union (SWDCU) is asking Durham County Council for a £70,000 grant to help it merge with two other unions.

SWDCU, which operates from Church Street, Shildon, and has outlets across south west Durham, has been struggling for some time.

Before Christmas its 840 members were dealt a hammer blow when they learnt the Financial Services Authority (FSA) had frozen its activities.

A spokeswoman for SWDCU last night reiterated that all of the deposits were safe and covered by the Financial Services Compensation Scheme (FSCS) However, she stressed that SWDCU had not closed yet and that they were still hopeful that the council would be able to offer a lifeline.

"We recognise that this situation has been going on for quite some time and we have taken advise from the FSCS," she said.

"Everything they need from us is literally boxed up and ready to go in the event Durham County Council cannot help us.

"We are hopeful though and we feel that it would be a terrible loss if SWDCU was to close down.

"Without credit unions many people turn to doorstep lenders who we’ve seen charge astronomical interest rates of 300 and even 700 per cent SWDCU members hold more than £140,000 in shares and £101,000 in loans.

The FSA stepped in last November and froze its activities reporting that the union had negative capital of £37,000.

As such the union can now only receive loan repayments and cannot make new loans or pay members their savings Deposits are protected but the FSCS cannot act unless SWDCU closes altogether.

SWDCU is hopeful of a decision from Durham County Council in days which will determine the union’s fate.