Rural Banking Services

Fay Jones Excerpts

Tuesday 20th July 2021 Westminster Hall

[Fay Jones (Brecon and Radnorshire) (Con)]

I beg to move,

That his House has considered rural banking services.

It is a pleasure to serve under your chairmanship this morning, Mr Gray. I am grateful to other Members for attending the debate. It is hot outside but there is no reason it should be hot in here. This does not need to be a divisive debate and I hope we can talk about the positives and the negatives of the issue.

I want to cover both the availability of cash and the importance of banking infrastructure in rural areas. There is no doubt that the pandemic has forced businesses to adapt and accelerated a wider move towards digital payments. That is to be welcomed and I thank businesses across the country that have bent over backwards and adapted their systems to ensure that they can provide a service to isolated or elderly customers. However, I am concerned that this has implications for some members of society, particularly older and vulnerable people, who are much more likely to use cash. Lower income households and those without internet access are likely to be the most affected.

During the pandemic, cash use has declined, often in constituencies with higher levels of deprivation. In my constituency, cash withdrawals dropped by 55% in the first six months of the pandemic and in areas such as mine, where our broadband and mobile coverage is poor, cash is extremely important for rural businesses and individuals. I am grateful that the Government are listening on this and are proactive, as I know the Minister will outline later, and we have already made some good steps in that direction.

In 2019, the “Access to Cash Review” report highlighted the need for different Government bodies and regulatory authorities to work together to protect access to cash. That was then followed with a commitment from the Chancellor in his Budget to legislate to protect access to cash. In April 2021, the Government accepted an amendment to the Bill that became the Financial Services Act 2021, which would allow consumers to withdraw cashback from more retailers without having to make a purchase. We have a real-life example of that amendment working well in my constituency.

I have been working with the community access to cash group in Hay-on-Wye, which is a group of volunteers who have gathered together to focus on the problem of cash availability. I do not know if you know my constituency, Mr Gray, but Hay-on-Wye is a beautiful town and has a wonderful culture of striking out on its own. In fact, in 1973, Richard Booth, who appointed himself the king of Hay, declared Hay an independent kingdom, so we did not need to go through the Brexit referendum—it really was that easy.

As a result, Hay-on-Wye has a culture of fixing its own problems. I want to commend the group of volunteers who have been organising this. They got together after the final bank left the town in 2018. At the same time, the post office has been going through some turbulent times after the postmaster, Mr Steve Like, stepped down from the business. I want to thank Steve and his family, who have owned the post office in Hay-on-Wye for more than 60 years. It was the end of an era when he stepped down in June.

With those two pressures in mind, a group of volunteers led by Josh Green got together to tackle the issue of cash availability. As well as creating a scheme where customers from different banks can speak to a representative from their bank in the parish hall one day a month, they have got together a large group of businesses that are now offering cashback after the Government stepped forward with the change to the Financial Services Act 2021. I want to celebrate what those volunteers have done. It is a meaningful difference and proves just how important cash is.

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Member for Brecon and Radnorshire (Fay Jones) on bringing forward this debate. My constituency of Strangford is similar to her own. We have had a number of bank closures and the latest one is Barclays in Newtownards, just 30 minutes away from Portavogie and Cloughey in my constituency. They are closed and the options are away. I agree with the hon. Lady that there is an important parallel between banking and broadband services. More time needs to be committed to improving internet services in rural communities to ensure that constituents can use online banking efficiently, in addition to doing it in person. It doesn’t suit everyone, but it will suit a whole lot of people. The option needs to be there, perhaps as an opportunity for banks and broadband to work together.

[Fay Jones]

I agree with the hon. Member. I hope the Minister will cover that in his summing up. As a beautiful constituency, we have one of the lowest broadband availability rates in the entire country, so those are twin-track problems that we need to fix at the same time.

[Robin Millar (Aberconwy) (Con)]

I thank my hon. Friend for securing this debate. She could well be describing Aberconwy: it is beautiful and rural, and it has trouble with broadband and, unfortunately, the withdrawal of banking services. In my constituency, the experience of the residents and small businesses of Llanrwst is that first they saw banking and counter services withdrawn from the town and going down the coast to Llandudno, and they were told that they could travel to Llandudno. Now, they hear that the counter services in Llandudno are closing, at some banks, and moving further along the coast. These are areas that do not have the benefit of extensive public transport, so it is physically difficult to move from the valley to the coast—

[James Gray (in the Chair)]

Order. Interventions must be brief. I call Fay Jones.

[Fay Jones]

I completely agree with my hon. Friend the Member for Aberconwy (Robin Millar), too. I will cover later in my speech the issues that have been raised. They are common issues, and that is why we all need to work together. This involves not just the UK Government, but the devolved Administrations in Cardiff, Edinburgh and Northern Ireland.

This proves the point that cash is extremely important. The Lloyds group talks about a group of 3 million cash-critical people. These are not the people that we might expect: 41% of this group are aged between 35 and 54; they earn less than £20,000 a year; and they often rent their home or live in social housing. Therefore, we are not just talking about the elderly, the vulnerable and those who live on their own. We need to ensure that this extremely important group in society has access to cash.

Let me turn to my ask of Government. As I have mentioned, the Government have taken some really positive steps towards addressing the challenges, and there is currently a consultation open on access to cash. The proposals include the Treasury granting powers to require certain firms such as retail banks to provide deposit and withdrawal facilities for customers within certain distances, and the Financial Conduct Authority would have oversight for monitoring and enforcing those requirements. I very much welcome that. Those proposals suggest that the Government are introducing a legal guarantee for consumers and businesses to be able to withdraw and access their cash. That is absolutely what we need. I think that the point about certain distances will be critical for people in my constituency of Brecon and Radnorshire. We are the largest constituency in England and Wales—the constituency is bigger than Luxembourg—and I urge my hon. Friend the Minister to bear that in mind as the consultation goes forward. I will certainly respond to it, but it is imperative to remember that miles are not the same in urban areas as they are in rural areas.

Brecon has four banks, and that is great news, but Ystradgynlais, the largest town in my constituency by population, has only one. Builth Wells has one. Hay-on-Wye, as I have said, has none. Crickhowell has none. Rhayader has none. Knighton has none. Since the mid-1990s, the number of bank branches in the UK has been falling steadily.

[Alex Davies-Jones (Pontypridd) (Lab)]

My Welsh colleague is making important points on the importance of banking infrastructure. In my constituency of Pontypridd, loyal customers whose life savings have been invested in banks are being abandoned by these corporations, which claim to serve the communities that we represent. Does the hon. Member agree with me that it is completely wrong for banks to bale out of local communities such as ours and others across Wales when just a few years ago they had to be bailed out by the public purse themselves?

[Fay Jones]

I certainly agree that it is wrong for banks to withdraw when there are no options left. We need to be really careful. I have worked with and spoken to a number of them in preparation for this debate, and I implore them to remember that we do need physical banking services. We cannot just push them down the line or rely on a certain urban area.

On that point, it has just been announced that Barclays bank in my constituency, in Llandrindod Wells, is about to close. From my office in Llandod, I can see the number of people who use that bank every day, and I am quite surprised that the decision is going ahead. I understand it is too late to influence that, but I make the plea none the less. It will cause considerable problems for people in my constituency: those who live in Knighton or Presteigne, or further north. I again remind the House that it is the largest constituency in England and Wales.

As much as this decision causes a headache for personal banking, businesses will also suffer. It is crucial that we recognise the value of these rural businesses. Farmers rely on good relationships with their banks, for obvious reasons. It is often said that nobody knows how to spend money better than a farmer, and it is really important that we remember how that money gets filtered out right through the rural community. One farmer sustains hundreds of businesses in a rural area, including the vet, the insurance agent, the feed merchant and the contractors that he will work with, so remembering that rural businesses need access to banking infrastructure is so important. I urge the Minister to put some real teeth behind the proposal in the consultation for a right to withdraw cash, again remembering that point about mileage. Some of my constituents who used to rely on Barclays bank in Llandrindod Wells are now going to need to travel 20 or 30 miles to get cash to pay their bills, or to give a grandchild their birthday money, so that right is absolutely essential.

The final point I will make is about the importance of banks to the high street, because nobody just pops to the bank as a one-off transaction: they pop into the post office, go into the butcher or go for a coffee. Banks are important parts of a thriving high street—again, I stress the importance of a high street to rural areas, particularly in Brecon and Radnorshire, where we do not have large urban conurbations or city centres. Our high streets are the lifeblood of the rural economy, and it is incredibly important that as we move towards a purely digital platform, we remember the need for face-to-face contact. If the pandemic has demonstrated anything over the past 18 months, it is that we all need and cherish human interaction, and it is incredibly important that we remember the impact that closures like these can have on mental health. Again, I think of the farmers in my constituency who take their cattle to market and then, while they are in Brecon market, go to the high street and into the bank. This is part of an important rural chain, and when one link goes, so goes the rest of it.

I really want the Government to think about the impact that these closures can have. Obviously, we cannot control the commercial decisions that the retail banks make, but I believe we should be doing all we can to preserve rural communities, remembering that rural banking services are so crucial. We talk a lot in this place about levelling up, and rightly so, but there can be no levelling up if we forget rural areas. I urge the Minister to think about that.