(6 years, 9 months ago)
Commons ChamberRead Hansard Text Read Debate Ministerial Extracts
Ruth Smeeth (Stoke-on-Trent North) (Lab)
I beg to move,
That this House recognises the vital importance of community-based banking; believes that national banks have a responsibility to their customers; is concerned about the effect of branch closure announcements by Lloyds Bank, RBS/Nat West, Santander, Yorkshire Building Society and the Co-operative Bank; and calls on the Government to support measures to protect access to banking services in local communities in the UK.
I thank the Backbench Business Committee for granting this timely and incredibly important debate and the hon. Member for Hazel Grove (Mr Wragg) for co-sponsoring it. I thank colleagues for their support; the number of those in the Chamber on a Thursday afternoon just before the recess demonstrates how important this issue is to us and the communities we represent.
Like many colleagues, I am angry and frustrated, as are my constituents. In the past three months, the three towns I am so privileged to represent have all had bank branch closure announcements, ripping the financial heart out of them. So what on earth is happening? The high street bank has played a fundamental role in our local economy and communities for generations. It has been a rare constant in the ever-changing landscape of our market towns and city centres.
Those bank branches have provided and continue to provide a vital function for local customers, whether it is the pensioner withdrawing her money for the week, the local business depositing the day’s takings, or the young family looking to take their first step on to the housing ladder. Madam Deputy Speaker, I am sure that you can remember, as I can, being taken into a bank by a trusted loved one to sign up for a first account—a big moment. For me, it was a NatWest account with a ceramic piggy bank and, as I proudly represent the Potteries, how could I not celebrate the fact that my piggy bank was a genuine Wade—Woody, made in Burslem?
These cherished childhood memories for so many of us might sadly not be available to the next generation. For millions of people up and down the country, the services that local branches provide are as necessary as they have ever been, but they are disappearing.
Chris Elmore (Ogmore) (Lab)
I congratulate my hon. Friend on securing the debate. My first bank was the Midland bank when I was 11, so I therefore discovered I had been a member of that bank for 24 years, much to my shock. On the question of shrinking bank services and millions of people being affected, following NatWest’s decision to close the banks in Maesteg and Pencoed there will be only one bank left in my whole constituency. That is 58,000 people within a geographical area with only one bank. Does my hon. Friend agree that that is a shocking failure of the banking system and that the banks are not following through on the community banking schemes that they are meant to be doing to serve communities?
Ruth Smeeth
I completely agree with my hon. Friend, although I think many others will be astonished that he has had a bank account for that long. There is a genuine issue about the responsibility of community banking. When I got my first paying-in book, there were 20,585 branches across the country, but by 2012 that figure had dropped to just 8,837. In the past three years alone, we have seen a further 1,500 branches close, and that does not include the announcement of further closures made in the past three months.
The hole that these closures leave behind goes far beyond an empty shop front. For the elderly or disabled, a 3 mile journey to the nearest branch is more than inconvenience. In my constituency, Burslem, Kidsgrove and Tunstall are all facing the loss of well-used local bank branches and the impact on local residents and local businesses will be severe. In Burslem, we are currently facing the prospect of losing our very last bank branch, a local Lloyds. Burslem is the mother town of the Potteries, as I am sure the whole House is aware. It is home to Burslem School of Art and the Wedgwood Institute, to Port Vale football club and the outstanding Titanic brewery. Yet if these plans go ahead, there will no longer be a single solitary bank. What message does that send to a community that is doing everything it can to support local businesses and improve our town centre? When did community banking become a phrase devoid of meaning?
In Kidsgrove and Tunstall, Co-op customers are faced with the prospect of losing their local branches—the last remaining Co-op banks in my constituency. As a Tunstall resident and a customer myself, I know how popular the branches are and the impact that their disappearance will have. Walk into any one of these branches at virtually any time of day and people are queueing. They are used by hundreds of residents as well as local businesses.
Petitions against the closure have already attracted thousands of signatures, and residents have contacted me about what the closures will mean for them. I must thank Councillor Kyle Robinson for leading the campaign in Kidsgrove, collecting more than 1,200 signatures so far, as well as Tom Simpson, Lucy Kelly and local traders in Tunstall and Tunstall market for their incredible efforts, as well as the wonderful June Cartwright for co-ordination of the Our Burslem campaign.
The closures will have an immediate effect and impact on people’s lives. I have heard from elderly constituents who use the Tunstall Co-op branch and will be forced instead to travel 3 miles via unreliable public transport to a city centre with no public conveniences. For people in their 70s and 80s, or those with a disability, this is more than an inconvenience—it is a genuine struggle.
That was brought home to me by a story from a constituent whose parents have used the branch for many years. They are not technologically savvy— a weakness I, and I am sure others across the House, share—and they find it difficult to use an ATM or to pay for things in shops using their debit cards. If the House will humour me for just a moment, I want to quote what my constituent had to say about this matter:
“My parents are 81 and 83 years old and have used the Co-op bank in Tunstall for many years. The staff know my parents very well. They are exceptionally helpful, supportive, patient and ensure that they understand everything that they need to. Knowing that my parents have this level of support when I’m unable to be there every day, provides me with a great deal of reassurance, and I’m extremely grateful for this.”
I am sure that we all know people who benefit from this level of personal service and for whom the faceless and bewildering world of online banking simply will not work. In fact, in my great city too many of my constituents do not even have access to the internet. In the past three months, the Office for National Statistics suggests, up to 51,000 people, or one in four, aged over 16 in Stoke-on-Trent have not accessed the internet. One in four. For the record, that is more than double the national average, which makes talk of internet banking as the panacea for this crisis nonsense for too many people.
For businesses too, the closures present a challenge. For those who trade primarily in cash it is neither safe nor practical to expect staff to travel halfway across the city to deposit the day’s takings. And for small businesses with a limited number of employees, the time that this will take out of their day is a real hindrance. One of the defences often given in advance of such closures is that nearby ATMs will continue to be available, yet hundreds of them are at risk of being closed down thanks to the proposed overhaul of the LINK network. What is more, the services provided by external ATMs are incredibly limited, even compared only with the automated services available in bank branches.
The Post Office provides a valuable service, and in 3,000 locations—soon to include Burslem—it is the last banking retailer in town. But its ongoing restructuring process has seen too many branches close in recent years and we do not know what the future holds. Of course, although the Post Office can support customers looking to withdraw or deposit cash, it cannot provide the same range of services and advice as a bank branch.
Ged Killen (Rutherglen and Hamilton West) (Lab/Co-op)
Does my hon. Friend agree that many people are not necessarily aware of the services available in post offices? If they are, they do not always want to do their banking in, for example, a local shop—where a lot of post offices are now based—because it might be busy.
Ruth Smeeth
I could not agree more with my hon. Friend. In fact, one of my concerns is that no assessment is made of whether local post offices have the capacity to deal with these issues when a bank in a community closes, and there is no communication with those post offices.
Britain has often been described as a nation of shopkeepers, so what does it say about us if we are unable to maintain the national banking infrastructure that our small traders need? There is a safety aspect to these closures as well. Should the final Lloyds branch in Burslem close, the only remaining ATMs will be inside shops. There will be no external ATMs available in the town and nowhere to withdraw cash after closing time. If I were to go for a drink in Burslem one evening, and as the vice chair of the all-party beer group, it would be impolite not to—
Ruth Smeeth
Absolutely. If I were to go for a drink, there would be nowhere for me to get cash out to pay for a taxi home. For many young women—I am not sure whether or not I still fall into that category—
Ruth Smeeth
Thank you very much, Madam Deputy Speaker. For many young women on a Friday night, the prospect of walking all the way out of town to a petrol station’s cashpoint may leave them vulnerable and afraid.
All that is merely a snapshot of the human impact that the decline in community bank branches is having on communities like mine. I am deeply concerned about what will happen to our towns should these branches disappear. I had hoped that the banks would share, or at least understand, that concern. Instead, when I met representatives from the Co-operative bank, which is no longer associated with the Co-operative Group, my concerns were dismissed and ignored. When I pointed out that the bank’s impact assessments were riddled with obvious inaccuracies, its representatives merely shrugged and said that it would make no difference to their decision. They treated me, and by extension my constituents, with contempt. They should be utterly ashamed of themselves.
The Co-operative is a bank that once distinguished itself by its commitment to ethical finance, so tell me, what is ethical about leaving a community without a lifeline and ignoring its objections? What is responsible about providing an incompetently researched impact assessment that cites nearby alternative branches that closed down a year ago? What is caring about hearing the concerns of 80-year-old men and women who have used a local branch their whole lives, and simply saying to those people, “The world has moved on—there’s an app for that now”? Let us be clear: a bank that treats people in that way cannot claim to be a “community” anything and should be embarrassed even to try.
As the statistics demonstrate, the problem is not limited to north Staffordshire. It is a national problem, certainly, but that does not mean that the hardship is evenly distributed—far from it. University of Nottingham research found that between 1995 and 2012, the areas that suffered the largest decline in branch numbers were
“characterised by unemployment rates and levels of renting from the public sector that are far above the national average”.
The researchers concluded that
“the least affluent third of the population has borne the brunt of two thirds of net closures.”
The people making those decisions might call it the reality of market forces, but I call it abandoning the people and communities that need those services the most. Whatever we choose to call it, the facts remain the same: the poorest and most vulnerable people in our country—especially those in rural or inner-city areas—are frequently discriminated against in the banks’ decision making process.
The social cost of excluding low-income consumers from mainstream financial services can be severe, and could even risk driving people into less legitimate but more visible and convenient methods of financing, including loan sharks, legal and otherwise. The costs of these closures go beyond the individual; they have long-term repercussions for the whole community. The Campaign for Community Banking Services has argued that bank closures contribute to the commercial decline of an area, as better-off consumers change their purchasing habits and begin to shop, bank and even socialise further afield. Worse still, closures are associated with a real decline in local bank lending. Growth in lending to small and medium-sized enterprises is dampened by an average of 63% in postcodes that lose a bank branch, and that figure grows to 104% for postcodes that lose the last bank in town. The impact on our high streets, on our local businesses, and on future regeneration can be devastating.
What does all that mean for towns such as Burslem, where local people are coming together to lift their community up and push back against years of decline? There was a time when the local bank was thought of as the heart of the community—perhaps it still is—so what happens to a community when it loses its heart? What happens when the monetary circulation of a town is cut off mid-beat? What happens when the last financial lifeline disappears and leaves the elderly and vulnerable without support? The world we live in is not the same as it was 10 years ago, let alone 40 or 50 years ago. Times change, technologies change, and we must change with them. But we must also do more to ensure that as the world moves, we do not leave behind those who find it hardest to keep up. We must recognise that there remains a place for community banking, local lending and face-to-face advice. That means we need the banks to take some ownership and responsibility for their loyal customer base. They need to be imaginative and consider sector and community-wide solutions, not pass the buck and blame their customers. If they will not do it voluntarily, we will have to force them to.
The banking sector has options. Banks could launch community banks that share counter facilities, like they do in parts of Spain. They could invest in multi-functional ATMs so that customers can pay in money directly, in their local communities. They could fund more extensively community-based financial education to assist people with online banking. They could even fund access to broadband in some of the harder to reach communities, so that their customers could access online banking. Yet all we have had from the sector is silence. We need to ensure that our banks are working in everyone’s interests, not just their own.
Mr William Wragg (Hazel Grove) (Con)
It is a pleasure to follow the hon. Member for Stoke-on-Trent North (Ruth Smeeth), who gave a splendid exposition of the issue we face in the country and clearly showed her dedication to her constituents.
The number of Members present is testament to how important this debate is. Given the extent of bank branch closures, it is likely that we all have an interest in this issue because of what is happening in our own constituencies. In the past 25 years, the UK has seen the closure of nearly 10,000 bank branches, which is over half of all of them. The rate has accelerated, with more than 600 branch closures in the past year. It is right that we should embrace technological change, but the rise of new approaches, including online banking, means that we are faced with the decline of traditional banking.
Many customers have a preference for in-branch banking. They prefer face-to-face service and the chance to talk to people, to get financial advice, to access their money physically, and to have the security of seeing their bank transaction take place and of receiving a paper record to prove it. In recent times, against a backdrop of scandals, one of banking’s redeeming features has been the personal relationships that banks still offer to customers. Members of the community often struggle when a bank closes, and closures are particularly important for elderly or vulnerable people who may not use online banking.
In recent years, my constituency has suffered from the closure of several local banks. Like other Members, I am sure, my constituency postbag and inbox have swelled as a result. In May 2016, Lloyds bank earmarked its branch in Woodley precinct for closure as part of a cost-saving measure. At the time, I presented a 583-signature petition to the House on behalf of local residents, calling on Lloyds to reconsider its decision. Despite that large demonstration of popular feeling, the bank went ahead with the closure regardless. That decision made it harder for hundreds of customers to access their money and to get financial advice and that face-to-face service.
The NatWest has also recently closed branches in two local towns, namely, in Romiley and in Marple. The last case was particularly galling as the justification given by NatWest at the time of its closure of the Romiley branch during the statutory consultation process was the proximity of the Marple branch as an alternative. However, just a few months after shutting the first branch, the bank announced its intention to close the Marple branch, too. Customers who had taken early assurance about a back-up branch in good faith felt that they had been treated as fools and that the behaviour of the bank in this instance made a mockery of the process of consulting on closures. Of course, if customers feel sufficiently overlooked, banks may well find that they start voting with their debit cards and switch accounts.
Although I accept that decisions on bank closures are ultimately a commercial decision, I urge all banks to show a lot more consideration of the needs of customers and how they can best be met. They must think carefully before making any decisions on a branch closure, particularly in rural or semi-rural areas, which have been hard hit by these measures.
Although it may not be a matter for the Government to intervene directly in a decision on an individual basis, the Government do have a role in promoting general access to banking services. Therefore, I ask the Economic Secretary to the Treasury to consider placing a duty on the Financial Conduct Authority to promote financial inclusion as one of its core objectives, as recommended by the Financial Inclusion Commission. That duty could include a mandate to require financial service providers to meet certain standards relating to access and customer service. Such a duty should require the design of products and services to be more inclusive and to maintain access to essential services for people who may not be online.
During my research for this debate, I was pleased to learn that a lot of the services offered by banks can now be done over the post office counter. Post offices continue to offer basic banking services to many bank customers. Indeed, around 99% of a bank’s personal customers and 95% of its business customers are now able to withdraw cash, deposit cash and cheques and make balance enquiries at a post office counter. All post offices can take cash deposits of up to £2,000. However, that begs two important questions on which I would like the Minister’s thoughts when he winds up. First, what is being done to ensure that local people are aware of the options available following the closure of a local branch? Secondly, and perhaps most crucially, although this is good news for customers, why is it deemed acceptable for privately owned banks, and indeed publicly owned banks in some circumstances, to close their own branches and rely on the state-owned Post Office to process their transactions for them? Are they making a profit while the overhead costs are met by the Post Office?
I thank all Members of the House for turning up this afternoon on our last day of term and for participating in this debate. I look forward to hearing their contributions and the response from the Minister.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
I thank you, Madam Deputy Speaker, for calling me so early in this debate, because I have a very long way to travel. I apologise to the House for not being present when the winding up speeches take place; it is not an intentional discourtesy.
I also congratulate the hon. Member for Stoke-on-Trent North (Ruth Smeeth) on making a really first-class speech. She covered every single point, and I am left with almost nothing to say as a result, which is rather distressing for someone like me who has a tendency to be verbose.
This issue causes me an element of personal pain because I have a number of friends who work for the Royal Bank of Scotland, at all levels of the bank. My comments about the bank are not intended particularly for the bank; they are aimed at the system in general. In my constituency, we face the closure of three RBS branches. One, in Tongue in north-west Sutherland, may be on hold—there has been a stay of execution. However, in the old royal boroughs of Tain and Wick, the intention is to close the branches. I have never seen an issue that has caused so much deep unhappiness among my constituents.
Call me old-fashioned, but the bank and the bank manager were as much a part of the social structure of these communities as the doctor, the minister and the school teacher. I think particularly of what happens when someone has, for example, a seed corn business—from little acorns mighty oaks grow. The point is that, in the past and even in recent times, someone with a business idea could go to the branch of their bank and say to the manager, “I have this idea. This is my business plan. Will you take a punt and lend me the money?” I have seen, in my home town, some seriously big businesses grow in my lifetime from absolutely nothing—there was a brave bet by the bank manager. We should not underestimate that.
The point has been made about the post offices. Our main post office in the town of Tain in the north of Scotland closed. Our post office now, which is very well staffed by well-intentioned individuals, is essentially a newsagent. The gap between the counter, where a person does their business, and the magazines is only the distance between two Benches in this place. If someone is trying to bank large amounts of money at the same time as Mrs McKenzie is trying to buy her copy of the Scots Magazine, everything gets muddled and, frankly, the staff get hassled. I really do not envy their position one little bit.
I have a short anecdote, which reflects on the banks. My first bank account, with the Royal Bank of Scotland, was opened by my father when I became a student. He put in £16—I did not see many £16s after that. In due course, I spent all the money because I was a young first-year student who did not know what he was doing. When my grant cheque came in, I opened another bank account in the Bank of Scotland and then I spent all that, too. The trouble came when the two bank managers talked to each other and said, “Do you realise that young Jamie Stone has two bank accounts and he is spending money like water?” Then they went and told my dad. There was absolutely no end of trouble over that. In a way, for those Members who are experts on Adrian Mole, that conversation, perhaps not completely correct today, headed off a potential multiple debt situation. I was pulled up and stopped—well, I had to be—which was probably to my great benefit in my life.
Banking is about the human face—of course it is. It is about seeing someone in the branch of a bank who says, “Don’t worry. What’s happened here is that the payment will not clear for three days.” That can be the difference between peace of mind and mental torture. It takes someone just to say, “Wait a minute, I will go online and take a look. Oh, here’s the problem. This is what’s happening.” You cannot take that away. We talk about online banking. Well, let me tell Members: if I hit the icon on my phone, it says that I have been logged out and, no matter how hard I try, I cannot get back in again. I do not have a clue, just like when I was 18, I do not know what my bank account is doing. Therefore, online banking is not for everyone.
The issue, as the hon. Member for Hazel Grove (Mr Wragg) said, is one for Government. The only way in which we will stop this endless gloomy slide of closures, which is eating into our communities and sapping morale, is for the Government to say, “Wait. What is the public service responsibility here?” They should then come forward with some thoughts and guidelines. It has been suggested that perhaps we should combine banking facilities and get the clearing banks to work together to form a one-stop shop. That is a very interesting idea.
I look for something from the Government saying, “We recognise that this is a responsibility, that this is dangerous for the structure of society and that these are the proposals that we intend to bring forward.” I am an optimist, so I wait in the hope that there will be something that will sort this out once and for all.
Nick Herbert (Arundel and South Downs) (Con)
I congratulate the hon. Member for Stoke-on-Trent North (Ruth Smeeth) on securing this debate. I am grateful to the Backbench Business Committee for granting it. This is an important issue, particularly in rural constituencies such as my own. My constituency of some 250 square miles in West Sussex consists only of small market towns and villages—there are no large towns. If one of those villages, which have high streets with a few important shops and stores, loses its banking facilities, that will immediately have a knock-on effect on the businesses in the village or small market town and the neighbours. It is of little use to those businesses and indeed it is very inconvenient to be told that they have to travel to a settlement that is some miles away.
Very often, following such closures, there has not been an alternative retail high street banking facility in the same village or small market town. Therefore, I think we start off with a collective agreement that it is important that we maintain banking facilities in these areas. We do not yet have a cashless society. Small businesses still need cash facilities. Local charities, many of which are still wedded to collecting cash and cheques, also need these facilities. That said, there are two important points to consider.
First, we have to acknowledge the march of technology and the huge growth in the number of customers who are now using online banking services. This has entirely changed the shape of retail banking. The number of people visiting some of the high street banks that face closure in my constituency has fallen to an unsustainably low level.
It is analogous to the situation that existed for police stations in some areas. Police forces were confronted with the reality that often only a handful of people a week were visiting police stations, many at the instigation of the police themselves, who required reporting to take place at the stations. Some forces recognised that maintaining an underused building was not actually the best way for the police to maintain a footprint in their community, and that there were more innovative ways to maintain a presence in their local communities, including the use of shared facilities, setting up pop-up shops in places where lots of people were such as supermarkets and developing their online presence.
There has been a change in the nature of the business and shape of policing, and in how it has to respond to today’s needs. But police forces also recognised that they could not simply withdraw. There has to be accessibility and a policing presence in communities, although that presence may now take a different form.
We have the opportunity to ensure that local banking services can be provided in communities on an ongoing basis, by post offices. As my hon. Friend the Member for Hazel Grove (Mr Wragg) said, following the new deal that the Post Office has done with Lloyds, the coverage that post offices can provide for basic banking services is now very high. As he said, there will be 99% coverage for individual private customers and 95% for businesses.
I suspect that there is relatively low awareness that post offices can provide these services. I therefore agree with the hon. Members who said that it is important that there is a proper information campaign to explain to local businesses which services their local post office can provide when high street banks are lost. It is not good enough just to put out a news release and write a letter to customers to say that the bank is closing. The banks have a responsibility and they should exercise it.
Secondly, it is important to maintain the post office network, especially if post offices are to become local banking hubs as well as providing their other services. This is a great opportunity for the post offices. It is a useful way to maximise the asset and to ensure that the investment in the post office network can be realised.
Jamie Stone
I entirely take on board what the right hon. Gentleman is saying about post offices. But I have just outlined the case of a post office that is using a retail premises that is entirely unsuitable. It must therefore be up to the Post Office to negotiate premises that are suitable for the service he is talking about.
Nick Herbert
The hon. Gentleman has anticipated exactly what I was going to say. If the post office premises become the location of the only banking services in a village or small market town, we must ensure that they are suitable, and the Post Office needs to ensure that that is the case when it identifies premises. It must also ensure that the banking services can be provided. The online systems have been down in the post office in Arundel over the past few days and as a result there have been no banking services.
As suitable premises can often not be found, suitable post office sub-postmasters cannot be found in various villages and small market towns in my constituency. This means that there is sometimes a suspension of post office services for a period of months, even though the Post Office’s policy is that there will be a post office outlet in these communities. That cannot happen if the post offices become increasingly important owing to the fact that they are providing banking facilities as well as all the other important facilities that they provide for the local community.
We need some more creative thinking. We cannot just allow the banks to step away and absent themselves from their responsibilities to ensure better services in this regard. To that extent, I agree with the hon. Member for Stoke-on-Trent North. The Government do have a role to play, by stepping in where the market is not working properly. The market is not working because there is insufficient demand in some areas for banking services in their traditional form, but those services are still important to local communities.
We must remember that local high streets are already under great stress. High streets in rural areas have really been suffering from the impact of globalisation and competition from online retail services. It is very difficult for small businesses to keep their heads above water as it is, so banking services are very important for them. If the Government’s objective is to maintain the vibrancy of these high streets—and I think it is—we need some active measures to ensure that post offices are promoting the best banking services and that these services are well publicised. We need banks to step up to the plate and contribute to ensure that the banking services can be universal and just as good as the services that were provided before. All those things can be done.
I recently had a useful meeting to discuss the issues with the Post Office’s senior management and the Minister’s predecessor, who acknowledged all these points. I know that the Government are concerned to ensure that banking services are provided. We must look forward to what can be created using the existing post office network and ensure that services are provided properly. It does not help to look backwards and think that we can somehow set a retail banking model in aspic, when it is actually failing because it does not provide the services necessary for the wider community and only supplies a very small number of customers. We need banking services in these areas, and they could be provided more creatively and innovatively. The situation needs a bit of Government help, but we also need the banks to play their part.
Madam Deputy Speaker (Mrs Eleanor Laing)
Just before I call the next hon. Member to speak, I ought to point out, for the sake of clarity, that we are in very unusual circumstances today because the timing of this business has changed and changed and changed again. I appreciate that this is the last day before a recess, and that Members—especially those with long distances to travel—are in some difficulty. I have therefore allowed far more leniency than is usual, first in the timing of people arriving for the beginning of the debate and, secondly, in the timing of their departure, either before or after the wind-ups. I would like to make it clear to the House that this does not create a precedent—absolutely not. We have a combination of circumstances today, which is highly unusual and is why I have allowed leniency. That will not be the case on other occasions.
Caroline Flint (Don Valley) (Lab)
I am sure that we all heed your words, Madam Deputy Speaker, and thank you for your consideration this afternoon. I congratulate my hon. Friend the Member for Stoke-on-Trent North (Ruth Smeeth) and the hon. Member for Hazel Grove (Mr Wragg) on securing the debate.
I listened very carefully to the right hon. Member for Arundel and South Downs (Nick Herbert), but I am afraid that he seemed to be talking himself into a bank closure. Of course, this debate is about banking services, but I hope that we can also focus on the need to think creatively about the sort of sustainable bank—a community hub—that is necessary. This is perhaps not necessary in our cities, where we can walk down the street and pass six banks in half a kilometre, but it is necessary for our small towns and semi-rural communities around the United Kingdom. For them, it is the bank’s presence in a new sustainable form that we are fighting for and championing today.
In August 2017, Reuters reported that bank branches across Britain had closed at a rate of 300 per year since 1989. The Daily Mail reported in December 2017 that over 1,000 branches had closed in 2015 and 2016, and a record 802 branches closed in 2017. The accelerating pace of closures appears relentless. In my constituency, the town of Tickhill lost its last bank in 2015. In 2016, the town of Thorne lost its HSBC branch. Then, in November 2017, RBS served notice that the town of Thorne will also lose its NatWest branch, and the town of Bawtry is to lose its last bank branch, also a NatWest.
The previous Government’s response to this relentless wave of bank closures was to announce an access tobanking protocol in March 2015. It is now clear that the protocol was not what it seemed. It laid out a timetable for consultation about impact and the provision of alternative banking, but no—I repeat, no—mechanism to stop a branch closing. So the process for closure has been determined, but a mechanism to halt a closure is non-existent. Communities have no more chance of stopping the closure than they did in 2015. The Government have done, and are doing, nothing to change this. “It is a private matter; it is a commercial matter”, we have been told on several occasions during Prime Minister’s questions in recent times. The Government decline to collect statistics on closures or on how many communities are now without any banking service. It is as though closures were an inconvenient truth.
The banks would have us believe that this is a story of enlightened pensioners managing their ISAs and direct debits on their smartphones. The truth is somewhat harder to get to. This House, I believe, is not nostalgic, nor opposed to telephone or smartphone banking. We are not against people managing payment on their PCs. But the selective figures provided by RBS-NatWest to justify closure give a completely distorted impression of their NatWest branch to each of the towns in Don Valley. For example, RBS was keen to tell me that 88% of Bawtry customers and 86% of Thorne customers now bank in other ways, and that only 48 customers in Bawtry and 69 in Thorne attend the branch on a weekly basis—although the time period for this estimate was not provided to me. Yet when a member of my staff went to the Bawtry NatWest midweek in mid-January—a quiet post-Christmas week—they saw a queue outside the bank before it opened at 10 am, and at 10.45 am they found a queue more than 10 deep in the bank, with several counters in use. But when I asked RBS how many transactions took place at the Thorne and Bawtry branches in the first hour of each day since the new year, the bank refused to disclose this information. It was “commercially sensitive”, I was told. Nor would RBS furnish me with information on what proportion of the customers are pensioners, how many transactions took place at each branch in the past year, or why neither branch opened on a weekend. On a Saturday morning, footfall could be more frequent.
So much for dialogue and consultation. Well, I say this to Ross McEwan, RBS’s chief executive, and to Les Matheson, NatWest’s chief executive, personal and business lending: please do not patronise me with offers to meet a “senior representative” when you refuse to provide any information that may demonstrate that small businesses, pensioners or the community generally may need the services provided in the Thorne and Bawtry branches more than you care to admit. In response to a question about the possibility of branches sharing premises to make them more viable, I was told by Mr Matheson that NatWest’s arrangement with the post office means that the post office is now “the shared premises”. On that basis, why have any branches at all? The post office is the NatWest!
Where is the genuine attempt to find a model for sustainable banking? Instead of small counters in corner shops, why cannot post offices be located in secure bank premises, sharing them with more than one bank? Why cannot several banks have staff in Thorne or Bawtry on different days of the week, with banks sharing overheads in secure premises to create, as my hon. Friend the Member for Stoke-on-Trent North said, a community banking hub? That could be a win-win situation.
Where is the attempt to bring young people into branches—some real outreach to make them see the bank as more than an app on a smartphone? I do not know about colleagues around the House today, but I am always being lobbied by banks about their latest wheeze to provide for financial inclusion. They are always telling me about how they want to do more in our schools and communities to give people the skills not only to press a button on a computer or click on an app, but to understand what financial literacy really means. They are always lobbying us, but I do not see any effort to attract young people into branches to help them with financial decisions. Let us not stop at young people. Many of my constituents do not have a bank account at all and have never had one, and there are plenty of other people who still do not know quite how to go about getting a mortgage, how to run an ISA, how to save, or how to pay off debt.
Ged Killen
My right hon. Friend is making an excellent point about the role of banks in attracting people into the branches. Does she agree that what many banks have been doing over a number of years is trying to drive people out of their branches by taking essential services away from those branches?
Caroline Flint
I absolutely agree with my hon. Friend. One would think that banks did not really want to foster demand for real branches, so the case for closure is made for them. They are creating a self-fulfilling prophecy.
Parliament needs to demand more from Government and more from the big five banks, beginning with support for local communities. While branches cluster in large cities in lavish offices, outlying towns and villages are being denuded of bank branches that are anchors for local businesses. We are told that the average customer travels just 2 to 2½ miles to their nearest bank branch. I worry about figures like that, because what they really mean is that the banks estimate all the access across the UK and then divide it, so of course the figures will be distorted by the density of branches in our cities.
Ruth Smeeth
I thank my right hon. Friend for making such a passionate speech on this subject. One of my issues with the journey times quoted is that I do not believe that any of these journeys have ever been done on public transport. The figures do not take account of how many bus changes may be needed, nor the fact that some of these places are not connectable on public transport. The numbers do not make sense. Does she agree?
Caroline Flint
My hon. Friend makes such an important point. There are so many assumptions about the way that people live their lives today that bear no relation to our own experience, let alone that of our constituents. In my constituency, people are 10 to 20 or more miles away from their nearest branch. We do not hear about the 10% to 20% of people across the UK who are in that situation. Customers in Thorne and Bawtry will each travel 10 miles if their NatWest branch closes. As my hon. Friend said, many of those people do not have access to a car. For many of my constituents, getting into Doncaster town centre takes at least two buses, and they are not necessarily running every five minutes—unlike the service that many of my friends benefit from in London and the big cities. The problem is simply not recognised.
Do the Government really wish to support our small towns to regenerate and develop? In both Thorne and Bawtry, the past 10 years have been tough, but—this is the irony—we are, I am proud to say, now seeing a renaissance in those towns. That is fantastic, but at this tipping point we are in danger of losing our last bank. It just does not make sense.
If we want to halt the growing gap between city and small town Britain, we need a policy to keep bank branches open in a more creative and sustainable way for the future. It cannot be right that towns with a population of 4,000 or 5,000 in the immediate vicinity, let alone the many thousands beyond that in even smaller villages, are losing not just the banking services but the presence of a face, rather than just a till, machine or counter in a convenience store for their financial needs.
Bawtry and Austerfield, which has 4,000 people, will soon have no bank. Strathaven is a market town with 7,500 people, Hornsea has 8,000 people, 40% of whom are over 60, plus thousands of tourist visitors every year, and Pencoed has 9,000 people—all those communities are soon to be left with no bank, and the Government need to do something about it. They could begin by collecting and reporting data on bank branches and the rate of closure, to face the uncomfortable truth about the loss of services in small town Britain.
The Government cannot be neutral on this matter. Their mandate derives from the British people, not UK Finance. This is not about neo-luddism. We are not anti-technology. This is about inclusion and equality. I urge the Minister and his Treasury colleagues to act before branch networks are a thing of the past.
John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)
I pay tribute to the hon. Member for Stoke-on-Trent North (Ruth Smeeth) and my hon. Friend the Member for Hazel Grove (Mr Wragg) for bringing this highly topical issue before Parliament.
The announcement in December from Royal Bank of Scotland-NatWest that 62 branches would be shut across Scotland affected my constituency more than most, and I wish to concentrate my remarks on that. Six branches are set to close in Berwickshire, Roxburgh and Selkirk in the latest in a string of closures in the Scottish borders.
We all acknowledge that banking habits are changing and that branches are less well used than they used to be. However, what banks are failing to appreciate is that for those who do use them, they remain more vital than ever. I share Members’ concern that these closures will affect vulnerable customers as well as cash-handling businesses and community groups that need a local branch at which to deposit money.
The impact of bank closures is particularly acute in rural areas, for a number of reasons. First, alternative services are already stretched. The post office in Hawick, for example, is very busy and will struggle to take on extra banking services. Secondly, connectivity in rural areas remains a big challenge. East Berwickshire has some of the worst internet speeds in the whole of the United Kingdom, with more than a third of people unable to receive a decent connection. How can those people be expected to rely on internet banking as an alternative?
High streets in the Scottish borders are struggling, and Jedburgh and Selkirk in my constituency will be particularly badly hit. Selkirk is currently going through a significant amount of town centre regeneration, only for the bank to now announce that it is going to leave. Another issue with one of the branch closures in the borders is disabled access. Duns is set to lose its RBS branch, and although the Bank of Scotland branch remains, it is only open three days a week, and both the branch and its ATM are not wheelchair-accessible.
Many people in the borders think that these closures have been decided by people with little experience of living outside the metropolitan areas of the United Kingdom. Someone has looked at a map without any knowledge of the local area and drawn red crosses all over it. There has been a complete lack of consultation. RBS simply announced these closures and told its customers to like it or lump it. There is a feeling in my area of the Scottish borders that enough is enough.
Opposition to the latest round of closures is unprecedented, and I have been contacted by a huge number of constituents. Tomorrow I will hold three public meetings on branch closures, spread across my constituency, such is the level of concern surrounding this news.
Danielle Rowley (Midlothian) (Lab)
Does the hon. Gentleman agree that the announcement by RBS this week that it will keep some branches in Scotland open temporarily—I think one in his constituency, but none in my constituency—does not go nearly far enough and still leaves rural and more deprived communities at risk of losing their services?
John Lamont
The hon. Lady makes an important point. I will come on to the bank’s announcement this week shortly, but I share her concern that it goes nowhere near far enough to address the concerns that many people have raised.
I accept the Government’s position that this is a commercial decision for the bank. The public shares are not managed by the Treasury; they are controlled by an arm’s length company, UK Financial Investments, whose role is to manage the public investment, not to manage the bank. It would set a dangerous precedent if there were direct Government interference in a decision such as this.
Having said that, I do not believe that the arrangement with UKFI would have prevented the Government from telling the bank that it had got this decision wrong. The announcement this week from RBS, with its minimal concessions, is simply not good enough. A handful of branches will remain open for just a few more months, and in the Scottish borders, only Melrose will be given a stay of execution. No one really expects these branches to avoid closure ultimately.
I was therefore very surprised to read the comments of the right hon. Member for Ross, Skye and Lochaber (Ian Blackford), praising the bank for this announcement. I was equally surprised to read his comments at the weekend, when he seemed to be taking credit for what he anticipated would be good news from the Royal Bank of Scotland.
Patricia Gibson (North Ayrshire and Arran) (SNP)
Does the hon. Gentleman agree that while the deal done this week, with 10 banks being temporarily reprieved, is not good enough, the UK Government should be exerting their influence—their much greater influence—as the major shareholder on behalf of the taxpayer?
John Lamont
I am grateful to the hon. Lady for her point, but if she had listened to what I said a few moments ago, she would have heard me say that while the Government own the shares, we do not have direct control over the day-to-day running of the company. Equally, I believe—I have argued this strongly to the Minister—that the Government should apply moral pressure on the bank to think again on these decisions.
The announcement by the bank does not go far enough, and although the bank has made some changes—minimal changes—it has not fully addressed the concerns that my constituents have raised. I was surprised by the comments of the leader of the Scottish National party at Westminster, who seemed to be trying to take the credit for what he anticipated would be good news from the bank. I was surprised because the bank made it clear that the changes to the plans it had previously announced were in response to concerns raised by politicians from all political parties, and because in the end the news was far from good. A cynic might think this had more to do with the right hon. Gentleman positioning himself ahead of the SNP deputy leadership election than trying to do what was best for his constituents or, indeed, the branch network across Scotland.
The truth is that the campaign against the RBS branch closures has been a truly cross-party effort—led, I must say, by the Scottish Affairs Committee at Westminster. I am pleased to see two other members of the Committee on the Opposition Benches today, and I know that they feel just as passionately as I do about the issue of branch closures. All Members who are losing branches in their constituencies share a desire to make the banks think again.
For the SNP, the loss of 52 branches across Scotland is a price worth paying to give 10 branches a very short temporary stay of execution. This is bad for communities in the borders, bad for rural communities across Scotland and bad for the elderly and the vulnerable. It is a bad deal to avoid further public scrutiny, made without consulting local communities.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
It is a pleasure to speak in this debate. I congratulate the hon. Members for Stoke-on-Trent North (Ruth Smeeth) and for Hazel Grove (Mr Wragg) on securing the debate, and I thank the Backbench Business Committee for awarding it to them.
I was elected in 2010, following the great financial crash of 2008. I thought at the time that MPs were tasked with two great challenges: first, how to ensure that the public never have to bail out banking failure again, and secondly, how to rebalance the economy geographically. In my view, both tasks required a fundamental rethink of how the financial system works. In reality, I am afraid we have made little progress over the past eight years.
I will speak briefly about moral hazard. The reforms, in my view, have been far too timid. We needed to break up the big banks, move away from the universal model and introduce Glass-Steagall provisions whereby retail and investment banking would be completely separated. That is the only way to ensure that the public are protected from the irresponsible behaviour of city speculators. Splitting retail and investment banking activity would also help to drive forward a more plural retail banking environment, instead of a few major banks dominating.
Creating a more plural banking system is a key element of any strategy to rebalance the economy of the British state on a geographical basis. The banks, having been bailed out by the people—let us remember that we are talking about nearly £1.3 trillion in loans, grants and guarantees from the public—have now abandoned our communities. More than 200 bank branches have been closed in Wales alone in the past six years, and the closure rate in Wales is three times that of London and the south-east of England. I am sure the same can be said of the more rural areas in England, and indeed of Scotland and Northern Ireland. In my constituency, all the major towns—Ammanford, Llandeilo, Llandovery and Newcastle Emlyn—have faced bank closures, and some have been left without any banking provision at all. We are talking about a large chunk of the west of my country.
Since I was elected, HSBC has closed its branch in Llandovery. The argument at the time was that services would be provided in Llandeilo. When the branch at Llandeilo was closed it said that services would be provided in Ammanford, but just a few months ago, the branch at Ammanford was closed. Centralisation is obviously a process, not an event. Just before Christmas last year, Lloyds announced its intention to close its branch at Llandeilo, and NatWest announced closure plans for branches at Llandeilo and Ammanford.
As well as meaning that towns lose their status as commercial centres, bank closures create four major problems for the communities we serve. First, job losses in our market towns are directly associated with the banks in question. Secondly, the loss of vital banking services can be a huge problem in rural areas, where poor digital infrastructure often renders internet banking redundant. In such areas bank closures particularly affect people who continue to rely on cash and cheques for financial transactions. Thirdly, the loss of banking services often leads to the loss of free ATMs in our towns—a number of Members have already referred to the problems that can create, especially for the night-time economy. Finally, the loss of banks undermines the financial underpinning of our local communities, despite the far-reaching consequences of the centralisation of business services over recent years.
Research indicates that bank closures dampen lending by small and medium-sized enterprises in their respective areas by 63%. That has a huge impact on economic performance, with businesses deprived of access to the lending that is so important to help them develop and maintain sustainability. That, of course, furthers geographical wealth inequalities and creates substantial productivity challenges in communities. As was said earlier, we are seeing a huge market failure with dire economic and social consequences, and policy makers must address the situation.
We can look across the world for numerous examples of what can be done to deal with the situation we face. In the Republic of Ireland the credit union movement has been mainstreamed to ensure that it provides vital banking services to the citizens of that country. In the US, credit unions also provide mainstream functions, including, critically, lending to businesses in the communities they serve. A strong network of community banks underpins the local economy. In Germany, strong economic performance is underpinned by the Sparkassen and Landesbanken network, which essentially are publicly sponsored community banks.
In my view we require action on three fronts. First, we need a US-style communities reinvestment Act to ensure that the big commercial banks have to invest their vast resources geographically and equitably, to ensure that businesses can obtain finance and wealth is shared evenly. Otherwise, banks will continue to concentrate on the City of London, and on socially useless investments that deepen sectoral and geographical wealth inequalities in the British economy. Secondly, we need the protection and enhancement of Post Office financial services, so that post offices can operate as all-inclusive providers and community banking hubs. For that to bear fruit, we must ensure that the obsession of successive British Governments with rationalising the network is resisted.
Thirdly, given that the British Government own 73% of RBS—which, in turn, owns NatWest—surely one option would be to change the business model and use that ready-made network. It appears, however, that the UK Treasury’s priority is to support bank closures and to prepare RBS for sale to City investors, but that would be an enormous missed opportunity given that we, the public, own a large share of that bank. Another option, put forward by my constituency colleague, Adam Price, in the Welsh National Assembly, would be for the Welsh Government to step into the breach by developing a network under a Welsh public bank brand.
The consequence of doing nothing is that we will not deal with the two major challenges that I set out at the beginning of my speech. When the next financial crash comes, I fear that the public will once again have to bail out failing financial institutions. Furthermore, there will be no hope of dealing with the grotesque geographical wealth inequalities that exist within the British state.
Michelle Donelan (Chippenham) (Con)
I commend my hon. Friend the Member for Hazel Grove (Mr Wragg) and the hon. Member for Stoke-on-Trent North (Ruth Smeeth) for securing the debate.
My constituency is formed of four market towns and a lot of villages, so it will be no surprise to Members that we have seen a number of bank closures in the past few years. In fact, there are no branches left at all in Bradford on Avon and Corsham. Locally, a key part of the problem has been insufficient transport infrastructure to get people into those towns, particularly from surrounding villages such as Neston, and an above-average ageing population.
Nationally, the banking industry estimates that branch visits have fallen by roughly a third since 2011. I understand and recognise that banks are businesses and that branch closures happen for commercial reasons. Fundamentally, advances in technology—online and mobile banking—have significantly reduced demand. Cheques are still the main reason customers go into a branch, but cheque usage has declined severely—by 13% between 2014 and 2015 alone. Things have changed: I remember back in the day my Mum paying in the supermarket with a cheque and cheque guarantee card. Now she uses Apple Pay on her iPhone!
To explain the decrease in demand, we must consider the purpose of banks. For some people, as Members have suggested, banks are more than a normal service. They are a part of the community, offering people a personal relationship and an opportunity to chat. They can prevent loneliness. That is why, for some, closures are not just an inconvenience or a sting: they can actually hurt. I know that that has been the sentiment in my constituency.
That view of banks, however, is decreasing, especially among younger generations, hence the need to specifically help and consider the elderly when banks close. I must note at this point, as other Members have, that provisions are already available to reduce the impact of bank closures. The industry’s access to banking standard, launched in 2017, makes a commitment to provide information about branch closures, along with options locally to continue to access banking services. It also includes specialist assistance to customers who need specific help. Importantly, it commits to providing a minimum of three months’ notice of branch closures. However, I do not think that three months is long enough for people to change their habits or prepare themselves. I ask the Minister to call on the banks to operate a six-month policy, which would be fairer and more adequate. It is vital that when banks make decisions on closures they review the transport network and infrastructure, and ensure that provision is available so that banks are accessible in the area.
Mobile banking is a perfect example of a halfway house, costing only 19% of a physical branch. RBS group and Lloyds have built a large network of mobile banks across the country, and HSBC has just started to do the same. They help in areas where there is no accessible alternative provision, and they can be used as transitional arrangements to enable people to adapt and have more time.
Jamie Stone
I take on board completely the point about mobile banks, but there are issues with them. The public have to queue up outside in inclement weather and get soaking wet, and they do not have the ability to handle paper transactions.
Michelle Donelan
I do not believe that mobile banks are the answer; I am proposing that potentially they are a part of the solution. I agree on the point about cold weather. That is a very valid and worthy consideration.
I have worked locally with Lloyds to reduce the impact and to manage the transition of the loss of branches in Bradford on Avon and Corsham. I am pleased to say that we have a provisional agreement for a mobile bank trial in Corsham. Madam Deputy Speaker, I am sure you will agree with me that the case for such a trial is just as valid in Bradford on Avon. I am sure the Minister, as a local Wiltshire MP, also agrees.
Turning to the impact of bank branch closures, each case is different in every circumstance. When severe, it can suggest, alongside closure, a lack of investment in training and support for older and vulnerable people. That is why I reiterate that a three-month notice period is not long enough. It takes time to build some people’s confidence in the security of digital banking. Alongside Lloyds bank and Barclays, I have run three fraud workshops, which were heavily attended, particularly by the elderly community. Support to vulnerable residents and the elderly is crucial. It is important to remember that about 4 million people—mainly the elderly—are not online at all. However, we must not write off older people as incapable of using the internet. We must support and manage them, and give them the tools and skills to make progress. More than 600,000 people aged over 80 already have online banking. They put me to shame, as I joined only last year.
Another stumbling block to digital banking can be deprivation, which can render people unable to own a computer or a smartphone. Mobile blackspots and patchy internet services are both common in the villages in my constituency. Banks should ensure that an alternative option is accessible, such as mobile banking or sufficient public transport to the nearest branch, and I again make the point that Bradford on Avon really needs mobile banking.
Post offices are not the answer, but they are part of the solution and can play an essential role. Our post offices have been struggling for years, but incorporating banking into their services is proving to increase their footfall and helping to engage people in their services again. The Post Office currently offers basic banking services to many bank customers and is expanding that to business customers. As has been noted, awareness is the key problem, but it is also about changing consumers’ habits. I was pleased that at the autumn Budget of 2017, the Treasury wrote to the Post Office and UK Finance to stress the importance of raising public awareness. I would like to hear the result of that from the Minister.
In conclusion, it is important that we do not resist technology, but that we accept and embrace change to enable progress, grow our economy and compete on the international stage. However, I want to be realistic. I believe that it is inevitable that all branches will eventually close. The supply of them has reduced by 60% in my lifetime, so I think that we should encourage a sustainable hub model to emerge—a one-stop shop—where post office and banking facilities can be offered, as well as debt advice and potentially even a citizens advice bureau. That will help to safeguard our high streets. The transition period is so important, along with the support available. Banks need to lead the way in training and supporting people who are currently unable to support themselves through their digital skills. We must also encourage the roll-out of mobile banking.
I hope I have outlined today that the banking world is changing, but that there is a process whereby we can improve the transition, so that everybody in society can continue to embrace technology. We must support our community.
James Frith (Bury North) (Lab)
I congratulate my hon. Friend the Member for Stoke-on-Trent North (Ruth Smeeth) and the hon. Member for Hazel Grove (Mr Wragg) on securing the debate. I would like to speak about Ramsbottom, which is frequently in the top-10 lists of best places to live and visit. Of the two market towns that I am proud to represent, Rammy has been hit first and hardest by the bank closure trend. It needs a community banking offer. When I visited small businesses there in December, the shopkeepers, charities and businesses all spoke of the distinct mix of problems that they face in keeping their heads above water.
Community banks, and banks generally, bring tradespeople to the town. They increase footfall and help to determine a town’s future prospects. Paying in, cashing up, small impulse buys, floats, cash-only stalls, making deposits and general local bank services are all still part of business life and life and living in Ramsbottom.
However, first Barclays then NatWest closed, and now Royal Bank of Scotland is reducing its opening hours, with visitors to Rammy, and customers reducing with them. A bank nearby is likely to determine the opening hours of any retail operation or business, as the proprietor will need to factor in the bank’s closing time with that of their business and the leaving time of their staff. It will be one of the things that a business proprietor considers in determining where to set up in the first place, and if a local authority is struggling to attract new shops, it will understandably opt for another eatery for the night-time economy or reach for a high-street name, thus risking diluting the independent offer of a town like ours, which is, in its first instance, the fundamental nature of the place and why visitors come at all.
It is all tied in to this proud community—one that has pulled together at a time of mourning recently, or a time of great testing—the Boxing day floods two years ago. There is always something fun to do and to see, whether at the chocolate festival, black pudding throwing competition—[Interruption.] It is true. Or the Head for the Hills music festival, the civic and town markets, or just a healthy mooch around the shops.
Of course, the problems cannot all be laid at the door of the banks, but they are a considerable part of the cumulative issues facing this community, including business rates, public transport links drying up, and less disposable income after making ends meet. It is the independent nature of Ramsbottom that gives it its zeal. These are our entrepreneurs, who are not denying the march of progress with broadband, with cash alternatives and online shopping; they are, as I am, rightly defending their modern but traditional offer. The butcher, the baker, the dressmaker, the art gallery, the coffee lounge, craft shops, pet shops, micro-breweries, chocolate factory and specialist food stores, family-run restaurants as well as charity shops, have all spoken to me of the impact on them of the drying up of available banking and a local bank.
The increasing risk of isolation for our older communities is also a consideration. Those for whom Ramsbottom is the nearest town with a bank, endure average broadband speeds 27% lower than the national average. My constituency is ranked 62nd of 75 constituencies in the north-west on that measure, and 467th of 650 constituencies in the UK. In Affetside, broadband is practically non-existent, and we all know that areas with no history of suitable broadband will also suffer from low-skilled internet use, which does not square with the inevitable claim that people can use internet banking instead.
Caroline Flint
My hon. Friend makes a superb point about access to broadband. In my constituency, some 30% of people either have very slow access or no access at all, and I can vouch for the fact that in Bawtry, where the last bank is in danger of closing, it is a nightmare either making mobile phone calls or getting on to the internet. Could not the Government say to the banks that until those areas have the pleasure of the fast broadband that our cities share, they should not close any services down to just online services?
James Frith
My right hon. Friend makes an excellent point. Is it not true that too often, when we see the march of progress, people assume that the have-nots will simply catch up, and that no intervention is required from Government or statute to bring that about?
When I asked business owners in the town for their input for today’s debate, the following contributions stood out. Steven White, pet shop owner on Ramsbottom High Street, said that:
“we banked with NatWest…the direct impact is that we now have to queue at one counter in the post office”
while others are doing all sorts. He added:
“We get our weekly change here, and there is now a delay in the payment hitting our account, so when things are tight, as they sometimes are, we can no longer rely on getting our day’s receipts in to help”
with cash flow. He points out:
“We could move banks but there is no confidence that who we move to will stay open in our town”
or nearby.
Mrs P’s Luxury Ice Cream told me:
“We have found it increasingly difficult to bank cash as the RBS is now closed two days during the week. I feel that there is very little consideration given to the elderly population”—
many of whom are their customers—
“who largely prefer face to face banking.”
Louise Isherwood of Ramsbottom Sweet Shop said:
“People used to pop in whilst in town using the banks…there are so many less people in town”
now
“on a daily basis…to make it worse, if the banks sell the building…for use as a wine bar”
people will not visit during the day—and they will not buy sweets at night.
In closing, here are some possible solutions. The Government should sponsor more challenger banks that operate at break even or not for profit. We should consider extending the role and mandate of credit unions. Labour’s proposed regional investment banks would ensure that community banking has a primary role in the service offer, and the Government should adopt that principle immediately. There should be rewards in the form of tax incentives for community banking operations when the “profit and loss” or “balance sheet” argument of the existing bank is that it only breaks even.
I rather fear that the Government will hold their hands up and say, “We are just the Government; what can we do?” However, there is a case for them to intervene, and for the industrial strategy to incorporate the experience of hundreds of thousands of businesses. They are the real employers, wealth creators and taxpayers. At least 80% of our economy is made by those people. They are job-creating heroes, sweating it so that the Government receive their taxes. The Government should not dismiss the argument that this is simply a commercial decision for the big banks.
I urge the Government, instead of propping up the Carillion model of employment, to stand up for these real employers, heed the concerns expressed about the withdrawal of banks, and make a commitment to new community banking so that everyone in our society can benefit.
Peter Aldous (Waveney) (Con)
I congratulate the hon. Member for Stoke-on-Trent North (Ruth Smeeth) and my hon. Friend the Member for Hazel Grove (Mr Wragg) on securing the debate.
This matter is of specific interest to me. Early in December, Lloyds bank announced the closure of three branches in the Waveney Valley area of north Suffolk: in Bungay, in my constituency, and in Halesworth and Southwold in the constituency of my hon. Friend the Member for Suffolk Coastal (Dr Coffey). I should declare an interest at this point, because I am both a personal and a business customer of the Halesworth branch. Shortly after the Lloyds announcement, NatWest announced the closure of its branch in Beccles, which is also in my constituency.
My main concern is that, if Lloyds proceeds with the closure of its Bungay branch, there will be no bank left in the town, and I believe that we need policies to prevent that from happening. Some may say that I am a luddite and that we cannot hold back the inevitable march of the internet and modernisation, but what concerns me is that some banks are closing branches in an indiscriminate, non-strategic way that will have an adverse impact on the elderly, the disabled, those without their own transport, small businesses, and the economies of the towns and hinterlands that will be left with no bank standing. In the last two years, Barclays and Norwich and Peterborough building society have closed their branches in Bungay. If Lloyds proceeds with its branch closure in May, there will be no bank left in the town. That has upset many people who transferred their accounts to Lloyds following the previous closures, and it will have a particularly negative impact on the elderly and disabled and on small businesses.
I have three specific concerns. First, if Lloyds proceeds with its closure, there will be no cashpoint machine with 24/7 access in the town centre. Bungay has three street fairs a year, which bring a significant amount of business into the town. Last Christmas an estimated 1,200 to 1,500 people came along, and there were long queues at the Lloyds cashpoint. Many of the traders who go to the street fairs only handle cash, and there is a real worry that, if it is not available locally, the fairs—which add so much to the vibrancy of the town—will suffer.
Secondly, it is important to emphasise that many businesses, both in the towns and in the countryside, still use cash and cheques. The lack of immediate access to cash and deposit points will, at least in the short term, cause considerable inconvenience and added expense. On the basis of my experience as a partner in a local family farm, I know that for several farmers the easiest way to handle payments from the grain merchant is still via cheques, and that quite often the rents paid by small businesses for farm buildings and workshops are still paid in cash. It should also be borne in mind that the change to internet banking in rural areas will require considerable improvement in broadband connectivity, an issue about which we have heard throughout the debate.
Thirdly, the lack of a bank in Bungay will affect the town’s ability to draw in customers from the surrounding area. Lloyds is redirecting its customers to its Beccles branch. That may mean that people who came into Bungay once a week to go to the bank, to do their shopping and to have a coffee or a meal may now do all that in Beccles. I met Lloyds representatives on 4 December, when I put those points to them. I asked them to reconsider their decision to close the Bungay branch. It is disappointing that I have not yet had a response from them, although I hope that that means they are giving the matter serious consideration.
With regard to NatWest’s closure in Beccles, I had a meeting with the bank’s representatives last month. I am disappointed with their decision, but they took me in some detail through why they reached the decision to close the branch and how they are now engaging with their customers. They are prepared to work with the local community. As well as a mobile bank and closer working with the post office, they have plans for a community banker who will have a base in the town at set days during the week, possibly in the library and the town hall.
I have mentioned that the closure of Lloyds in Bungay would result in there being no ATM accessible 24/7. With this in mind it is necessary to ensure that there remains a good network of cashpoints across rural Britain, where consumers and small businesses use cash to a greater extent than in urban areas. I thus urge the Government to support the Which? and Federation of Small Businesses campaign to get the Payment Systems Regulator to ensure suitable measures are in place to guarantee that consumers can easily access their money without charge.
It is important that measures are introduced that can help to avoid a situation where towns are left without a single bank. That could be done in a variety of ways, in particular by building on the post office network, which generally has a better rural reach than that of high street banks. The policies put in place, first by the coalition Government and then the current Government, have been successful in making the post office network more resilient.
In Bungay, the post office is in the newsagent and there is a drawback of lack of space. In towns at risk of having no bank, consideration should be given to providing additional funding to put in place a more substantial post office branch. Ultimately, I would look for this to be funded by the banks. Alternative options that could be considered are mutual societies or pop-up banks, where the high street banks join together to sustain a presence in the town.
Bungay was a pioneer of provincial banking, with Gurney’s, a precursor of Barclays, opening one of its first branches in the town in 1808. Some 210 years on, it will be a very sad day if the town no longer has its own bank and we must do all we can to ensure that that does not happen.
Susan Elan Jones (Clwyd South) (Lab)
It is a pleasure to follow the hon. Member for Waveney (Peter Aldous), my hon. Friend the Member for Bury North (James Frith) and all other contributors to the debate, but of course I particularly thank my hon. Friend the Member for Stoke-on-Trent North (Ruth Smeeth). I was intrigued by her description of her first experience of banking and I remembered my wonderful chequebook with a nice colourful kingfisher on it. I thank the hon. Member for Hazel Grove (Mr Wragg), too, who secured this debate along with my hon. Friend.
I have to say that I am completely fed up, as are my constituents and many businesses in my constituency. We are fed up because we are a constituency of 240 square miles and we have a grand total of one bank branch left. I do not know what happened to all the rhetoric of the last bank in the community. Whatever happened, it did not work in areas such as mine and it is not working across swathes of the country.
I welcomed the banking protocol. In fact, I was part of a cross-party group of Members that went to see Professor Griggs about the protocol. I welcomed it and many of the suggestions in it. For example, I welcomed the fact that it highlighted the need for the collection of cash from businesses and the like and the co-ordination of that. I welcomed many of the things in that voluntary code, but it strikes me that not enough has been done subsequently. It certainly has not halted branch closures.
In 2016, when the last two branches were to close, at Chirk and Ruabon, a staff member and I took it upon ourselves to visit 126 businesses on the high streets of Chirk, Ruabon, Rhosllanerchrugog, Johnstown, Cefn Mawr, Plas Madoc and Acrefair—apologies to any constituents I have missed out—to ask about the many issues they face. Earlier in the debate reference was made to post offices. Having worked with local businesses and post offices in my constituency, I welcome any improvements where they have been made. I also welcome the work that the Treasury has done on standardisation, because we are no longer in the daft position where some things work for some banks, and other things work for other banks. There are post office branches where that works absolutely magnificently, but in others it simply does not work. If someone comes into a post office to buy a packet of crisps, and then someone else buys a bar of chocolate, but the person working there has to deal with a banking transaction in the middle of that, that is not a sustainable solution.
If we are looking to develop post offices in that way, that might be one exciting option to consider around the country. I know for a fact that post offices are doing all sorts of things, for example, granting credit union members access to their cash. I welcome that when it works, but we have to look at what provision is put in place when bank branches close.
Earlier in the debate it was suggested that the notification period for bank branch closures should be longer. I think that there is a case for that, but in too many cases we know that, when a bank gives notice that it is going to close a branch, that is what it is going to do. We can petition to our hearts’ content, with 38 Degrees petitions, petitions in this House, Change.org petitions—we could even create our own website and have some more petitions—but in most cases it does not make one jot of difference.
Michelle Donelan
Does the hon. Lady agree that more time would allow people to hone their digital skills and that banks have a role to play in that to ensure that people are prepared for the closure? The branches might still close, but a longer notice period would give people time to prepare.
Susan Elan Jones
Yes, I would welcome that. I think that is a positive point.
We also have to consider what the banks have been telling us. My right hon. Friend the Member for Don Valley (Caroline Flint) spoke about some commercially sensitive information that she was not allowed to have. I, too, have asked for commercially sensitive information, such as how many people had accounts at the branch, and clearly the bank was unable to tell me. Better still, I asked how many people on a typical week went in with queries. I was told something earth-shattering: that queries might not really be queries. I asked what that meant. I was told that, if someone goes into a bank, stands at the counter and asks a question, that might not be a query. I made the point that, for the customer asking the question, it very much was a query. I was told that, if there was no formal transaction, it was not a query. It is a parallel universe.
As we move at this juncture, we need to know what on earth the banks are planning to do next. An hon. Member has made the point that first we were fobbed off by being told that one could go to the next village, and then to the next, and then to the next, and that it was all right because it is just a little walk down the road—rather like an old-fashioned countryside treasure hunt. Suddenly, one realises that one has to go quite a long way to get to the next post. That cannot be the way to deal with the problem.
What we do about cashpoints and ATMs is of utmost seriousness. There are currently some 70,000 in the country, the bulk of which are free to use. At the start of 2016, the then Chair of the Treasury Committee, Andrew Tyrie, said that cashpoint charging and closures were of great concern. His point was that, if the ATM companies were not going to deal with the problem, this House needed to look at it, because people in rural communities and those on low incomes would be affected the most. As far as I can see, one problem with cashpoints is that the 38 or so banks and the like that are part of the ATM network are having a little scrap with each other. As they knock metaphorical spots off each other, each deciding that they are all paying too much, it is the customer who loses out.
Ruth Smeeth
My hon. Friend may not be aware that the price of an average transaction has not increased for nine years. The service is not costing the banks any more money; they just do not want to pay for it any more.
Susan Elan Jones
Where charges exist, the average cost of a single transaction is £1.70, and it is worrying that we are not looking more at free access to cash, which is a basic right. We do not say that about drinking water or many other things. It is nonsense that we are prepared to let banks charge money for us to visit a cashpoint, and there is no doubt that charging hits the poorest communities hardest.
I want to give credit to some examples in my constituency of where people are fighting against the system. I do not know whether Members have ever visited Corwen, which is a fantastic town.
Susan Elan Jones
Excellent. I do not know whether Members have been on the steam train, but Corwen is a wonderful place for tourism and has fantastic local businesses. The town really wants to consider and develop community banking, and people are adapting. We are not expecting to return to a previous era—we do not expect Captain Mainwaring and Sergeant Wilson to come back—but we need a type of banking that works for us and for communities such as Corwen and many others across the country. The Government need to step in if the banks are going to close branches or if the ATM companies are going to start charging. We need the Treasury to be tough on them and we need to stand up to them. At the end of the day, if the world’s local bank and other local banks mean anything by community banking, they have to mean it nationwide.
Gillian Keegan (Chichester) (Con)
It is a great honour to follow the hon. Member for Clwyd South (Susan Elan Jones), and I congratulate the hon. Member for Stoke-on-Trent North (Ruth Smeeth) and my hon. Friend the Member for Hazel Grove (Mr Wragg) on securing this debate. Technology has been used to modernise the banking sector for decades and, as an industry, banking has seized the opportunity to use technology mostly to improve the customer experience wherever possible. In the ’90s, I worked as a technology procurement manager for a bank when we were upgrading branch infrastructure. Thinking back, the introduction of the ATM network was one of the first steps away from personalised, face-to-face banking, but what would we do without them? We cannot do without them, and I could not agree more with the hon. Member for Clwyd South about how important it is, as we face changes in the banking industry, that the ATM network and free access to it is preserved throughout the country.
The revolution in FinTech has forced another change in the banking model, and our banks no longer collect the income of merchants and disburse the cash to individuals. Our behavioural patterns have changed with technology. In 1988 we had more than 20,000 bank branches in the UK, and 25% of adults were paid in cash. In many respects, cash has had its heyday. Now accounting for less than 50% of transactions, we saw an 11% decline between 2015 and 2016 alone. Cash may still be king, but its crown is slipping.
That trend is set to continue. Already 6% of the population rarely use cash. Young people, in particular, prefer digital payment methods such as card, online and mobile banking. The model of branch banking as a conduit for cash movements therefore needs to change to ensure that banks remain commercially viable.
The speed of change has surprised many communities, with the uptake of digital banking being relatively recent, and it is important that adequate notice is given when changes are made to local banking services. In 2012 at least one of our major banks had no mobile users at all, but today there are more logins a day on mobile banking than via the web. Meanwhile, the average branch bank customer goes to the bank every two or three months.
Branch closures throughout the nation are predominantly a response to declining demand. In my constituency, Barclays closed its branch in East Wittering citing a 10% fall in transactions at the branch in a single year. However, Barclays has identified 80 customers who exclusively used the branch for their banking needs. Those people need alternative provision.
When a branch closes, it is important that it gets in touch to advise customers of all the services that are available online, via telephone or via mobile banking. Many banks go beyond that and offer training and support to customers, especially the elderly and most vulnerable, to ensure that they are not excluded by the shift to digital services.
Like everybody else in this discussion, I am concerned that there is an increased risk of financial exclusion due to either a lack of digital know-how or a lack of access to the technology. Personal banking is something that many people, especially older members of our society, greatly value, and in many cases the alternatives are not suitable.
We need to ensure those customers know that the Post Office offers branch banking services for all major high street banks and can facilitate all the things that people do in a bank, including traditional cash and cheque services. That is a good alternative, as more than 98% of the population live within three miles of one of our 11,600 post offices nationwide, which makes it Europe’s biggest retail network.
The structure of community services is changing, with our traditional high street names consolidating into shared services. Becoming a community hub is important. The Post Office has managed that well in Chichester and is collaborating with retailers such as corner shops and book shops. That is a win-win for sustainability. Many Members will have been involved in debates about post office closures. We need to make sure that the network of face-to-face branch services is secured in some way, and post offices are a good alternative.
It is important that such services are well designed, as other Members have mentioned. I recently visited the new Chichester post office, which is co-located with Sussex Stationers and British Bookshops. There are seats available for those who cannot stand in a queue for long, and staff are on hand to assist people who are using self-service kiosks or who are waiting for the cashier. Needed privacy is provided. The service is similar to that provided by the old bank branches. That is the right model, but these new post offices need to be well designed, and perhaps more could be done to promote best practice in design.
The Government have made significant strides in improving both mobile and broadband coverage, with 95% of households now able to get superfast broadband. Alas, in rural areas such as my constituency, many people still suffer from areas of poor connectivity, with some areas of my constituency ranking in the worst 10% in the country. As we increasingly rely on digital banking services, blanket connectivity is becoming increasingly important. We must continue our investment in digital connectivity to mitigate the impact of branch closures and to allow people to utilise the technology of today. It is clear though that for some of the older generation, the digital era will already have passed them by. Expecting them to bank digitally is simply not realistic and in cases such as these, the post office must be advertised as the new place for local face-to-face banking. I am concerned that banks might be reticent to advertise post office banking as they may compete in some other areas.
All businesses must adapt to stay ahead of the game and the major banks are under increasing pressure to modernise their services, with new entrants disrupting banking models for businesses and individuals. FinTech firms are creating new and efficient financial platforms, offering lower prices to consumers for financial transactions. To keep up, our major banks have to move to a more customer-centric and digital model of working.
Changes in the banking sector have revolutionised how we do business and how we handle personal finances and, overall, I believe that that has been to the benefit of society. The advent of the microchip, the internet and mobile services have fundamentally altered many of our industries, and banking is no different. Banking practices have had to change to remain commercially viable and banks have had to invest in digital banking platforms, which has made life easier for most of us, but of course we must take care of those who are not willing or able use the services. These individuals must be informed of the other service providers, such as the post offices, and banks that are closing branches have a moral obligation to do that.
Phil Wilson (Sedgefield) (Lab)
I congratulate my hon. Friend the Member for Stoke-on-Trent North (Ruth Smeeth) and the hon. Member for Hazel Grove (Mr Wragg) on securing the debate.
At the end of June, four bank branches will close in my constituency of Sedgefield. NatWest is closing two branches, one in Ferryhill and one in Newton Aycliffe, Santander is to close its branch in Newton Aycliffe, which is just across the street from the NatWest branch that is to close, and Barclays is to close its branch in Sedgefield village. This recent round of closures will deprive every community in my constituency of a bank branch except Newton Aycliffe, which will still have a Halifax, a Barclays and a TSB. It is the biggest town in the constituency, with about 30,000 people living there. The local post office still operates in these communities and offers banking facilities, but it is hardly the place to discuss banking issues such as mortgages or loans. Sedgefield is a rural constituency, with up to 40 towns, villages and hamlets over 150 square miles. The bus network is not what it should be and it is difficult to get around without a car or other means of transport.
Much banking is now done online, on a mobile app, or on the telephone, but there are still those in our communities who need to be able to walk into their local bank branch because they are not online or do not have access to a telephone or mobile, especially the elderly. I know that the banks that are closing branches in my constituency say that they recognise those concerns. NatWest, for example, has a network of community bankers—I believe the number is 1,000—around the country who will be deployed to reach out to and support vulnerable customers when a branch is closed.
All the banks have pointed out to me that how people do their banking has changed radically over the past few years. NatWest told me that the number of people using its branch network has fallen by 40% since 2014. In the same period, mobile transactions have increased by 73% and, in the first half of 2017, 1.1 billion mobile and online transactions were carried out by the bank’s customers. Since 2012, in the two NatWest branches in my constituency, 88% of the customers in Ferryhill and 89% of the customers in Newton Aycliffe have banked in other ways. Transactions at the Ferryhill branch have fallen by 30% and at Newton Aycliffe the figure was 34%. The number of customers using both branches has fallen to between 60 and 100 a week, although whenever I speak to customers who use the branches they always say that there are queues and that they are busy. The reality for customers seems to be completely different from the statistics revealed by the branch. It is a similar story with Santander in Newton Aycliffe. Santander says that 91% of customers use other means of banking besides walking into the local branch. Some 45% use other Santander branches and 40% use their mobiles to do online banking.
I used to live near Sedgefield village, and I can always remember there being a Barclays bank there. I asked how long a branch had been there and was told that there had been a Barclays in that same building in Sedgefield for nearly 100 years. Now, Barclays says that 74% of its customers use other forms of banking. Of 5,000 customers, 22% use the branch exclusively for their banking. Barclays has identified 200 people it considers vulnerable and tells me that it is proactively contacting them to help with their future banking needs. Overall, the number of transactions at the branch has fallen by 17%, whereas in the wider region the fall has been 12%.
Banks such as Barclays, NatWest and others that are closing branches should report how many vulnerable customers they have been able to retain or how many have gone on to other banking mechanisms and systems, to ensure that they are not financially excluded. If they did that, we would be able to take a snapshot of how many people are becoming financially excluded because of closures.
Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)
The hon. Gentleman is giving a fine speech. Does he agree that the large number of closures throughout the United Kingdom have badly affected elderly constituents and those who are disabled? Soon, there will be no banks within large radiuses around most of our towns and people will resort to putting money under the bed again, just as they had to do in my grandmother’s day. The humanity has gone out of banking.
Phil Wilson
The hon. Lady makes a valid point. There has to be a social conscience in banking, and it should not just be for the public sector to sort out. The private sector has to be part of it.
We cannot deny the growing trend in banking being done online and by mobile phone and telephone. Barclays pointed out to me that on average its customers use mobile banking more than 28 times a month and visit a branch less than twice a month. The bank carries out 12 digital transactions a second and, since 2014, has started to use video banking.
The way we bank is changing, and it is not just a UK phenomenon; it is happening across mainland Europe, too. According to data from the House of Commons Library, by the end of 2016, the number of bank branches in Germany had fallen to something like 32,000, which was a reduction of nearly 6% on the year before. In France, where there has been more robust opposition to branch closures—apparently, it is more difficult to close branches in France than elsewhere—Société Générale has announced the closure of 20% of its branch network by 2020. That bank is going to close one in five branches. However, the French bank branch network is still extensive, with six branches per 10,000 head of population, which I believe is the highest proportion in the EU. In Spain, 10,000 branches were closed between 2012 and 2016. Banking is changing, driven by technology that is obviously convenient to the vast majority of customers.
I would like the Minister to address two areas of concern. First, what more can the Government do and what work are they undertaking with the financial sector to encourage banks to look after their vulnerable customers so that they are not left behind? There is also a wider concern. Rural areas, such as County Durham, are seeing the destruction of rural bus services and there are issues with whether broadband provision is sufficient to allow customers to access the internet and therefore access online banking in the first place.
Secondly, the closure of bank branches highlights a key problem that faces our town centres. For example, the future of Newton Aycliffe town centre has been controversial for many years. Although Freshwater, the shopping centre’s owner, has invested in the centre and won awards for its efforts, the closure of two bank branches will only add to the number of already vacant shops. This is not a story reserved for Newton Aycliffe; it is true of town centres throughout the country. Town centres need to be more leisure-focused, with bars, restaurants and coffee shops, as retail moves online, where people are more likely to shop—with Amazon being a case in point. As a consequence, we see many retailers quitting jobs and issuing profit warnings. I make this request to the banking sector: look at how you can change your offer on the high street; look at how you can make the physical bank presence more affordable and more accessible; and look at whether there is a way to merge banking with leisure, such as, for example, placing bank branches within a café.
The closure of banks does not happen in isolation. It affects vulnerable people, it affects our town centres and it affects our communities and their way of life. The banks must remember that, although there is a trend with new technology towards online banking, other people can be left behind; and there is a life that is offline as well as online. All I ask is for the banks to think creatively, because they, too, have a social obligation to their customers, not just to their bottom line.
Craig Mackinlay (South Thanet) (Con)
We have had a debate of extreme unity, between parties, between regions and between countries. It is fair to say that every MP in the House is concerned about the rapid closure of the banking network. I particularly wish to salute the hon. Member for Stoke-on-Trent North (Ruth Smeeth).
It feels like we are seeing a rapid change in high street banking, at a rate that I have never seen before. The reason for that is probably to do with us—the consumer. We have gone down the route that the banks have encouraged: taking the contactless route and using mobile and internet banking. We no longer use cheques for our transactions, because, first, we cannot find our cheque book, and secondly, we have to find an envelope and a stamp.
We have all fallen, probably rightly, for the seduction of the ease and speed of online banking. As my hon. Friend the Member for Chichester (Gillian Keegan) said very clearly, the volume of cash transactions in society is now below 50%. Even though we have the advance of the cashless society—I am sure that is warmly welcomed by the Treasury, because it means that most transactions can be appropriately taxed—it will be a very long while, probably a number of decades yet, before cash is completely out of the system.
There are a number of cash businesses; every constituency has them. My fear is that, when banking facilities move further and further away from those businesses, the amount of cash that is held in their premises and the homes of their owners, and perhaps in their safes, will become bigger and bigger, and with that will come security risks. There are security risks for the staff who are responsible for taking that cash to a bank that is increasing in size and further away.
Ruth Smeeth
One issue that has been raised with me by my constituents is to do with community groups that fundraise and hold big one-day festivals. They generate cash on that day, but, unlike businesses, which may be able to mitigate some of the problems, they may have volunteers who never have done anything like it before. That is a huge issue. Unfortunately, the post office will take cash deposits of only £2,000, which makes it even harder for them.
Craig Mackinlay
The hon. Lady makes the perfect point. My right hon. Friend the Member for Arundel and South Downs (Nick Herbert) said very clearly that, when charities hold grand county fairs, there may be temporary traders who do not have contactless facilities and will not at any time that I can foresee, which makes it a very cash-based business. There are also clubs and societies that rely on cash and cheques for the small transactions among themselves.
I recall, not that long ago—I do not want to single out NatWest for any particular criticism—an advert that said, “We are open all the time. We are keeping our branches.” It was criticising its competitors, saying, “Ah, look, our competitor banks have made your bank into a new trendy wine bar.” I am afraid that we are seeing far too many of those across the country. I recall very clearly that my first bank account was at Lloyds 33 years ago. That branch, which had been there for 50 years or more, is now a quite nice Cypriot restaurant. That highlights the point that the network is disappearing in my constituency in particular. Broadstairs has lost NatWest and Lloyds in this last year alone.
The hon. Member for Clwyd South (Susan Elan Jones) mentioned her petitions. I also generated a petition, and the regional director for NatWest very kindly came to my offices and I delivered it to him. I received the warm words, “We’re consulting.” But of course, the outcome was probably determined some time before the petition was even thought about. Sandwich, one of the best preserved medieval towns in the country, has lost HSBC, Lloyds and NatWest in the last 18 months alone. Broadstairs and Sandwich are both now left only with Nationwide, which I salute for staying true to its roots in service to the community and maintaining its branch network.
We have seen the banks retreat from the smaller communities into the major conurbations and shopping centres. I do not know the experience of other hon. Members, but whenever I pay in a cheque—my heart sinks when I receive a cheque in the post, because it means I have to wander somewhere to do something with it—the queues seem as long as they ever were.
Much has been said about the post office network, which is fantastic, but it is not always available and the queues are horrendous. The post office has closed in the small village of Ash in South Thanet—I say village, but it is getting towards town size, with a population of 3,500. We hope that the post office will be resurrected in a new branch or shop, but there is currently absolutely nothing available for the people of Ash, who are five miles from Sandwich, 16 miles from Canterbury and eight miles from Ramsgate.
Why do we not all use mobile apps and the internet? Well, that is all very well, but I do not want the elderly to be forced into accepting that type of banking, and people who have difficulties but are managing independent living need help with those kinds of facilities. My father is in his 80s, and is fit and well, but I do not want him to use mobile banking under any circumstances, because it is not uncommon for him to say to me, “Oh, I’ve had an email from Santander and I don’t even bank with Santander.” That is exactly the point. Many of us here, particularly those who are younger than me, are very internet-savvy and would recognise a scam banking email, but many of the elderly would not recognise it and might respond, giving up their internet banking details.
There are clarion calls across the House, mainly—dare I say?—from the Opposition, that it is up to the Government to do something. We often hear Members saying that the Government should do this or the Government should do that. In fact, we see it on the Order Paper on an almost daily basis. I do not think that this is a matter for the Government, although they can help to inform the debate. This afternoon, Members from all parties are saying loudly and clearly to the banks, “Stop what you’re doing and start thinking again about the communities you serve.”
Much has been said about the opportunity for joint banking facilities. That would be a very sensible route to take. I appreciate that a premises costs a lot of money, as it has to be heated and there are business rates, staff and security to pay. But surely three, four or five of the major banks could come together in some kind of grand banking hall, sharing facilities so that counter service is available. The call today is, “Banks, please do something.” They could also extend the availability of their mobile, caravan-type, irregular banking facilities that can go to smaller communities; I cannot see why that option should not be available.
We are all responsible for this situation. I am still a bit of a cash person. I even go into the bank and sign a cheque for cash. It was not many years ago that the cashier said, “Why don’t you use the cash point?” Of course, I do use cash points, but if I am passing the bank I often cash a cheque. I said, “Don’t put yourself out of a job. If more and more of us do that, you’re sounding the death knell of this branch.”
We see these changes here in the cafés in this House. I am always quite amazed that some of the younger people who work here will use a contactless card for their sandwich and a cup of coffee costing £1.90. I am not like that, but I can see that my own level of card use is increasing as the years go by. At the moment, I will use a card over the level of £20, but I am increasingly tempted to go for the contactless card under that £20 limit.
I recommend that Members encourage our constituents to get into the banks that still exist and use their counter facilities, because then the banks will not be able to say, “We’re closing because we’re not getting used enough.” The cross-party clarion call from this Chamber today has to be: “Banks, please stop. Let’s think again. Let’s work together. We want more joint facilities and more mobile caravan-type banking facilities going to our communities.” We can all do our bit by getting into the banks and using them.
Jim Shannon (Strangford) (DUP)
It is a pleasure to follow the hon. Member for South Thanet (Craig Mackinlay). I pay special credit to the hon. Members for Stoke-on-Trent North (Ruth Smeeth) and for Hazel Grove (Mr Wragg) for setting the scene so well and giving us an opportunity to make some contributions on this subject.
Five banks have closed in my area in recent times—in fact, one has not closed yet but is going to close—so this is happening in Northern Ireland as well. Clearly the bank closures are not just in one area of the United Kingdom of Great Britain and Northern Ireland but across all its regions, as others have said.
I represent the beautiful—the most beautiful, without a doubt—constituency of Strangford to the best of my ability. It is the most wonderful place to live in the whole of the United Kingdom. Everybody knows that, nobody doubts it for a second, but I just want to put it on the record, as I often do in this Chamber. I am blessed to wake up every day with a beautiful view of Strangford lough and all that country living entails. I am also blessed to have a 15-minute journey that takes me to my constituency office and the wonders of a great town. The make-up of my constituency is rural and urban; town and country. So it is with great pleasure that I contribute to this debate with both rural and urban hats on.
In my main town of Newtownards, the Bank of Ireland and First Trust Bank have closed, and down either side of the peninsula we have had banks close. The bank in Portaferry closed some years ago, but Kircubbin’s has now closed as well. I am currently trying to fight the closure of Ulster Bank in Killyleagh. When I say “fight”, I mean trying to stop it, not physically fighting it. We have had meetings with Ulster Bank officials and come up with some ideas, not on how to stop the closure, because we cannot do that, but on how to make it easier. This seems to be the latest banking fad: close the smaller branches, centralise everything, and it does not matter about the lack of customer services. What matters is how much profit the banks can get for their shareholders. That should not—indeed, must not—be the motivation for this happening.
When I met the officials from Ulster Bank for an open and frank discussion about the proposed closure, they were clear that the branch was closing and that nothing could be said to change the decision. That was disappointing, because the purpose of having meetings is to try to change opinion, ever mindful that there are others at a different level who are making decisions. That was despite the fact that we had outlined the particular need for the branch to remain, given the needs of the rural community and those who are already isolated. In Kircubbin village, farmers and fishermen had banked at Ulster Bank for umpteen years. People from businesses in the village had strolled down to their bank, because it was within walking distance. We had an elderly population who looked on the bank as more than a bank, because they had a relationship with the people in it as well. Those things were lost. Now we have a credit union that has started up. I hope that it can fill some of the vacancy, but it cannot fill it all given the very nature of what it does.
I have real concern that these decisions are made by big banks that look only at the profit of the bank, not profit across the Province, and that they are not rural-proofing. Rural-proofing has to be part of the decision making process. Hopefully the Minister will give us some idea of whether, in his discussions with the bank, he has been able to raise the issue of rural-proofing and how it affects rural communities.
I believe that customers in Kircubbin who pay the same charges as customers in Belfast should receive a similar service. That is clearly not the case. It has once again come to pass that living in the country means being isolated and away from face-to-face interaction, which is an essential part of the banking trade.
Every one of us remembers our introduction to a bank. I remember well the first loan I took out from the bank. I will not go into detail, but the bank manager was most accommodating. To be truthful, the way we got our loan would never happen today. It was done very quickly, with the knowledge of me, and probably of my parents and their solid banking over some 30 or 40 years.
I put forward the case for Kircubbin, and particularly the needs of the fishermen and farmers in the area, and asked what would be offered to help those valued customers. I must say, I am still disappointed and annoyed. I was somewhat grateful that as opposed to walking away, as many banks have done with a “Too bad, so sad” attitude, the bank has committed to a leave-behind service that will take the form of a one-day-a-week community banker who will work from an office space or business in the town to help with one-on-one issues.
We have secured a mobile bank once a week in Kircubbin village and other areas in the peninsula—an option that the hon. Member for South Thanet referred to. The elderly can get to that mobile bank, and those who have businesses can have an interaction there. With the mobile bank and a community banker, we got two things.
The bank has also been allowing people to bank in the post office for basic lodgements, withdrawals and balance checks. In the six-month run-down to the closure of the bank, there was a dedicated staff member who helped people to better understand and use the online banking system. There were also numerous tutorials available to users, and the bank made its community officer available to groups such as fishermen or famers over a period, to ensure that there was confidence in the new system.
I have watched people go into a bank and have someone explain how the online service works, but I can tell you that as soon as they walked out of that bank, they were never going to use that service. They were confused and did not know what the purpose of it was. More time needs to be spent on that.
While we did not get the outcome I had hoped for, there is at least a clear determination that customers will not be completely abandoned, and I thank the bank for the long-term promises it has made. It has made the same commitment in terms of its withdrawal in Killyleagh on the other side of my constituency.
It seems like too many banks are closing, leaving customers who are not confident with online banking with no option other than to bank in that way. The problem I have with online banking is that it does not suit everyone, and many people need an alternative. I have seen customer services representatives talking to customers about online banking, and it is clear to me that they are unhappy and unsure how it works.
I personally like the paper trail of banking. I well remember when my mother took me down at the age of 16 to open my bank account with the Danske Bank. She gave me £20 to start it, which was a fortune in those days. Along with the £26 that I had saved for five or six years, I had £46. I was able to buy a Mini car for £45. That gives an idea of how far back it was. We thought we were rich, and we were, because I got my first car. I have been with that bank ever since.
I do not bank online. Indeed, I could not bank online with my limited computer skills. I do not believe that the bank should force this on those who are not internet-savvy and who leave themselves open to being victims of fraud, as they do not know how to protect themselves. That is another thing we must remember. As others have said, there are so many scams today, with people phoning up and saying, “I’m from the bank. Give me your details.” The elderly feel vulnerable, and we need to protect them. I have a particular concern about that, especially in my constituency. We do not let children internet-bank because we attempt to protect their interests, and yet they are more computer-savvy than a 65-year-old retired fisherman who we try to force this new way on.
I recently spoke in the RBS debate—it is nice to see the Minister in his place again, and we look forward to his response—and I again make clear that this is not a witch hunt against any particular banks. I have been impressed with their aftercare when they have pulled out of an area, as they have in areas such as Kircubbin and Killyleagh. Time did not permit me in the last debate to read out my closing remarks, so I will use them today.
I call for a return to the old-fashioned codes of truth, honesty, fairness, common decency, integrity and transparency throughout the whole of the banking industry. I call for a return of the bank manager who has an intimate knowledge of his branch and the people who use it—they really had such knowledge—not one who glances at an online profile. Bank managers should stop closing branches, and instead get to know the people whose money they take.
I support the call for a public inquiry into the Global Restructuring Group scandal that has so terribly affected businesses in my constituency and throughout the UK. I call for compensation for small businesses and for a resolution for those in the midst of strife. I understand that RBS is a business and must run as such, but when it put its fate into our hands in this House, it was more than simply about giving it a handout; it was a chance for us to look at how this had happened and ensure it would never happen again, and we must take this duty very seriously.
The pandemic—it is a pandemic—of rural bank closures must be addressed, and we have a duty in this place to address it. I intend to do so, and I know many others wish to do the very same. We must be a united House: united against the banks and against the closures.
Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)
Thank you, Madam Deputy Speaker, for the opportunity to contribute to this very interesting and vital debate on a massive issue that affects communities across our nation. It is always a pleasure to follow the hon. Member for Strangford (Jim Shannon), who made a particularly passionate and insightful speech about the impact the programme of closures will have on communities in his constituency.
I congratulate my hon. Friend the Member for Stoke-on-Trent North (Ruth Smeeth) on securing this debate, and on speaking so passionately and knowledgeably in introducing it this afternoon. I also thank the hon. Member for Hazel Grove (Mr Wragg) for his contribution, and for securing the debate through the Backbench Business Committee.
I speak with a degree of nostalgia and affection for community banking, given that I grew up around community banks. My mum has worked in retail banking for her whole career, and I remember vividly as a kid being taken down into the vaults of the Bank of Scotland in Charing Cross, where my mum worked. I also remember opening my Squirrel saver account at the Bank of Scotland, and my little plastic Bank of Scotland piggy bank, which was great.
I speak with great affection about community banks, but I also know how important they are, particularly for elderly customers and vulnerable people in the community. They develop a very close and affectionate relationship with the staff, who know them very well, understand their needs and are able to accommodate them. It is a form of personal interaction that builds affectionate relationships and a long-term engagement with banks, and those relationships are hugely valuable for the banks. I would have hoped that more banks recognised how important such personal interaction is for communities —it is vital—and how it contributes to them.
It is a shame to think that that bank in Charing Cross is now a Starbucks. That shows that this is a long-term process of withdrawal from communities, and we must challenge it because our communities are approaching a real cliff edge. My worry is that the programme of bank closures that we have observed, particularly in recent years, appears to target the poorest communities in our society disproportionately. Well over 1,000 branches have closed in the past two years alone.
In my constituency of Glasgow North East, where unemployment is twice the national average—I would add that it has had the lowest turnout in elections in any constituency, which perhaps shows the level of disengagement of many people—we have had the closure of the RBS branches in Possilpark, one of the poorest communities not only in Glasgow but in Scotland, and on Alexandra Parade in Dennistoun in recent months, followed by the closure of the Clydesdale bank in Springburn.
It was a cruel irony that, when I went down to look at the Clydesdale bank branch on Springburn Way, next to the shopping centre, I saw a branch of BrightHouse doing good business—it was doing a roaring trade. BrightHouse is a rapacious organisation that fleeces the poorest communities in our society by, I would argue, mis-selling consumer goods at outrageous rates of interest. That is also something we should challenge. As more people are forced out of normal commercial banking into the hands of these rapacious lenders, such lenders have to be challenged.
Ged Killen
My hon. Friend is talking about poorer communities being left behind by these banking changes, and he is absolutely right. Although the recent stay of execution for 10 branches in rural areas of Scotland is welcome, these are some of the wealthiest communities in Scotland, and three of the banks being saved are in the constituency of the Secretary of State for Scotland. The Government are the majority shareholder of RBS, so surely there is a role for RBS to step in and look after more such deprived communities?
Mr Sweeney
My hon. Friend is correct, and that is one thing we do not see—I have tried to piece together the evidence, but it is not nationally recorded. What is the density of banking operations in the poorest communities in our society? Data is not gathered on that issue. Possilpark and Springburn fall into the most deprived decile on the Scottish index of multiple deprivation, including for employment, health, education and housing. That seems to be the case for a lot of areas with branch closures, certainly in the Glasgow area, and it would be interesting if the Government could oblige banks to provide the data as a matter of national standards. By contrast, in the wealthiest parts of the city—I took the example of Byres Road, which is arguably the wealthiest postcode in Glasgow—every major bank is represented. Banks seem to be withdrawing from the poorest communities while maintaining their services in the richest parts of the city, and if that is extrapolated across the UK, it paints a dismal picture.
It has been argued that bank closures are a reality of technological change because more people are using online banking services. In reality, however, 2 million Scots do not use online banking, and they are disproportionately older people who are not familiar with the change in technology. We must be realistic about the rate of change and how practical it is, so as to reduce the harm caused to society and prevent the generational dislocation that is evidently occurring. More than one third of people who use the services of Citizens Advice Scotland have no or limited internet access. How will they access finance and banking if the major commercial banks disinvest in their local communities? Such closures are not just driven by technological change.
It is a great privilege to be a council member of the Institution of Engineers and Shipbuilders in Scotland, and the banking sector is a huge driver of innovation in our society. As hon. Members have said, we have seen huge technological changes, and one great British innovation that sticks out for me is the ATM. In 2016, the Scot James Goodfellow was inducted into the Scottish Engineering Hall of Fame for his work in inventing and patenting the first ATM in 1966. He did that in response to the desire by the major commercial clearing banks to close on Saturday mornings. People were trying to find a technological way to accommodate that desire, and that is how the ATM came into being and why it is so ubiquitous on our high streets today. We must harness technological change for the public good, not simply use it as a cop-out or an excuse to ridiculously disinvest from our communities at an inappropriate rate. We in the House must challenge that and adapt technological change for the public good; we cannot leave the banks to be judge and jury about the way that such change should occur.
I mentioned that closures are not just driven by technological change, and we must consider the banking sector in the UK. Five of the major commercial banks hold 85% of all current accounts, and personal banking services are combined with riskier investment banking activities. That is symptomatic of a very difficult and high-risk sector that in the last decade alone threatened our national prosperity with the banking crash.
The banking system in this country is an oligopoly and one of the most centralised systems in the world. As Adam Smith recognised, profit-seeking behaviour runs contrary to the common good and the creation of national wealth—we should always remember that when considering this issue. Germany has more than 400 local savings banks, known as Sparkassen, 1,000 co-operative run banks, and 300 private commercial banks, and that contrasts with the five massive banks in this country. Those banks in Germany are characterised by providing “patient finance”, not just to households and consumers but also—critically—to industry.
When James Goodfellow made his speech while being inducted into the Engineering Hall of Fame, he said that the greatest regret of his career was that ATMs were patented and invented in this country, yet they are not built or manufactured here. We have not benefited from this country’s industrial innovation, and our industrial strategy is symptomatic of our banking sector. We do not finance industrial growth because we are seeking high-risk, high-return profit in the City; we are not investing in the real economy, and that contrasts with the German banking system.
Why does Germany have the largest manufacturing sector in Europe, and one of the largest in the world? Because its banking system is resilient enough to underpin patient finance and allow real industrial growth and long-term economic resilience. We see that with German investment in machinery and a productive economy, and with their productivity rate—German workers produce in four days what UK workers produce in five. If we look at that as a broader symptom of malaise in banking and industry, we have to grip it and address it at all levels.
That is why I am so proud to stand here as one of the 39 Co-operative party Members of Parliament: the largest ever group of Co-operative MPs in Parliament and the third-largest party group in this House. The Co-operative party has long recognised the structural problems in society, which is why it proposes turning RBS into a mutual owned by its members and run in a not-for-profit manner in the public interest. The case for that is clearly self-evident and vital: we need that disruptive intervention in the sector.
We want to create a legislative mechanism to support the development of credit unions in the United Kingdom, one perhaps based on the US Community Reinvestment Act 1977, which I think was mentioned previously. The key innovation of the Act, introduced under the Carter Administration, was to combat discrimination and provide access to credit for low and moderate-income communities. If we reflect on the nature of bank closures in the UK, it is highly likely that they disproportionately affect the poorest communities. In the United States, that was known as “redlining”: banks essentially blacklisted communities they thought not worthy of investment. We can make the accusation that that is happening today in this country, albeit on an informal and opaque basis. It is about time a light was shone on the reality of the economic dislocation happening in our poorest communities.
Legislation similar to the Community Reinvestment Act would combat that discrimination by providing access to credit for low and moderate-income communities. It would apply a rating to banks based on their density of operation in poorer areas. In the US, investment credit unions are included as a CRA activity, meaning that the credit union sector is worth billions of dollars and it competes on an equal footing with commercial banks. Santander’s operations in the United States contrast with its operations in the UK: an £11 billion five-year commitment to support community benefits. An increase of 50% was announced in the US. It does not extend its American community reinvestment activity to the UK, because there is no legislative or regulatory imperative to do so.
The picture in the UK today is one of perilous dislocation, with banks withdrawing from our most vulnerable communities. It is the duty of this House and this Government not simply to capitulate to free market dogma, but to temper and control that market in the public interest.
Patricia Gibson (North Ayrshire and Arran) (SNP)
I am delighted to participate in this debate, although I wish it were not necessary. I thank the hon. Member for Stoke-on-Trent North (Ruth Smeeth) for securing the debate and for her comprehensive opening speech.
The speeches we have heard today show there are common concerns across the United Kingdom about the stampede of the banks out of our communities. We are all very concerned. We have had the announcement of yet more bank closures by RBS, with a further 62 branches closing in Scotland. Ten have been reprieved for the moment, following negotiations with the Scottish National party leadership. I agree that that does not go far enough. It certainly does not—
Patricia Gibson
In a moment.
It certainly does not do anything for my constituency, but I am not mean-spirited enough not to recognise when progress is made. I know the hon. Member for Berwickshire, Roxburgh and Selkirk (John Lamont) would rather cut his own head off than give the SNP any credit for anything, but I really think he should be more gracious in this case. He said that this was as a result of concerns expressed by all parties, but the fact is that around the negotiation table there was the SNP and RBS—nobody else. So I really do think that he might perhaps put that in his pipe and smoke it.
Patricia Gibson
I will not give way. You’ve put the boot in and the boot’s been put back, so we will leave it at that.
I would be disturbed by the fact that the UK Government, despite being the major shareholder in RBS, has not lifted a finger—[Interruption.] The hon. Gentleman chunters from a sedentary position, driven by his hatred of the SNP and his lack of concern for communities who have been offered a reprieve. It really is quite sad, Madam Deputy Speaker. It is concerning that the UK Government, despite the taxpayer being the major shareholder in RBS, have not lifted a single finger to encourage or force RBS to pause its closure programme and carry out impact assessments or consultations with the communities affected.
Madam Deputy Speaker (Dame Rosie Winterton)
Order. I think the hon. Lady has said she is not giving way. She has a short amount of time in which to speak.
Patricia Gibson
Thank you, Madam Deputy Speaker. It is disappointing that the UK Government have not lifted a single finger on behalf of the taxpayer to do anything to protect the communities affected by the bank closures. I am disturbed that the UK Government, as the major shareholder, were not consulted about the closures either. That is deeply unfortunate and raises a lot of questions.
I am pleased—other Members may not be—for the communities whose banks have been reprieved, but it does nothing for my constituents in North Ayrshire and Arran, who still face the prospect of losing three banks in Saltcoats, Kilbirnie and Kilwinning. Vowing not to close the last bank in town is something that RBS has now sought to disassociate itself from. That sounded good at the time to the PR companies, but it has not bothered to continue—
Patricia Gibson
No, I will not. The hon. Gentleman is being extremely rude. As I said, he is driven not by concern about banking communities but by his hatred of the SNP. It really is rather pathetic.
It sounded good to RBS when it said that it would not close the last bank in town, but that has long been abandoned. As a result, Kilwinning—a town of around 16,000 people—now faces the prospect of losing its last bank. We have seen this week that RBS is not deaf to the uproar that the closures have given rise to. Its public image lies in tatters, but it has opened the door an inch to reprieve some branches. I and SNP activists, who have been out every weekend, on Saturdays and Sundays, since after Christmas collecting parliamentary petition signatures to save our banks—having already collected thousands of signatures—now propose to run at the door that has been slightly opened and kick it open wide to save our branches. We will not give up in our quest to save our banks. We bailed out the banks and it is time that they lived up to their moral obligations to our communities.
If the closures go ahead in my constituency, it will bring the number of towns with no bank to six. The towns of Dalry, Stevenston, West Kilbride, Ardrossan and Beith no longer have a bank and, shortly it seems, RBS intends to add Kilwinning to the list. I honestly do not think that any other constituency in the United Kingdom has been so adversely and cruelly hit. Indeed, the banks are stampeding out of Ayrshire at an alarming and staggering rate.
People have talked today about post offices picking up the slack, but the range of services that banks provide are not always available in post offices. Having a corner at the back of a Spar supermarket is no compensation for customers, who will get no privacy and not get the same level of services. Of course, it was only 10 short years ago that our post offices were under attack and stampeding out of our towns.
I cannot overstate the sense of anger and betrayal felt by these and similarly affected communities across the United Kingdom. From a bank that was bailed out by the taxpayer to secure its very survival, due to its own incompetence—a bank that is still 73% owned by the taxpayer—this is a bitter pill to swallow. That pill is made all the more bitter by the fact that, last year, that very bank paid out £16 million in bonuses. The culture of excessive bonuses lives on, while the customer and taxpayer continue to suffer.
The UK Government retain all legislative and regulatory powers in respect of financial services, so they do indeed have the authority to call a halt—a pause—to the devastating round of closures while banks, stakeholders and the UK and Scottish Governments consider how best to take account of the obligation to banking customers and our communities. Whatever the banks may say, they do have an obligation to our communities—a service obligation, a financial obligation and, I would argue, a moral obligation.
Let us be clear: the bank closures mean that the affected communities no longer have access to day-to-day essential banking services. They mean that my constituents in Kilbirnie must undertake a round trip of 18.8 miles to access their new so-called “local” bank, with most relying on public transport to do so. They mean that RBS customers in Saltcoats are being directed to the next RBS, which is a round trip of 12.8 miles, and Kilwinning customers are being asked to undertake a round trip of 6.8 miles to visit their new “local” branch.
All of that is before we even get to the impact on local businesses, which are increasingly finding themselves without access to night safes. If local businesses cannot bank their takings at the end of the business day, they must incur an extra insurance charge for keeping the cash overnight, with all the security implications of that. These small businesses are the backbone of our communities and our local economy. Make no mistake: to leave a town with no bank is financial and social exclusion.
I have been told by RBS that the branches closed in Kilwinning, Saltcoats and Kilbirnie in my constituency will be replaced by mobile banks. That is not what constituents want. The mobile banks are not reliable, are not disability-compliant and are a poor substitute for the presence of a bank in our towns.
We will continue to fight these closures. We will continue to collect our parliamentary petition signatures because RBS must understand that the people of North Ayrshire and Arran, the people of Kilwinning, Saltcoats and Kilbirnie, will not sit quietly and take the poor treatment that has been meted out to them. I urge the Minister to use all the means at his disposal, as the majority shareholder, on behalf of us, the taxpayer, to sort this matter out and order the banks to pause, consult communities and do the right thing. This matter will not go away.
Bill Esterson (Sefton Central) (Lab)
I congratulate my hon. Friend the Member for Stoke-on-Trent North (Ruth Smeeth) on securing the debate, in collaboration with the hon. Member for Hazel Grove (Mr Wragg). It has been an excellent debate. Many examples were cited, and there was cross-party acknowledgment of the devastating impact on all our communities of the closure of branches of a variety of banks.
The point about the impact on accessibility was well made. Members spoke about the impact on individuals and communities. As the Social Market Foundation points out, 11% of the population rely completely on high street bank branches, and that is typically the older and poorer parts of our communities. This is an example of financial exclusion, and it is a real problem throughout the country. Only 30% of the over-65 population use online banking. That is of particular importance in constituencies such as mine, which is in the top 20 of constituencies for people aged over 65. That is a real cause for concern, to which I shall return later, with examples from my constituency.
Individuals and businesses need banking services to suit their needs. A British Banking Association survey found that 58% of people surveyed stated that access to a branch—using a branch—was important to them, and 57% believed that face-to-face relationships with their bank were important. Those figures go up for businesses: for SMEs, the figures are that 68% believe that a branch is important and that 66% find that face-to-face banking is important. Therefore, the impact of branch closures is felt by individuals in their personal banking and for business banking, with particular impacts on our high streets—our communities. The Federation of Small Businesses warns that it is a great worry for its members that many now struggle to do the banking that they need.
In my constituency, in the last few years alone, we have seen closures of RBS, TSB, the Co-op bank, HBOS and HSBC branches. Alongside those we have seen significant post office closures. I agree with the Members who spoke about the important role that the post office network plays in providing banking services. Unfortunately, I see no evidence of co-ordination between the banks and the Post Office to ensure that post offices provide services in place of banks when there are closures.
In one of the three towns in my constituency—the town of Maghull, where I live—we have seen significant closures, adding Barclays to the list that I gave. The RBS branch in Maghull now opens for only two days, Monday and Friday. As was pointed out to me today by a constituent whose business has to bank the takings every day, that is absolutely hopeless. What are businesses to do on Tuesday, Wednesday and Thursday?
NatWest’s justification—it is online and anyone can see it—for the closure of its branch in Maghull includes the point that it is only 3.4 miles to the nearest bank, but that is hopeless if people cannot travel there by bus or car. For many older people, it is completely out of the question. NatWest also states that it consulted its local MP: it clearly thinks that everything is OK because it asked me whether it was all right to close the branch. I did not say that it was, by the way.
We have heard some excellent speeches today. My hon. Friend the Member for Stoke-on-Trent North made points similar to mine about closures in the towns that she represents. She spoke about the vital function of bank branches for businesses depositing the day’s takings, and about the impact of the proposed closure of the LINK network. My hon. Friend the Member for Ogmore (Chris Elmore) spoke about NatWest closures, and said that his constituency now contains only one bank to serve all the communities there. My hon. Friend the Member for Glasgow North East (Mr Sweeney), among others, mentioned the lack of awareness of post office services. My hon. Friend the Member for Don Valley made a powerful case—
Bill Esterson
I am very sorry—my right hon. Friend the Member for Don Valley. I am pleased to be able to set the record straight.
Bill Esterson
My right hon. Friend is working very hard on this campaign, as well as having worked hard to achieve that recognition in this place.
My hon. Friend the Member for Midlothian (Danielle Rowley) mentioned the RBS closures, as did other Members in all parts of the House. Some spoke in a very heated way and no love was lost on a couple of occasions. An important point was made about the limited response of RBS to the concern that was being expressed about the closures. My hon. Friend the Member for Bury North (James Frith) drew attention to the key role of banks in attracting footfall and trade for other local businesses. He rightly spoke of the importance of Labour’s regional banking offer and the opportunity that it presents for community banking.
Like other Members who spoke, my hon. Friend the Member for Clwyd South (Susan Elan Jones) represents an area that contains only one bank branch to serve all her constituents. My hon. Friend the Member for Sedgefield (Phil Wilson) mentioned bus services and said that many of his constituents did not have access to the internet or phone. He also spoke about the impact on his local town centres. My hon. Friend the Member for Glasgow North East said that bank branch closures hit the poorest communities hardest. He also rightly observed that we might do well to emulate and learn from the successful arrangements in Germany.
These branch closures are happening at a time when banks are making healthy profits. We have to wonder who the customers are, and whether the banks have lost sight of the fact that it is the personal and business banking customers who are their customers. I always thought that putting customers first was the way for a business to operate and succeed. That was certainly a lesson that I learned when I ran a business.
Has the time come to put public good ahead of short-term profit? The challenger banks—such as Metro, which is open seven days a week, and the Bank of Dave, which results from the entrepreneurial approach taken by Dave Fishwick in Burnley—have demonstrated that it is possible to make a success of a bank branch. Is it time for banks and financial services to be seen as a utility, an essential public service that delivers for customers—for high streets, communities and small businesses? We regulate the financial services sector now, and I can tell the Minister that if the Government will not add to that regulation by addressing this issue, a Labour Government certainly will. We will ensure that no closure can happen without proper local consultation, and, crucially, without the approval of the Financial Conduct Authority.
I cannot conclude without mentioning the hon. Member for Strangford (Jim Shannon), who mentioned RBS and GRG: the systematic abuse, the intentional and co-ordinated approach of management, the clear RBS board responsibility for the mistreatment of small businesses. That serves as another reminder that the current attitude and approach of banks is not what is needed by their customers.
Government must intervene so that the banks work for us. As a number of right hon. and hon. Members have pointed out, the banking access protocol has not delivered. There is an impact on communities, travel, public transport, the environment, economies and businesses from lowering footfall, and there is lower lending in places without bank branches. Some 10% of households do not have the internet, and only 9% of small firms approached their banks in 2016 for finance. All of these things are examples of why the banking system is not delivering.
This is not about the nostalgia of Captain Mainwaring or Walmington-on-Sea; it is about what is needed today. Face-to-face banking for business and personal customers matters, service matters, and bank branches matter and can be alongside the post office. If we put the public good first, we can be successful. The voluntary approach has not worked, and the only organisation that can ensure our banking system delivers is Government. It is time to act.
The Economic Secretary to the Treasury (John Glen)
I commend the hon. Member for Stoke-on-Trent North (Ruth Smeeth) and my hon. Friend the Member for Hazel Grove (Mr Wragg) for securing this debate, and thank the Backbench Business Committee for allowing it. We have had a lively debate with 16 Back-Bench contributions, and it has rightly aroused a lot of passion. It is the third such debate in the four weeks that I have been in post—two of them in Westminster Hall—and the banks will need to respond to what they have heard. From Strangford to Selkirk, from Newton Aycliffe to Sandwich, from Bradford on Avon to Bungay, we have heard the case made for banks to remain open, and in my constituency I will be meeting representatives from Lloyds bank tomorrow to discuss the closure of Wilton bank, which is scheduled for 19 March this year.
This is a very important issue, and I listened carefully to the observations from Members across the House on what the Government should do. They ranged from my hon. Friend the Member for South Thanet (Craig Mackinlay), who, characteristically, was very reticent to see Government get involved, to the hon. Member for Sefton Central (Bill Esterson) who, in a measured speech, held out the prospect of significant intervention from Government. I believe there is a role for Government in dealing with this issue, and I will talk about the Government’s actions to support those who require over-the-counter banking services and the Government’s commitment to widespread free access to cash.
I want to address the banking standard, too; I noted the observations of the right hon. Member for Don Valley (Caroline Flint) about her perception of the inadequacy of the banking standard and I want to address that, as well as the concerns raised about the way that the banking services available at the post office work. I will also address the UK ATM operator LINK’s financial inclusion programme.
As Economic Secretary, I want financial services that deliver for all customers up and down this country, from Salisbury high street to the farthest reaches of the Hebrides. None the less, all hon. Members will appreciate that banking, like so many other industries, needs to respond to changing customer behaviour, which we have heard depicted by many Members in our debate. Change, which in this case is driven by the unrivalled speed of innovation in the financial services sector, is not easy to remedy. How many of us in this House regularly use our local branch, and how many of us, like me and others, manage our finances online or via our mobile phones? Ultimately, what I have repeatedly made clear in this place in the four weeks that I have been in post is that the management decisions of banks are made without intervention from Government.
I hear the call from the hon. Member for North Ayrshire and Arran (Patricia Gibson) to intervene but, given that the Scottish Government own Prestwick completely, it is somewhat odd to be told by the Scottish Government spokesperson that Ministers have no role in the operation of contractual agreements made by the airport. It is really important that we acknowledge that inconsistency and that the Government act through the regulator, and that is not a static dialogue. I have already spoken extensively to the head of the Financial Conduct Authority, and more can be done.
The Government firmly believe that these firms have a responsibility to minimise the impact of closures on communities wherever possible, which is why I am pleased to address the motion today. The Government already support a range of measures to protect access to banking services in local communities across the UK, but we must acknowledge the change that has happened. Branch footfall is falling year on year—it is down by a third since 2011, as my hon. Friend the Member for Chippenham (Michelle Donelan) noted—and the number of banking app transactions has risen massively, to 932 million in 2016, which is an increase of 57% on the previous year. The Government cannot resist that; the question is what we can do with the tools available.
The access to banking standard commits all major high street banks to a series of outcomes when they decide to close a branch. There are three principal obligations. First, banks will give customers at least three months’ notice of closure. I note the call from my hon. Friend the Member for Chippenham to extend that period. They have a responsibility as soon as operationally ready, and I note that RBS gave six months’ notice. Secondly, banks will work with customers after the announcement has been made to ensure that they know how and where they can continue to bank. Thirdly—this is vital—banks are required to identify vulnerable customers and ensure that they receive all the help they need. That could mean helping customers get online for the first time, or it could mean showing them the facilities at the local post office, or ensuring that they have access to a mobile branch, a telephone banking service or a local, free-to-use ATM. Obviously, every bank will take a different approach, but the principle of the standard is that the outcome for customers will be the same.
As of July 2017, the Lending Standards Board has had responsibility for monitoring and enforcing the standard. I say to the right hon. Member for Don Valley that the board does have the power to cancel or suspend a registered firm’s registration and give directions on future conduct, but I will look carefully at her remarks and consider whether anything could be done to strengthen the measures further. This independent oversight is a welcome and important addition to the way the standard works.
Turning to the ATM network and post offices, I acknowledge that the Government have made great strides in bolstering the over-the-counter banking services available at post offices, and an extra £370 million to support that work was announced in December. UK banks and building societies reached a new commercial agreement with the Post Office that has set the standard for the banking services available in post offices, ensuring a uniform level across the 11,600 branches. Those services can include the ability to check a balance, to withdraw and deposit cash using a debit card, to use chip and pin or pre-printed paying-in slips, and to deposit cheques. There is an ad hoc cash deposit limit of £2,000, but the Post Office estimates that that covers 95% of all transactions.
We should not forget that 99.7% of people in this country now live within three miles of their local post office, and 93% live within a mile. At the autumn Budget 2017 my predecessor wrote to the Post Office and UK Finance and asked them to consider how they could fulfil the aims they have set out.
Caroline Flint
Where did the Minister get the figure of 93%—perhaps he can furnish us with the information after the debate—because I do not think that bears any relationship to the reality for many of our constituents?
John Glen
I am happy to do that.
I have written to the Post Office and UK Finance to impress upon them the importance of developing detailed joint proposals to achieve the objectives that everyone rightly requires of them. I am clear that those proposals must include the following: a shared vision for public awareness of the banking services available at the Post Office; measurable outcomes that the parties agree they can use to determine their progress in delivering that vision; specific actions that the Post Office, UK Finance and parties to the banking framework agree to take to achieve the outcomes, collectively and/or individually, and a timeline for doing so; and arrangements for measuring the impact of the specific actions on public awareness throughout the UK to ensure the outcomes are achieved. I know that colleagues from across the House feel strongly about this issue—I have heard that today—and I am determined to see progress, so I have asked for a response by the end of March. I will be happy to update the House in due course.
Several hon. Members mentioned access to cash, and the Government continue to work with industry to ensure the provision of widespread free access to cash. LINK, which runs the ATM network in the UK, has assured the Government that industry is committed to maintaining an extensive network of free-to-use cash machines and to ensuring that the present geographical spread of ATMs is maintained. On 31 January, LINK announced plans to bolster its financial inclusion programme, which ensures the provision of ATMs in certain areas where demand would not otherwise make one viable, and LINK has confirmed that that will include addressing instances where the closure of a bank branch is leading to a financial inclusion problem. LINK has also specifically committed to protecting all free-to-use ATMs that are a kilometre or more from the next nearest free-to-use ATM.
In summary, I again thank the hon. Member for Stoke-on-Trent North and my hon. Friend the Member for Hazel Grove and all right hon. and hon. Members who have spoken this afternoon. I hope I have been able to give some reassurance that the Government recognise the frustration and disappointment caused by bank branch closures. Ultimately, the Government cannot reverse market movements or customer behaviour, and it is right that the Government do not intervene in commercial decisions that respond to such changes. However, I will continue to work to ensure that everyone, wherever they live, can access the banking services they need. This Government have taken measures to maintain access to vital banking services and to ensure that banks support communities across the UK when their local branches close. Banks will need to continue to respect and respond to Members’ engagement in that process, so I encourage every Member to keep the dialogue open with their constituents about how they can take advantage of the many options already in place.
Ruth Smeeth
I thank the Minister for his response. I have a great deal of respect for him, and I wish him more luck with Lloyds tomorrow than I had. We need more clarity on a few issues, and the emphasis should be on the banking sector to resolve them, but if they will not act—so far, they have not—the Government and Parliament will have to act to hold them to account. The banks are not being imaginative, so we may have to make them.
The first issue is with LINK and access to ATMs. While I welcome the new announcement and what that may mean for access, the evidence suggests that 3,500 ATMs may close. Given what we are already seeing, that could be a challenge, so I urge the Minister to consider that more closely in addition to using the post office network. Colleagues across the House have agreed that face-to-face, personal contact is vital, and the post office network, while helpful, does not currently provide what we need from it. We also need to start talking about public transport infrastructure, so that people can access alternatives.
I thank the Minister for the debate and look forward to working with him on this issue.
Question put and agreed to.
Resolved,
That this House recognises the vital importance of community-based banking; believes that national banks have a responsibility to their customers; is concerned about the effect of branch closure announcements by Lloyds Bank, RBS/Nat West, Santander, Yorkshire Building Society and the Co-operative Bank; and calls on the Government to support measures to protect access to banking services in local communities in the UK.
Phil Wilson (Sedgefield) (Lab)
On a point of order, Madam Deputy Speaker. On 17 January, in moving my ten-minute rule Bill on tightening the regulations on private landlords, I should have declared that my wife owns two houses that she lets out. I regret that oversight, and I take this opportunity to correct the record.
Madam Deputy Speaker (Dame Rosie Winterton)
I thank the hon. Gentleman for putting his point on the record.