High Street Banks and Banking Hubs

Lord Bishop of Norwich Excerpts

Thursday 25th January 2024 Lords Chamber

[The Lord Bishop of Norwich]

My Lords, I am grateful to the noble Baroness, Lady Tyler of Enfield, for this timely debate. I will speak particularly about rural areas and market towns.

The diocese I serve across Norfolk and Waveney is largely a rural one, but it is one where market towns play a key part in peoples’ lives. Historically places of transaction, they contribute to the warp and weft of community life, especially with their rural hinterland. It is no accident that, in Norfolk, they are fairly evenly spread out across the county, having developed so that livestock could be driven to them for sale and the bonds of extended familial friendship and trust strengthened.

From my internet searching, I estimate that we lost at least 12 bank branches in Norfolk last year. The market town of Wymondham saw the closure of NatWest, HSBC and Barclays within 12 months. The parish church’s treasurer now has a 26-mile round trip to bank the cash collection and cheques. Banks are vital for small rural businesses and charities that deal with cash. Yet, as we have heard, closures are accelerating, and this seems to be a pattern across the UK.

The sad reality is that the withdrawal of banks from market towns has disadvantaged sections of our community, especially those who want to speak to a human and not a robot, those for whom trust is a hard-won necessity, those with sensitive things to discuss and that group of people who are not savvy with the internet or have poor connectivity and so are digitally disfranchised. The negative impact on financial inclusion of closures needs to be borne in mind.

It is good that LINK, the cash machine network, and Cash Access UK have recognised the difficulty of accessing banks in rural communities and market towns and that the whole idea of banking hubs is coming to the fore. As we have heard, there are 31 of them: 21 in England, seven in Scotland, two in Wales and one in County Down in Northern Ireland, mentioned by the noble Lord, Lord Rogan. Their role is, sadly, lagging behind the rate of bank closures. The gaps are there, and I hear that it takes some time to establish a banking hub, so I very much warm to the suggestion from the noble Baroness, Lady Tyler, that the last branch in town should not close until a banking hub is ready to go, for many people are in great need of reasonable access to cash deposit and withdrawal services.

In the Norfolk rural district of Breckland, there have been eight bank closures since 2018, with a further two announced for the coming months. That is a drop of nearly 60% in the number of local banks. In the market town of Watton, no bank remains. The newly opened community banking hub is a welcome addition, following the closure of all the town’s banks in recent years, and its services are proving popular. It is open five days a week, with a counter service operated by the Post Office where customers of all major banks can carry out their regular cash transactions, but it also offers this banking hub, a community banker service where customers can talk to their own bank about more complicated issues. The community bankers work on rotation, with a different bank available on each day of the week. NatWest, HSBC and Barclays each take one day, so, in a sense, this is an invitation for other banks to take up the other two days. The local vicar, Dave Cossey, tells me that the only drawback he has discovered so far is that the banking hub will not accept partially full bags of cash. This is proving to be a challenge for small charities, and it would be great if that blockage could be removed.

In other places where banking is not in people’s DNA—especially, perhaps, in our economically poorest communities—credit unions bring much. Often run by volunteers, they can help people save cash and receive small, affordable loans. I have two questions for the Minister. What is the Government’s strategy for rolling out more banking hubs and how will government support be given to local authorities, to LINK and to Cash Access UK to enable this to happen? Secondly, I think credit unions have a great part to play. What plans do the Government have to aid their development, particularly in rural areas and our market towns?