Bank Branch Closures

Albert Owen Excerpts

Thursday 30th June 2016 Commons Chamber

[Christian Matheson (City of Chester) (Lab)]

I beg to move,

That this House is concerned about continued bank branch closures and the damage that this causes to local communities, small businesses and the welfare of senior citizens; and calls upon the Government to help maintain access to local banking.

The motion stands in my name and those of the hon. Members for Wells (James Heappey) and for Ceredigion (Mr Williams). This has been very much a joint effort and I pay tribute to them. I would like to thank the Backbench Business Committee for the opportunity to bring this motion and debate before the House today. When the three of us approached the Backbench Business Committee, hon. Members serving on it graciously offered us the day of the local elections as a possible occasion. Knowing that there was wide support for the debate and not wanting it to get swamped by external events, we declined and asked for a later date. That worked out well, didn’t it?

I have a smartphone in my pocket that has an app—let me explain to more senior hon. Members that that means an application—through which I can access my banking services, pay my bills, check my balance and transfer money between my accounts, none of which, I hasten to add, are sited offshore. I can probably even apply for a loan. Banking is changing, and in many ways it is becoming more convenient and perhaps changing for the better.

Convenience, however, does not rely solely on the possession of a smartphone. The physical presence of a bank is still important. Today, I shall not call for a halt to all technological advances in banking. I do not want to go back to the days of accessing cash by having to cash cheques in a branch, and I certainly do not want to go back to the days of using credit card devices that the shopkeeper used to have to fill in by hand and then run a mechanism over to print the credit card details on carbon paper.

[Albert Owen (Ynys Môn) (Lab)]

In my pocket I have a cheque book and a mobile phone, but when I go to the bank, I do not have much of a choice when it refuses to provide many services. The serious point is that many places in my constituency do not have a mobile phone signal, so people face even greater limitations on how they can provide or access services.

[Christian Matheson]

My hon. Friend makes an extremely useful point, and if he will bear with me, I may come on to say more about some of the areas that are suffering the most from these bank closures.

As my hon. Friend has perhaps alluded to, we need to recognise that for many—the elderly, people with caring responsibilities, and small business owners—high street banks’ programmes to close many of their smaller branches and centralise everything in the centre of large towns create havoc for individuals and businesses and damage local communities.

My interest in this issue was prompted by a spate of branch closures in the Hoole area of Chester. Last summer, NatWest announced it was closing its branch there. The excuse was that the branch was underused. Yet I and my team undertook a scientific survey of usage by standing outside and counting people going in over several hours that flatly contradicted the suggestions made by NatWest. HSBC had already gone in Hoole, and it was followed more recently by Lloyds, leaving only a Barclays branch as the so-called last branch in town. Bank branches around Chester had been closed previously, including in the Boughton and Saltney districts.

All our banks are now in the centre of Chester, which has several profound effects. First, it increases traffic into the city centre. Ours is already a congested city built on the beautiful River Dee, but when the Romans founded it and when it became a bustling market town in the middle ages, nobody thought to design it with the needs of 20th and 21st-century car use in mind. Keeping satellite branches is, strangely, good for the environment. More importantly, satellite branches support local businesses.

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[James Heappey]

To be fair to the banks, they did write to notify me of their decision, and the more noise I made in the media, the more willing they were to meet me here to discuss it. However, the right hon. Gentleman would be right to suggest—and I would agree—that it was not exactly a process whereby the local Member of Parliament was encouraged, as a representative of the community, to take soundings on what was actually of value to that community. It was more about assuaging my fears and trying to persuade me that various steps were being taken in mitigation.

I was talking about the vulnerable and the isolated. There are certain things that draw the elderly, in particular, out of their homes over the course of a week, such as going into town to do their banking and to visit the market and the library. When banks are removed from towns and people are told, “We will teach you to be better at using a computer”, that is all well and good, but it does not alter the fact that, for some, that journey into town will have been their interaction with the outside world for that week.

Moreover, digital exclusion is a real problem, in two respects. First, there is the issue of competence. There are people who are just not very good at handling their affairs over the internet. There are people who have been doing things in the same way for a lifetime, and who do not trust the process of putting their financial affairs in the hands of electrons on a screen. They want to give their money to a person over a counter, and see it locked away in the drawer and on its way to the bank’s vaults.

Then there is connectivity. I know this is not a rural-urban issue and I know that the Government’s broadband roll-out programme is making great advances in areas like mine, but the reality is that these banks are closing more quickly than the broadband network is being improved and so even those who are willing and able to do their banking online are not always able to do so.

[Albert Owen]

The hon. Gentleman is giving a very eloquent description of his area’s situation, which I am sure is mirrored across the whole of the United Kingdom. What he is suggesting is that there is no joined-up thinking. We have one Department—BIS—that is responsible for one area and the Department for Culture, Media and Sport responsible for another. There is also a survey by Government to retain and regenerate town centres, which has been ignored, because the hon. Gentleman highlighted four empty buildings in his relatively small town.

[James Heappey]

I am grateful to the hon. Gentleman for his intervention. While of course the Treasury will have an interest in the provision of banking, DCMS will have an interest in the provision of broadband, and the Department for Communities and Local Government and perhaps the Department for Environment, Food and Rural Affairs might concern themselves with the overall impact on the viability of communities in both rural areas and towns.

I am also concerned about the capacity of the post office network to pick up the slack. They are offered again and again as the route out of a bank closure, yet too often there are reasons why the Post Office cannot do more, and I will come to that shortly.

Finally, there is the availability of free-to-use ATMs in our town centres. Replacing an ATM outside a bank with something we need to pay a few pounds to use is not fair on the community that then finds itself needing to access its cash at that expense.

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[Albert Owen (Ynys Môn) (Lab)]

I congratulate my hon. Friend the Member for City of Chester (Christian Matheson) and the hon. Members for Wells (James Heappey) and for Ceredigion (Mr Williams) on sponsoring this debate and the Backbench Business Committee on allowing it.

As has been said, the high street banks are the hub of our communities. Not long ago, as my hon. Friend the Member for City of Chester said, they used to boast that they were the local banks. That is not the case for those who live in north-west Wales. As indicated by other Members, Wales has seen one of the largest number of bank closures across the UK. These are the very same banks that the taxpayers of local communities helped to bail out only a few years ago. We took the responsibility, as a nation, to secure the banking system, but all we have seen is closure, closure and closure.

These closures have been implemented by stealth. There is a trend: first, we see a reduction in services—appointments only in centralised branches—and then hours reductions, when already those hours are not what communities want. If someone works from 9 to 5 and has to commute, their bank will not be open when they leave their home or when they return to their local community. The banks have not adopted the flexible working hours that businesses elsewhere have arranged. Then there comes closure. More often than not, when a bank writes to its customers, after deciding to close a branch, it will call it the most difficult decision it has had to make.

No. The difficult decision would be to work with the local community and keep the bank open. Closure is an easy option for many banks. They have been encouraging people to use online services. My local branch still pulls me up and says, “Would you like to use online banking?” That is not encouraging over-the-counter services; it is encouraging people to move away from their local banks. I do not buy what the banks say about the difficulty of closing branches. It is an easy option for them. Many have overheads that they want to reduce to make maximum profit for shareholders, and that is what is behind many of the closures.

I accept that IT services in the finance industries are evolving and that younger people are happy to use an app. As I said in an intervention, I carry my iPad and my cheque book with me wherever I go, but my ability to use those services is limited in rural parts of my constituency where I do not get a signal. Once, the bank got in touch with me to ask whether I had made a certain withdrawal and it took me hours to pick up the message because of the lack of a signal. I went to the branch to discuss it and got excellent service, but quite often people are not given the choice of going into the bank branch.

Banks have been closing in villages in my constituency for decades. Some have been replaced by a hole in the wall in another shop—the Spar or the post office—but the post office closure programme has compounded the problem in many constituencies, with mass closures of post offices across the country. Although many have extended hours, they are not there to suit small businesses and individuals.

In my constituency, the problem is not limited to villages and areas of low population; it is found in the principal towns as well. The five principal towns on Anglesey have all experienced reductions in banking services. Those services are vital to tourists: they come to the area and want to get money, but the hole in the wall may not be working; or they have an inquiry that they cannot deal with through their local branch. People visiting my constituency and other parts of the UK who want to go in and have a face-to-face talk about their financial circumstances are unable to do so.

The Government here in the UK, the Government in Wales and local authorities across the United Kingdom are working hard to regenerate town centres, yet many of the high street bank branches in principal buildings in those town centres are closed. It is difficult for regeneration schemes to counteract closures on the scale that we have seen. There is no joined-up thinking here. The present Government have rightly talked about how valuable high streets are, but the banking industry is not pulling its weight, even though we, the taxpayers, bailed out some of the banks.

The Holyhead bank branch has reduced hours and people have to go to Llangefni, 15 miles away, for an appointment. Fifteen miles may not sound like a great distance, but people who do not have private transport may have to take two or three buses to get there and make the journey within those reduced hours. Peripheral areas of north Anglesey have been hit hard by bank closures. Again, it is difficult for people to get to alternative branches and they usually have to make an appointment.

Market towns have been built on trade; the banks have played an important part in their development and infrastructure has in part been built around the market and the banks. Such towns have been ignored for too long. I know the banks are private institutions, but they have community responsibilities. They are letting down their customers, in particular those in rural areas.

Other speakers have talked about regulation and the many inquiries that have been set up, but I am making practical points about individuals in the 21st century who want to access services face to face. The social value of banks and financial services in local communities is important. We have heard about elderly people wanting to come in to a branch and talk to someone; let us not ignore them. We have a growing older population in our country and we and the banks need to look after them. The banks have a social responsibility.

This debate is timely and I appreciate that we are having it because it affects each and every constituency. It is time the House of Commons started to tell the banks that they have to be responsible to the communities they serve. Those communities, their customers and the taxpayers helped to bail out the banks when they were in trouble. Communities are now in trouble. We are asking the banks to pull their finger out and act responsibly.

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[Harriett Baldwin]

The hon. Lady is right to ask that question, but if customers were surging into branches and transacting valuable business, the banks would not be being as radical as they are.

[Albert Owen]

Will the Minister give way?

[Harriett Baldwin]

A lot of Members will want to intervene. I have a lot of ground to cover and only seven minutes in which to cover it, so I will give way only very briefly.

[Albert Owen]

I am very grateful. I encourage the Minister to go to her local banks and talk to the staff. Their opinions have not really been voiced here today. They are the frontline of the banking industry and quite often we do not hear from them. It is because of reduced hours that she and I have limited time to go into our banks, but I do go in every Friday morning.

[Harriett Baldwin]

The hon. Gentleman is right to pay tribute to the wonderful staff up and down the land who staff our bank branches. The older members of our communities really value that interaction. It can be very important in protecting them against some of the online fraud, which, we have to acknowledge, targets older customers.

It is clear from the points raised today, and from the regular discussions I have with Members, that we are all in agreement that bank branches are an important part of the solution when it comes to access to finance for our local communities. It is one of my top priorities as Economic Secretary to ensure that financial services work for everyone and that they are on the side of people who want to work hard, do the right thing and get on in life. Having a good branch network is part of that. The role of banks in society is essential. I am glad that that has been acknowledged today.

In the interests of time, I want to just highlight some of the issues raised in the debate. First, in the past year we have made significant progress on access to banking services by improving access to the basic bank account. Many more banks now offer that. We have also reduced the practice of charging for failed payments, which was unacceptable. The industry has moved forward on that. I pay tribute to the hon. Member for Walthamstow (Stella Creasy). She has not participated in this debate, but she made such an impact in terms of bringing payday lending under the regulation of the FCA and the progress we are making on that. There has been much discussion about the access to banking protocol.