Community Bank Closures
Debate between Caroline Flint and Bill Esterson(6 years, 9 months ago)
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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—
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.
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.
Enterprise Bill [ Lords ] (First sitting)
Debate between Caroline Flint and Bill Esterson(8 years, 9 months ago)
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Bill Esterson
My hon. Friend is right. I was a councillor at the time as well and remember the investments in certain Icelandic banks. More than a few local authorities were caught badly as a result. Her point is well made.
On the benefits to larger firms—and we will deal with this when we discuss cash retentions in the construction sector—there is evidence of the use of moneys due, particularly to smaller firms, to help the cash flow of the larger firm. That is potentially true in the public sector, as my hon. Friend said. Dealing with that is one reason to explore bringing the public sector within the remit of the small business commissioner.
The last Federation of Small Businesses members’ survey assessing late payments by the public versus the private sector was conducted in 2012. It consisted of responses from nearly 9,000 FSB members and confirmed that although larger companies are the worst offenders with late payments, late payment in the public sector is still a big issue. According to the survey, 27% of Government agencies paid SMEs late and 29% of SME invoices from the UK central Government were paid late, so central Government were slightly worse than local. A more up-to-date assessment of late payment by central Government is found in the National Audit Office’s paper “Paying Government suppliers on time” from January 2015. The study covered all central Government Departments but looked in detail at the payment practice of the Ministry of Defence, the Home Office, the Department for Business, Innovation and Skills and the Cabinet Office.
Central Government spend £40 billion a year on goods and services, of which about £4.5 billion is spent directly with SMEs. An additional £4 billion is spent with SMEs indirectly where SMEs are subcontractors to Government contracts. The wider public sector—for example, local authorities and NHS trusts—spends £147 billion a year on goods and services.
Government Departments have a target to pay 80% of undisputed invoices within five working days and report good performance against those targets, but the NAO study calls into question the idea that Departments are paying their suppliers promptly.
Caroline Flint (Don Valley) (Lab)
My hon. Friend mentions the role of local authorities and health trusts as regards the supply chain in local communities. In my area of Doncaster, I would add the Prison Service. I have three prison establishments in my constituency, and there is another prison within Doncaster town, and we can add to that the fire service and policing. A huge number of our more provincial towns and communities do not necessarily have the big corporate companies but are the supply chain for the public service in all its diversity and in meeting the needs of local people. It would be short-sighted not to look at how we can ensure within our communities that those public services pay our small businesses in good time.
Bill Esterson
My right hon. Friend makes a very good point. The public sector is an incredibly important part of the economy in many parts of the country. We have a collective responsibility, whether in Parliament or elsewhere, to get this right and ensure that the public sector is doing its bit. That is really important.