Banks and Communities

Chris Davies Excerpts

Thursday 11th January 2018 Westminster Hall

[Martin Whitfield]

I agree; there is a serious question about the data available to the banks when they make decisions about closure. I will come on to that point further into my speech.

[Chris Davies (Brecon and Radnorshire) (Con)]

As a member of the Backbench Business Committee, I was delighted to support the hon. Gentleman’s important application. In Wales, and in my constituency in particular, we have towns where exactly what he describes has happened: we have towns with no banks. That causes immense problems, but it has been going on for more than 10 or 15 years. Does he think that the closure policy that the banks have to go through—that tick-box process—is strong enough?

[Martin Whitfield]

The question that the hon. Gentleman raises of the tick-box attitude towards the investigations that banks carry out is one of the fundamental problems with regard to all consultation. Is it genuine consultation, or is it an economic decision that has been taken somewhere and then just implemented, almost irrespective of the evidence that they find when the consultation takes place?

I am keen to hear remarks from the Minister about what the Government, who obviously represent the United Kingdom in that interface between banks and the consumer and constituents, are able to do to push back those bank closures and, more importantly, investigate and establish the bank’s view of the relationship between them and the communities that they serve.

Banking as an institution goes back many thousands of years. It began in the temples—other buildings that communities held sacrosanct and safe. Tensions between money and religion have run in parallel throughout the same period. I do not intend to investigate that, but I suggest it shows the close link between the trust that people put in the individual they give their money to, to look after, and religion. Looking forward through history, the banking sector developed with the European banking families, who established a way of transferring money across Europe and then the world. Then, the Bank of England was established in 1694 and, perhaps more importantly, the Bank of Scotland in 1695.

Deposit banking has been a part—a foundation—of our society from the very beginning. That relationship was not built on pure profit, but on trust; initially, trust of individuals who promised to take care of others’ money; promise and trust of families who looked after moneys, and then the institutions. Such trust has developed over time, reinforced by close contact. That trust moved and continued to deepen and develop as banks became the cornerstone of our high streets. What of that bond of trust today? What is the feeling of banks’ most important stakeholders—those community individuals? They still entrust their money, which is then used by the bank to do so many other business activities.

In 1998—20 years ago—there were more than 11,000 branches. Today, the most recent figures indicate that there are just 6,000 local branches. Bank closures have escalated rapidly, with just over 1,000 closures in the last two years.