Community Bank Closures

Bill Esterson Excerpts

Thursday 8th February 2018 Commons Chamber

[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—

[Caroline Flint]

Right hon.

[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.

[Caroline Flint]

I worked hard for that.

[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.