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The Economic Secretary to the Treasury (John Glen)
It is a pleasure to serve under your chairmanship, Sir Henry.
I warmly commend the hon. Member for Argyll and Bute (Brendan O’Hara) on securing this debate and speaking with such passion and determination. Let my first words be that the Government recognise how often banks are seen as an intrinsic part of the community fabric. That point has been made by several Members this afternoon, and the hon. Gentleman has reaffirmed it eloquently.
We have heard a lot about the closure of physical branches. I believe that this is the fourth time that the hon. Gentleman has raised the issue in the House since RBS’s announcement last December. I want to make clear my sincere sympathy for the concerns that he raised on behalf of his constituents and that hon. Members raised during the debate.
I reassure the Chamber that one of my key priorities as Economic Secretary is to promote and support financial services that deliver for their customers, making those services as accessible as possible. However, the hon. Gentleman must appreciate that the way we bank is going through a period of unprecedented change. Online and mobile technologies mean that customers—perhaps some of us in this Chamber—are reducing our use of high street branches quite drastically.
Kirstene Hair
I thank the Minister for giving way. On accessibility, my constituents in Montrose have been told that they will have to travel to Arbroath, but RBS will give no confirmation that Arbroath will remain open for the foreseeable future. I agree that accessibility is of the utmost importance, but it is understandable that constituents are concerned—they do not know what the future holds for the next nearest branch.
John Glen
I will come on to a number of practical steps that I think can challenge the banks’ logic and help hon. Members across the House.
We have to acknowledge the change in the way that we use banks, and the fact that banks will adapt to reflect the shift in consumer patterns. That means making tough decisions, such as modernising their services to maintain profitability. I go back to what I said two weeks ago on this spot: the decision is not for the Government, and it is important that I explain why. I acknowledge the point that has been made about Stephen Hester, but there is a material difference between the Government, as the largest shareholder, being consulted on who the chief executive is, and the day-to-day operational decisions made branch by branch. There is a reasonable difference in the level of involvement. Each bank’s branch strategy, including whether to open or close individual branches, is for the management of that bank to determine. The Government rightly do not intervene in those commercial decisions in this bank or in any other bank.
John Glen
I will not take an intervention, because I need to make some progress. Likewise, the Government do not manage the RBS Group; that is headed by its own board, which is responsible for strategic direction and management decisions. By its own volition, RBS has announced a number of branch closures in line with its commercial strategy. Obviously, banks will keep a number of factors in balance when they make these decisions: customer interests, market competition and other commercial considerations. The decisions are theirs to take, but they are also theirs to defend.
I say to the hon. Gentleman who secured the debate that by bringing the matter to the attention of the House again, he is doing a very good job of challenging the bank to justify the decisions it makes. It is for the bank to do that. Indeed, two RBS executives gave evidence to the Scottish Affairs Committee on this very matter last week, and they were pressed on their rationale. I have read the transcript, and they made it clear that customer behaviour is changing and bank branch networks logically are changing to reflect that.
John Glen
I am going to carry on, I am afraid, but I will address a number of points that flow from that.
The banking industry estimates that branch visits have fallen by roughly one third since 2011, and that more than one third of our adult population regularly uses mobile banking apps. The Office for National Statistics estimates that 63% of adults used the internet to bank in 2017. It is not the Government’s role to speak for RBS, but its own figures paint a similar picture of substantial change. Strikingly, I understand that RBS estimates that only 1% of RBS customers in Scotland use any of its branches on a weekly basis. I am aware that there are disputes over that, and I will address that point in a moment. The banking industry is changing to accommodate this shifting customer behaviour. However, the Government recognise that closures have an impact on customers who still need or want to bank in person. We have addressed that and ensured that measures are in place so that everyone can continue to access banking services.
Angus Brendan MacNeil
The Minister said that only 1% of customers are accessing those branches. On an island of more than 1,000 people, that does not square with RBS telling us that only 13 people went into the branch. I do not need MI5 on the Isle of Barra to tell me who goes in the branch. We see exactly who goes in there. Twenty went in on the morning that RBS made that announcement. It got rid of a load of employees and hired people from an agency. Surely, as the largest shareholder, Government have to have some oversight over the cowboy behaviour that has been going on at the Royal Bank of Scotland—it is not Scotland any more.
John Glen
I am grateful for that intervention, but I will not take any more. I will address how the bank can be challenged on this point in a moment.
I want to make four points in the remaining time I have. First, I want to discuss the Post Office. The Government has improved face-to-face banking services at the Post Office. With more than 11,600 Post Office branches in the UK, it offers a robust network to ensure that customers have a physical opportunity to bank locally if they choose. We should not forget that 99.7% of people live within three miles of their local post office, and 93% within one mile. We are going to experience a cultural change in the appetite and behaviours around using post offices.
Earlier last year, the UK’s banks and building societies and the Post Office reached a new commercial agreement that set the standard for the banking services available at the Post Office—balance inquiries, cash withdrawals, cash deposits and depositing cheques—to ensure that there would be a uniform level of service across the country. That agreement means that 99% of personal customers and 95% of business customers can do their day-to-day banking there.
I am aware that for the service to maximise its potential, the banks’ customers must know about it and know how to use it. That is why my predecessor wrote to the Post Office and to UK Finance last month; I am expecting a response today and I expect to see substantive commitments from all involved. We can all do our day-to-day banking at the Post Office and we should spread that message far and wide, especially to those of our constituents who may be worried about this issue.
Secondly, I will address a number of the concerns raised by hon. Members about the access to banking standard. As well as bolstering the Post Office, the Government support the industry’s access to banking standard that all major high street banks have agreed to. The standard commits banks to a number of outcomes when a branch closes: first, that they will give at least three months’ notice of a closure and explain their decision clearly; secondly, that they will consider what services can still be provided locally and communicate clearly with customers about alternative ways to bank; and, thirdly, that they will ensure that support is available for customers who need extra help. That support includes help for the digitally excluded who want to learn how to bank online, and guidance for those who regularly use branches and who need to be shown where and how to use the local post office that can help them.
I understand that RBS has undertaken substantive discussions with MPs and other local stakeholders on the future of banking in the communities affected by closures.
John Glen
I am not going to give way again. Where it has not done so, it is incumbent on RBS to engage with Members of Parliament to do just that. In excess of the notice required by the standard, RBS has given six months’ notice of these closures. The access to banking standard is the practical way to shape a bank’s approach to local areas, and I encourage every Member to ensure that their community is aware and able to engage with their bank directly. The Lending Standards Board monitors and enforces the access to banking standard. It will monitor how RBS and other banks fulfil their obligations to their customers. The board can be contacted by Members of Parliament if they have legitimate concerns about the way in which the process is being fulfilled. That new and additional scrutiny is a necessary and welcome addition to the way the standard works.
Thirdly, I will address the current account switch service. Should other banks offer more extensive local facilities, the Government have made it easier than ever before to switch to an alternative, using the current account switch service. The switch service is free to use. It comes with a guarantee to protect customers from financial loss if something goes wrong, and it redirects any payments mistakenly sent to the old account, providing further assurance for customers. That means that, more than ever, banks are incentivised to work hard to retain their existing customers and attract new ones.
Finally, a number of points have been made about access to cash. I understand that RBS is considering whether an additional mobile bank branch would be required in the constituency of the hon. Member for Argyll and Bute. More widely, the Government continue to work with industry to secure the provision of free access to cash. In December, LINK—the organisation that runs the ATM network in the UK—committed to protecting all free-to-use ATMs that are a kilometre or more from the next nearest free-to-use ATM. This is a welcome strengthening of its financial inclusion programme.
I acknowledge that this is a very difficult matter, and I commend the hon. Gentleman for bringing it to the House again. I commend all hon. Members who have contributed. I believe that I have set out clearly where there are some options to challenge the banks, if they feel justified in doing so.
Question put and agreed to.