Rural Bank Closures

Debate between Gareth Thomas and Roger Williams

Tuesday 21st February 2012 Westminster Hall

[Roger Williams (Brecon and Radnorshire) (LD)]

It is a great pleasure to bring this important matter to the attention of the Chamber, and to serve under your chairmanship, Mr Brady. About a year ago, I secured a Westminster Hall debate on a similar matter. Another Treasury Minister responded to that debate, but it is a great pleasure that this Minister is present today to respond to my remarks.

I have secured the debate to reiterate my concerns about the closure of bank branches in rural areas. Although 20% of the population live in rural areas, it has never been more difficult for them to access money and financial services. As hon. Members may recall, I raised this issue nearly a year ago following the closure of Barclays bank in Rhayader in my constituency. That town of nearly 2,000 people was left with a single branch of HSBC bank that ran a reduced service just three days a week. Such a situation made it increasingly difficult for local people and businesses to access their money, and meant that they had either to change their account to HSBC, or travel 14 miles to Builth Wells and the nearest Barclays bank.

Sadly, Brecon and Radnorshire now has a new case study. On 9 March this year—unless the bank has a Damascene conversion as a result of this debate—the branch of HSBC in Presteigne will close. That will leave a community of nearly 2,500 people with just one branch of Lloyds TSB that is open only on Wednesday and Friday and between the limited hours of 9.30 am to 3 pm—a mere 11 hours per week. Furthermore, the branch has no cash machine, and I will return to that point. News of the branch closure met with a huge response from the people of Presteigne, who managed to collect more than 500 signatures in a petition against it. They see the closure as a desperate shame; one resident told me that she has seldom seen the bank empty, and that there is usually a queue.

Let me describe Presteigne in a few words. The editor of Country Life magazine, Clive Aslet, considers it to be one of Britain’s top 10 towns in which to live. It is an active, transition town that engages with environmental issues to an extent rarely seen in other places. It is heading towards a strategy of zero waste; a large allotment area has just opened and proved popular. The voluntary East Radnor day centre brings in elderly people from the countryside to share friendship and a meal together, as well as providing other services. Presteigne’s music festival is internationally renowned and premiers many musical compositions.

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

The hon. Gentleman is describing Presteigne, which sounds almost as beautiful and wonderful as north Harrow in my constituency. That area has also lost its last bank branch, which is impacting on businesses. Does he think that it is incumbent on the Government, perhaps through the Minister, to convene a summit of the big banks and demand that where a bank branch is the last in a community, banks must respect the need of that community for it to remain open? To help the Government achieve that objective, does the hon. Gentleman think that it is worth considering a British version of the Community Reinvestment Act, which forces banks to disclose where they lend and to demonstrate that they are performing well in order to maintain their banking licences?

[Roger Williams]

I believe that the Government have a role to play, and such a summit may be the way forward. We could also support trials of community banks in which a number of different banks come together to provide banking facilities, thereby cutting costs for individual banks but maintaining a facility for the community.

--- Later in debate ---

[Roger Williams]

I thank the hon. Gentleman for that intervention. Yes, I believe that there may be a role there. There is the American model of a shared bank, whereby one facility houses different banks. They share the costs and maintain a presence in the community. That may be a way forward; the Government could help with, or initiate, a pilot scheme of that type. I had intended to suggest that later.

[Mr Thomas]

I am grateful to the hon. Gentleman for supporting the idea of holding a summit with the banks to discuss branch closures. Does he not think that having such a summit is all the more important given that the Government’s attitude to bank branch closures has arguably become more depressing since his previous debate last March? I ask that because the Financial Secretary to the Treasury, who has direct responsibility for this issue, has said:

“The Government do not intervene in…decisions as to whether, and where, banks maintain branches.”—[Official Report, 26 January 2012; Vol. 539, c. 329W.]

In a recent debate, he also suggested that if the Government intervened to stop bank branch closures, banks would continue to face high costs. Clearly, a more sophisticated Minister is answering this debate, and one hopes that she will have the courage to take a slightly different view. The answers to our questions surely underline the need for a summit so that banks do not think that the Government condone further bank branch closures.

[Roger Williams]

I thank the hon. Gentleman for that intervention. One reason why I called for the debate is that I am not prepared to allow the closures to go unnoticed. By bringing the issue to the attention of the Government and right hon. and hon. Members, I intend to bring it to the attention of the big four banks, and a number of other banks. These large organisations have a social duty to which they should attend, but it would be useful if the Government could kick things off with an initiative and call for a summit, as the hon. Gentleman said.

When a bank has the last branch in town, it often makes a pledge of some sort to keep it open, but those pledges are often difficult to define; that creates a lot of uncertainty, which can be fuelled by such comments as those made last year by the British Bankers Association. It said:

“Branches will remain open if they are being used. But if the number of customers…coming into the branch falls, then the bank—like any other retail outlet—will need to look carefully at whether it is…viable to keep it open.”

Well, the bank in Presteigne was being used, but a different target was imposed on it, relating to the selling of financial products such as mortgages, pensions and loans. The population of Presteigne is rather stable; it may have made use of those products in the past, but it still expected services from the bank. However, the bank has decided to withdraw from the community.