Face-to-Face Banking: Rural Areas

David Mundell Excerpts

Tuesday 1st September 2026 Westminster Hall

[David Mundell (Dumfriesshire, Clydesdale and Tweeddale) (Con)]

It is a pleasure to serve under your chairmanship, Mr Wishart. I know that you like good news, so I will start with some.

Last week I met Stuart Miller, the chief executive of the Cumberland building society. He confirmed that the building society will keep all its branches open indefinitely —including those in Dumfries, Lockerbie, Langholm, Annan and Gretna—and that it is already seeing an uptick in customers coming from banks that have closed.

My constituency—which, as you will know, Mr Wishart, is larger than any consistency in England—has seen the wholesale closure of all Lloyds and Bank of Scotland branches. We have only one Royal Bank of Scotland NatWest branch left. The branch in Biggar is about to close, and there is no real arrangement in place for what will replace it. There is very poor mobile reception, as I experienced yesterday, and there is no commitment to a free-to-access cash machine.

The hon. Member for Mid Derbyshire (Jonathan Davies) made an important point, which I have also raised with the Minister’s predecessor: Link abides by the rules—it is a rules-based organisation. In Moffat in my constituency, there are technically two other cash machines—one is in a shop and never has any money in it, and the other is in another location that is not open 24/7—so we are unable to get a free-to-access cash machine in the centre of what is a very busy town. That issue needs to be looked at.

As the Minister and others may know, Henry Duncan founded the world’s first savings bank in my constituency in 1810. It seems rather ironic that it was easier to access banking 200-odd years ago than it is now.

--- Later in debate ---

[Mark Garnier (Wyre Forest) (Con)]

Thank you for your leadership, Mr Wishart. I welcome the Minister back to her position as the Economic Secretary to the Treasury for the second time. It is a great pleasure to see her in her place. Much more importantly, I congratulate the hon. Member for South Devon (Caroline Voaden) on securing this important debate. The fact that 25 Back Benchers have contributed illustrates just how important the subject is to our constituents. The debate has also illustrated the fact that the nature of banking in the UK is evolving quite fast.

According to data from Finder, just under 30% of adults used online or remote banking in 2006. In 2024, that figure had increased to 88%. It is simply the case that fewer people are using face-to-face banking services, but that does not mean we should get rid of branches altogether. As we have heard, many people still rely on them. We need to strike the right balance between allowing our banking system to evolve with changing consumer habits and protecting those who rely on traditional banking services, such as vulnerable people and local businesses.

Before I go further, it is valuable to provide some context to this debate. According to Which?, 6,871 bank branches have closed since 2015, meaning that 69% of branches closed in that period. Which? also found that 56 of our constituencies, from Norwich North to Mid Bedfordshire, are now without a single bank branch, and that 101 constituencies have just one branch left. The South Devon constituency is part of that category, following the recent closure of the Lloyds Bank branch in Totnes. As the hon. Lady set out, the impact on all her constituents, but especially the vulnerable and older constituents she serves, is significant.

In the increasingly digital world in which we live, it is easy to forget that many people struggle to use technology. The Government’s own statistics suggest that 1.3 million adults in the UK are deemed to be digitally excluded. Although that has decreased from 6.8 million in 2017, there are still a significant number of people who find the digital alternatives difficult to navigate.

[David Mundell]

Does my hon. Friend acknowledge that some people who would otherwise be willing and able do not have access to these services? Many of my constituents do not have good enough mobile service to operate apps.

[Mark Garnier]

My right hon. Friend raises another big argument that we could have on the issue of rural broadband, but it is worth making the point regarding internet connectivity that I was just coming on to. I know this is as painful in other constituencies as it is in Wyre Forest. According to the financial lives 2024 survey, adults living in rural areas were,

“disproportionately more likely to report having poor or no connectivity.”

We must also remember that many of our local businesses rely on face-to-face banking services. According to the House of Commons Library, an average small business deposits cash twice a month, withdraws cash once a month and gets change for their cash registers once a month. It is worth bearing in mind that, typically, we have about 3,500 businesses per constituency, so an awful lot of people rely on these services.

I remember the impact that was felt in 2015 when HSBC closed the last bank in Bewdley in my constituency; people were utterly dismayed. Happily, the post office stepped in and was able to help resolve the issues, but since then we have now discovered that that the post office is under threat. We are working on it, but it demonstrates the point that things are changing very quickly.

There is also a more subtle outcome of a sharp reduction in bank branches: the relationship between a bank and the local economy is being dramatically reduced, which has implications for our wider economy. Local branch managers living in a community, providing banking services to local businesses and understanding local economic opportunities as well as pressures, are well placed to understand the commercial value of a loan application by a local business. That is important.

An application for a business loan is usually something that business owners and managers want to get in place as fast as they can, but the reality is that applications for smaller business loans now take an average of nine months to be approved. That is not good for our local economies. Furthermore, banks need to lend money. That is the business they are in. Each loan creates a banking asset. Indeed, 95% of the money in circulation is the result of banks lending it into existence through fractional reserve banking. It is in the interest of both our banks and our economy that they lend, but if it takes too long, others will step in. That can be good, but it can be bad.

Private debt is gaining traction alongside private equity. Meanwhile, unregulated loan notes have been central to some recent mis-selling issues at the smaller end of the market. That is not the fault of the banks, but the lack of local banking services opens doors to alternatives, not all of which are properly understood, risk-assessed and regulated. However, we must recognise that banks are businesses. I do not want to be an apologist for banks, but they do provide a very important service, which they have to do in a profitable way. They have to make commercial decisions, and they have to consider the footfall in their branches and the take-up of digital banking.