Royal Bank of Scotland Branch Closures

Tuesday 14th May 2024 Westminster Hall

16:00

[Deidre Brock (Edinburgh North and Leith) (SNP)]

I beg to move,

That this House has considered Royal Bank of Scotland branch closures.

It is a pleasure to serve under your chairship, Sir Charles. Here we are again. This debate feels a bit like groundhog day. Yet more bank branches are set to bite the dust as the network rapidly shrinks, amid woolly promises of support and training for vulnerable customers. Selective statistics are spun to show that counter services just are not being used enough, leaving most of us puzzled when we see the local branch still bustling with life. That is certainly the case for the Leith Royal Bank of Scotland branch.

I confess that I am surprised that I have had to secure this debate, because I represent an area that was well served by banks until recent days. More often, I have supported the work of Members from rural areas who have fought valiantly against the impact of closures in their communities, but with both RBS and TSB planning to shut up shop, the Bank of Scotland looks set to be the last high street branch in Leith—and who knows for how long? When even the most densely populated part of Scotland is down to the last bank standing, we know we are in trouble.

I first pay tribute to the incredible staff at the RBS branch in Leith, who have been left worrying for their futures after this closure was announced. They are a legendary bunch, well known for going above and beyond for their customers and providing that old-fashioned notion of top-notch customer service. The branch is a well-known and well-used fixture in the area, and it should remain to serve the people of Leith into the future. It is located in a vibrant and growing—my goodness, is it growing—part of the city, and it serves diverse banking needs, from the many small start-ups that rely on cash, to people who are more financially vulnerable and cannot easily head uptown, so I find the decision absolutely baffling.

[Christine Jardine (Edinburgh West) (LD)]

The hon. Lady touches on something common to many of us in Edinburgh, where 70% of the bank branches have been closed down in the past few years. This morning, I heard from a constituent in the Newbridge village who is being hit very hard by the closure of the RBS branch there. Her autistic son needs cash every day, and she will now have to get a bus to a different part of the city to get it for him because there is no post office available either. Does the hon. Lady agree that we cannot allow this situation to go on?

[Deidre Brock]

I absolutely agree, and I will be making those points in my speech. The hon. Lady’s example perfectly illustrates exactly why branches need to remain open, and banks must be encouraged to do that.

These further closures from RBS are a particular disappointment, because that once-proud Scottish brand, which is now a subsidiary of NatWest, can trace its origins to Edinburgh in 1727, at the time of the Scottish enlightenment. It is credited with providing the world’s first overdraft—a mixed blessing, perhaps—and it created a wide branch network as part of Scotland’s successful and stable multi-bank system. Times may have changed, but the move towards more centralised control of banking does not seem like progress to me. For RBS to soon have just three city centre branches in Edinburgh is a sorry state of affairs.

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Lady for securing this debate. She is consistent, and I am here to support her. In my constituency, the Ulster Bank, which is a subsidiary of RBS, closed its Ballynahinch branch last February, and it now intends to close the neighbouring Downpatrick branch in November. Does she agree that the abdication of the duty of care to rural banks is unacceptable at a time when profits are so high? Legislation underlining that duty of care should come before this House, as the current guidelines are not providing safeguards.

[Sir Charles Walker (in the Chair)]

Order. Ms Brock, are you happy, as the mover of the motion in a half-hour debate, to take interventions? You do not have to.

[Deidre Brock]

Yes, Sir Charles. A number of people expressed interest in being here and talking about branch closures in their areas, so I have allowed for that in my timing.

I absolutely agree with the hon. Member for Strangford (Jim Shannon) and I will make some points about that later. The impacts on rural areas are particularly stark and I am very much aware of them, having been part of the Scottish Affairs Committee that conducted an inquiry.

[Sarah Dyke (Somerton and Frome) (LD)]

In my constituency, Frome—with a population of 30,000 people —will lose its last bank. It follows in the footsteps of other market towns in my area: Castle Cary, Martock and Wincanton. Many of my elderly constituents are very worried that they will lose their physical, face-to-face contact with their banks. Does the hon. Member agree that, to combat the loss of bank branches, we must support communities by triggering the development of community banking hubs that safeguard people’s right to face-to-face contact with their banks, particularly in rural areas?

[Deidre Brock]

Absolutely, and I will make some points about that later.

I say, with a heavy dose of sarcasm, that banks cannot be expected to cut their profits and serve their customers when they have shareholders to please, even when—in the case of RBS—taxpayers bailed them out when they needed it and still own a third of the business. How often can we in this place bemoan bank branch closures while the Government sit on their hands and refuse to meaningfully intervene? The speedy decline in branches is alarming: almost 6,000 have gone, across the UK, at a rate of 54 a month since 2015. Do we just accept sleepwalking into a cashless society and the deepening of the digital divide? Should we all be forced into using systems that may go against our very human preferences for face-to-face services just because it is cheaper for the banks? What kind of society do we want to be? A society that looks out for everyone, or a society where markets rule and only the fittest survive?

[Brendan O’Hara (Argyll and Bute) (SNP)]

I thank my hon. Friend for securing this debate. She is right: it is like groundhog day. How many times in the last nine years have we discussed this issue in this Chamber? Banking in rural Scotland has been decimated, particularly around Argyll and Bute: recently, the RBS branch in Helensburgh announced its closure. Does my hon. Friend agree that financial institutions are abdicating responsibility to the people who were forced to dig deep to bail them out during the crash? Once again we are seeing those banks putting shareholder dividend ahead of any form of social responsibility.

[Deidre Brock]

I agree with my hon. Friend. He is absolutely correct. I think everyone else here agreed with him as well.

Existing legislation to protect against bank branch closures is far too weak. The Financial Conduct Authority has some powers to protect cash services but not bank branches. Yet, in 2019, the FCA’s own research found that bank branch closures presented particular challenges for older people who would have to travel further to reach a branch. It also said that older people were less likely to turn to mobile banking, which increased their risk of financial exclusion. But it seems the banks can just follow the tick-box guidance and then fire ahead with the closure anyway. We must introduce a community right to physical banking services. I commend the work of my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) to introduce a Bill for such a measure. I hope for cross-party consensus to take forward something similar.

I am curious to hear whether the Minister thinks bank branch closures conflict with the Equality Act 2010—specifically part 3, which states that service providers must ensure equal access to services for all individuals? We already have all the evidence we need of the impact on communities, on older people, on people with disabilities, and on small businesses that rely on cash trade.

[Paul Girvan (South Antrim) (DUP)]

There are banks that say that they are offering another service because they will work with banking hubs, but those banking hubs are not there all the time. They work just the hours that suit them, so they do not give accessibility to all. It just suits the banks to tick a box to say that they are available.

[Deidre Brock]

Yes, the hon. Gentleman is quite right, and there are delays around those hubs, which I will reference later in my speech.

Research from Which? Found that 65% of consumers would find life difficult without the option to access their bank branch. Age UK says that four out of 10 over-65s do not manage their money online. We also know that paper documents are just preferred by many people, and can help them keep track of their finances better.

[Michael Shanks (Rutherglen and Hamilton West) (Lab)]

I thank the hon. Lady for bringing the debate, and for being incredibly generous in giving way so much during a half-hour debate. She has mentioned selective statistics being spun. The Rutherglen branch is also earmarked for closure. I stood outside it and heard, particularly from older people, that they were being told to go into the branch to use the app. This then generated statistics to make it appear as though people were transferring from using physical tools to digital tools, even though they had gone into the branch. Does the hon. Lady agree that the problem is that the bank has been dressing up statistics about branch use to try to sell the argument that it should close the branch?

[Hon. Members]

Hear, hear.

[Deidre Brock]

There was a chorus of agreement behind me then, as the hon. Member will have heard. I think that it is felt that some of these statistics are being massaged to suit the bank’s purposes. That is certainly the impression that many of us has gained.

I am not immune to the financial pressures and challenges facing high street banks. Digital banking is cheaper and more convenient, at least when people can get their password to work and for it to recognise their face. It is used by the majority of us, but it is not for everyone, and minorities matter. RBS told me that

“80% of our active current account holders now use our digital services”,

but what about the one in five who do not? A lot of people are being left adrift, losing their financial independence. I accept that keeping branches open is costly, so there need to be greater initiatives to encourage banks to stay in town. Banking hubs, as has been mentioned, have been positively received. They are not a replacement for branches, but they are a helpful option for some places, offering a more personal and private space for banking than post offices alone.

But where are they all? The roll-out may be picking up a bit now, but so far it has been woefully slow. Since 2015, almost 635 branches have closed in Scotland, yet only nine hubs have opened and only 15 sites have been recommended as suitable in Scotland since the trials ended in 2021. At best, that only scratches at the surface of the problems created by the loss of our branch networks. While any community can apply to be considered for a hub, not so many will be successful, as Link has to independently assess the needs of the location using the same strict criteria for all.

Many feel they do not replace the need to access physical bank branches. Yes, post offices have increasingly provided access to cash withdrawals and deposits, but otherwise they offer only limited services. In 2020, Citizens Advice found major issues surrounding the post office’s ability to provide even those services, which included limited training on personal and business banking, cash supply issues and security concerns. For many, a bank branch offers access to the wider economic network, where people can seek financial advice and make enquiries about other financial products such as mortgages. These services cannot be provided by the post office and alongside this, the post office’s ability to fill the gaps left by branch closures is limited because of reductions over the years in the number of post offices themselves.

Perhaps the criteria of the bank hubs proposal need to be loosened up a little. Perhaps communities should not have to wait until the last branch leaves their town or area before banking hubs will even be considered, then face lengthy delays before anything gets going. With co-ordinated efforts from everyone involved, locally and nationally, surely we can get the roll-out widened and accelerated to better fill the digital divide that is deepening every day. I would be interested to hear the Minister’s thoughts on that.

[Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)]

The hon. Lady is right about the need to look at the criteria for community banking hubs. My constituency has been left with one bank in one town, Ammanford. All the other market towns have lost their banks, but the community banking hub is not an option because the towns are so small. The current criteria work against the interests of rural Wales, so is there not an argument that the criteria should be extended to take into consideration an amalgamation of rural towns within 20 or 30 miles of each other, so that the community hub could serve two or three towns put together?

[Deidre Brock]

The hon. Gentleman will be more familiar than I am with the needs of those communities, but I think any proposal is worth looking at. That is certainly true of community banking for several towns, though it might depend on the distance between them. My mother-in-law lives in the highlands and has to travel 10 miles to get to her nearest bank branch. These are all things that need to be considered carefully.

I would like to give a nod to the Castle Community Bank, a fantastic community bank in my area of Leith, for the work it is doing in filling the banking gap for many people where the other banks have failed them. As a credit union, it has been a real asset to the community, supporting vulnerable people to break cycles of debt and get affordable access to loans and other financial services. Its focus is on helping people, not serving shareholders, and I am very happy to give it my thanks and my support for its efforts.

Perhaps RBS should take a leaf from its own book and remember the people it serves. Its website proudly claims that

“the bank has a history of making life easier for its customers. The bank is committed to serving Scottish communities and putting the interests of customers first.”

It is time for that commitment to be made clear in bricks and mortar, not just words.

[Sir Charles Walker (in the Chair)]

I thank the hon. Lady for her excellent speech. I call the Minister to respond.

16:15

[The Economic Secretary to the Treasury (Bim Afolami)]

I commend the hon. Member for Edinburgh North and Leith (Deidre Brock) on securing this debate. I know this subject is important to many of her constituents, and indeed to those of many other Members.

Just two weeks ago, I responded to an Adjournment debate on branch closures. I want the House to understand that I have been working on this issue a lot in my brief, so I am very familiar with the issues that have been brought up. As I said then, and say again today:

“Banks and building societies are essential in people being able to manage their money on a day-to-day basis, and they hold a privileged and important place in our society. As such, firms must ensure that all customers, wherever they live, have appropriate access to banking and cash services.”—[Official Report, 24 April 2024; Vol. 748, c. 1111.]

We all recognise that banking has changed significantly in recent years, as the hon. Member outlined. The shift towards online and mobile access, although not complete, is significant, and it has given customers many more ways to access banking services conveniently and securely. Customers have clearly taken up those opportunities. Recent FCA data shows that almost nine in 10 adults banked online or used a mobile app. By contrast, roughly a fifth of adults regularly use a bank branch. That fifth is very important—I do not want the House to misunderstand me—but it is important to set out the scale of the change we have seen in quite a small number of years.

That does not mean that we should do away with in-person banking services, which remain critically important for many people, not just for access for cash, which I will talk about, but because of the intangible social role they play in the high street. I recognise that, as do the Government. The Government have taken steps in law to protect access to cash—indeed, we are the first Government to do so. The Financial Services and Markets Act 2023 established the FCA as the lead regulator to deliver that, and gives powers to the FCA to ensure the reasonable provision of cash withdrawal and deposit facilities, including free services, to individuals. Following that, the Government published a policy statement setting out their policies on access to cash. The FCA must have regard to that as part of a regulatory approach. That statement sets out that people and businesses should be no further than three miles from a free cash access point.

The FCA recently held a consultation on its proposed regulatory regime. Under the proposals, designated banks and building societies will be required to assess and fill gaps, or potential gaps, in cash access provision that significantly impact consumers and businesses.

[Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)]

The Minister makes the point about the distance that people have to travel to get to their branches. The county of Sutherland is 2,028 square miles, and we have only one branch. My plea is very simple. Governments come and go, in both Edinburgh and London, and I wish the Minister well on a personal level; I just ask that officials in the Treasury are made aware of that statistic about Sutherland, and that they bear it in mind when they think about branch closures, whatever happens in the future.

[Bim Afolami]

I appreciate that intervention from the hon. Member. I will say to him, very directly, something that I was going to say later in my speech. In the case of rural constituencies—he mentioned his very rural constituency—I think that the assessment criteria used by Link for banking hubs, working with Cash Access UK and looking at this whole issue of access to cash, need to be amended. I have communicated that to the industry, and I hope that, over the coming weeks and months, that will happen. It is clearly not working, in a relatively small number of instances in rural areas, where the rules do not appear to be flexible enough. I think that would be useful.

[Carla Lockhart (Upper Bann) (DUP)]

Since 2020, 50 banks in Northern Ireland have closed and only one banking hub has opened. Does the Minister agree that that is just not acceptable? The criteria do need changing. We have heard great plans from the Government to help to change it, but when will that happen? When will the criteria change, and when will the Government take this on board?

[Bim Afolami]

I am very happy to speak with the hon. Lady about the challenges that Northern Ireland has in this regard—the statistic she outlined speaks for itself. In relation to the criteria, this is an industry-led set of rules—the Government do not determine which banks’ branches open or shut—but there is definitely much more work that we can do, working with the industry, to see whether we can improve things.

The industry has come out, through UK Finance, and said that, over the next 18 months, more than 225 banking hubs will be opened. That will mean a rapid increase in the speed at which banking hubs will open compared with recent years, and the industry is committed to that. However, I am very happy to have a conversation with the hon. Lady about Northern Ireland in particular.

To respond to the hon. Member for Edinburgh North and Leith regarding the Equality Act 2010, like all service providers, banks and building societies are indeed bound by the Act, and it is not our judgment that they have somehow contravened it. They are bound to make reasonable adjustments, where necessary, in the way that they deliver their services.

In the time remaining to me, I would like to talk a little bit about banking hubs in particular, because I think they have been a unique proposition and have proved, in most cases, very popular where they have appeared. The issue has been, “Let’s get them faster and let’s have more of them.”

[Sarah Dyke]

I have already mentioned that, in my constituency, many banks have been closing and many market towns have been left without a bank, but many businesses are also really concerned about the lack of banks in their areas. People still want to use cash, and businesses are still taking cash, but they now need to travel many miles across the constituency at the end of the working day to deposit their cash safely. Will the Minister comment on how his Department proposes to manage the negative impacts on some of our vibrant businesses—such as those in my constituency—that make up our villages and towns, which will now have to travel much further to deposit their cash safely?

[Bim Afolami]

My response is, in part, to repeat what I have already said, which is that we were the first Government to legislate on access to cash in law, through the Financial Services and Markets Act 2023. That sets out that people should be no more than three miles away from access to cash. In relation to banking hubs and the ability of small businesses to use bank branches or a banking hub, that is why banking hubs are so important. These hubs help people and businesses to withdraw and deposit cash, pay in cheques, and check their balances through the post office counter. They also provide a community banker who can help people with wider banking services, from making a transfer to providing support for fraud and scam victims.

The hubs are deployed by Cash Access UK—the company owned and funded by nine major high street banking providers—in response to an assessment of the community’s cash needs by Link, the co-ordinating body that sets the criteria. As I have already explained, I think that in many instances that criterion needs to be changed by the industry, and I hope that it will do so. To ensure that there is no gap in the provision of services, industry has committed that, if a hub is recommended, it will not close the branch that it replaces for up to 12 months, until that hub is open. If there is a delay beyond that, a temporary hub will be put in its place.

[Christine Jardine]

I appreciate that there is an internal logic to what the Minister is saying about the banking hubs, and even mobile banks, but it does not reflect the actuality. When I was informed about the branch closure in Newbridge, which I mentioned earlier, it was stated that there was a post office 1.7 miles away where cash could be obtained. That post office was closing, and even if it were not, anyone without a car will have no way of getting there.

[Bim Afolami]

I thank the hon. Lady for her point. On the notification of closures, banks and building societies are required to provide customers with at least 12 weeks’ notice, a summary of the firm’s analysis of customer needs —including those who use the branch—and information on how to continue accessing services after the closure. Firms should also provide the support that customers will need to transition to channels such as digital or telephone services. I want to be clear that the support is not just saying, “You need to go and do this.” Firms are meant to provide support, and the impact of any planned closures on their customers must be carefully considered. Any firm that does not adhere to that is not doing its duty.

[Michael Shanks]

I wonder if the Minister could look at the statistics, because I think some of the statistics used by the banks have been quite misleading. On the question of banking hubs, we have one in Cambuslang in my constituency, which is a fantastic resource, but it is there because all the banks closed. When the Royal Bank of Scotland in Rutherglen closes, I want to avoid all the other branches closing. Banking hubs are a useful tool to have in the community, but does the Minister agree that keeping the branches open would be even better for people?

[Bim Afolami]

The answer is that sometimes keeping branches open makes sense and sometimes it does not. I cannot say from the Dispatch Box that in every instance it is right to keep all branches open, because the rate at which people are moving online is very rapid. Sometimes it does not make sense, but sometimes of course it does. It is that judgment that the firms have to make independently and commercially. We do not want to live in a world where Government Ministers determine which branches close and open across the country—I do not think that is sensible. It is important that those are independent commercial decisions.

[Deidre Brock]

The Minister says that it is not appropriate for Ministers to get involved with individual branch closures, but will he tell us what discussions he has had with the banking industry about bank closures and what the response has been?

[Bim Afolami]

I am happy to talk to the hon. Lady about that in more detail outside the Chamber. On the record, I will say that I have had many discussions about branch closures with UK Finance, the body that represents all the banks, and have worked with it to see if we can speed up the roll-out of banking hubs.

In the remaining time that I have, I will restate that just a few weeks ago the 50th banking hub opened, and Link has recommended over 70 more so far. That includes 15 hubs that have already been announced across Scotland. It is a priority for me that industry continues to deliver, to ensure that customers maintain appropriate access. UK Finance has committed to 225 hub locations to be announced by the end of 2024, up from 120 currently.

To conclude, it is important that those hubs provide a good service to customers. Following my recent discussions with high street banks, I am pleased that industry has agreed to improve the services in hubs to ensure that customers have a positive experience. I communicated those in a “Dear colleague” letter to Members of the House, and I have written to the Chair of the Treasury Committee. We are not in a completely perfect place, but things are improving. Taken together, the measures represent a significant step forward from industry to ensure that all customer needs are appropriately met. I will continue to monitor the roll-out of future banking hubs closely, as I will the whole issue.

Question put and agreed to.