It is hoped the fund will tempt low income Scots away from payday loans

Affordable credit is to be made more accessible to low income Scots through a new £2m fund.

The Scottish Government will provide £1million to the Carnegie Trust’s Affordable Credit Loan Fund, doubling the size of the fund as part of the country’s child poverty delivery plan.

It is hoped the support will help grow the sector, opening up more options for those that need affordable credit, reducing the cost of borrowing and making sure that people can access financial products and services that meet their needs in a responsible way.

Equalities secretary Angela Constance said: “Insecurity of income is one of the biggest challenges faced by those in poverty.

“By investing £1 million in the Carnegie Trust’s Affordable Credit Loan Fund, we are doubling the amount available for social lenders to offer affordable loans.

“We are showing how Scotland is leading the way on tackling the problem of access to affordable credit. We want to provide a clear alternative to organisations, such as payday lenders, that can often charge extortionate interest rates and can leave people trapped in a cycle of debt.”

Martyn Evans, chief executive of the Carnegie UK Trust, called it a “milestone.”

“At present, those in poverty have to pay a significant premium whenever they borrow money,” he said. This has to change. We need to make more affordable, socially-motivated credit, linked to other services, far more widely available."

Actor and activist Michael Sheen who is currently campaigning to end high cost credit added: “Through the End High Cost Credit Alliance that I’ve founded I am looking forward to working closely with partners in Scotland to help make more affordable credit available for all.”