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.