Bank Closures (Northern Lincolnshire)

Harriett Baldwin Excerpts

Wednesday 15th July 2015 Westminster Hall

[The Economic Secretary to the Treasury (Harriett Baldwin)]

What a pleasure it is to serve under your chairmanship this afternoon, Mr Davies! I congratulate my hon. Friend the Member for Cleethorpes (Martin Vickers) on securing the debate. He has spoken eloquently on behalf of his constituents and communities. He is without a doubt the most diligent and effective Member for Cleethorpes I have ever known.

As my hon. Friend set out, bank branches play an important role in their communities—communities such as Barton-upon-Humber, Caistor and Market Rasen. They are valued by individual consumers and small businesses, and the services that they provide make a real difference to people’s lives. One of my key priorities as Economic Secretary is financial services that deliver for customers. I strongly believe that banks should be there to help and enable customers to achieve their aspirations at every stage of their lives, whether that is saving for their first home, taking out a mortgage, buying a car or saving and investing for the future.

As my hon. Friend mentioned, how we bank is going through a period of unprecedented change. New online and mobile technology means that customers are reducing their use of high street branches. As he mentioned, some banks had pledged not to close a branch if it was the last one in town, but since those pledges were made the volume of transactions in high street branches—including in the last branches in town in places such as Caistor—has continued to decline. Those changes mean that the banking industry, which has to modernise and improve its services to maintain profitability, often has to make tough decisions. They are commercial decisions for the individual institutions, but it is right for the Government to seek to ensure access to banking services for everyone, wherever they live.

We made strong progress on that agenda during the last Parliament. In March this year, the Government welcomed an industry-wide agreement known as the access to banking protocol. I am pleased to say that all the major high street banks agreed to that protocol, which came into effect in May this year. The protocol means that when a bank decides to close a branch, it must think carefully about the consequences of doing so; it must engage with its customers; it must consider the needs of its customers; and it must identify ways for its customers to continue banking after the branch has closed. The results of that engagement with the community and an impact assessment will be made public before the branch is closed. We have also made it easier for my hon. Friend’s constituents in north Lincolnshire to switch their bank accounts, with seven-day switching to one of the banks that remain open.

I appreciate my hon. Friend’s concern about the impact that branch closures will have on shops in local high streets. I assure everyone that the Government are committed to safeguarding high streets and town centres. For example, through the high streets innovation fund we have provided funding to the 100 towns that have the highest rates of empty property. Small business rate relief is also a valuable bonus for high street shops. In March 2015, the vacant share of retail outlets fell to 13%, which is the lowest vacancy rate since 2010.

As well as taking seriously the impact of branch closures on local communities, we must consider how customers will continue to access banking services. A range of alternative measures is in place, and I would like to talk in more detail about some of those measures. As my hon. Friend mentioned, at more than 11,500 of its branches in the UK, the Post Office allows customers to access their bank accounts, check their balances, withdraw money and deposit cash and cheques. Sixteen banks offer services to their personal customers and small businesses through the Post Office, including those that he mentioned. That is a huge network, which offers most customers a real opportunity to continue banking locally.

I know that more can be done, however. The range of services offered by the Post Office may be more limited than those offered in a traditional bank branch, and my hon. Friend has mentioned how popular they are. Service provision may vary by bank and by the capacity of each post office. That is why the Government are supporting measures to improve the banking services that the Post Office offers and to make those services more consistent for customers.

Late last year, the British Bankers Association and the Post Office began negotiations to agree a standard set of services, such as withdrawals, deposits and balance checking. The agreed services will be made available to bank customers at post office counters across the country. The negotiations are ongoing, but I make it clear that the Government consider completion of that work to be a priority. The protocol includes a measure for an independent review after one year, which I hope will indicate whether it has been effective—I will take a close interest in that matter.

We also expect to see concrete progress on publicising the services that are already available. As I have made clear, banks should be there to help their customers achieve their aspirations at every stage of life. We should also recognise that the modernisation of banking services is leading to new opportunities for customers, and we should all be excited about that. Since April 2014, for example, customers have been able to transfer money instantly to another bank account using only their mobile phone number; from 31 July 2016, customers will be able to use their smartphone to photograph cheques for payment into their bank account, helping to make life easier for customers in remote areas. Banks are taking action to ensure that customers are able to use such new and exciting technologies with confidence.

Those innovations also apply to the UK’s ATM network, which can play a more important role in addressing some of the concerns voiced by consumers when their local branch closes. Steady progress is being made in extending the ATM network across the UK, and the number of free-to-use ATMs is at an all-time high. In fact, 97% of withdrawals are now made free of charge. Isolated, disadvantaged and rural communities often have the worst access to free-to-use ATMs, however, so the Government are working closely with the Link network’s financial inclusion programme to subsidise free-to-use cashpoints in more than 1,400 remote and deprived areas across the UK. Importantly, members of the public in my hon. Friend’s constituency can nominate their area for inclusion in that programme.

This debate has focused on branch closures, but it is also important to recognise that many banks are choosing to prioritise their branch network and are opening new high street bank branches, with TSB and Metro bank being good examples. Metro bank is planning to open 150 branches by 2020, and its branches are open seven days a week.

[Martin Vickers]

I thank the Minister for the information she has provided. My constituents, and people across the country, would appreciate more opportunities for face-to-face contact. Can she give an assurance that the Government will do all they can to influence the banks to make provision for people who want personal contact? It is one thing for people who are applying for a car loan of a few thousand pounds not to have face-to-face contact, but people who are committing to a mortgage for 25 or 30 years need detailed, experienced advice. It is much easier to provide such advice on a one-to-one basis.

[Harriett Baldwin]

I agree. My hon. Friend will be glad to know that 58% of people agree with both of us that face-to-face contact and having a local branch are important when choosing where to bank and engaging in major transactions. Some banking organisations take the view that they will gain market share by opening new branches. I have mentioned Metro bank, and TSB currently has 630 branches serving 4.5 million customers, which makes it the eighth-largest branch network with 6% of all UK branches. The Government are keen to encourage such healthy competition between different brands, some of which offer a face-to-face banking model.

The Government’s ambition is for 15 new banks to enter the market over the life of this Parliament. If we achieve that, it will give customers far more choice of whom to bank with and encourage banks to compete more effectively with one another. Competition will also continue to drive innovation in the delivery of banking services, such as contactless payment and payment by mobile phone. Atom bank, which recently received its banking licence, is a good example of innovation. It plans to be an online-only organisation and has ambitions to offer a range of innovative services to customers, which could include face-to-face contact through technology, as well as between individuals in the same location.

One often suggested solution is the sharing of bank branches, which would allow banks to lower overheads and maintain local provision when they may otherwise have to close their branches. Of course, each bank must specialise and differentiate itself from its competitors, but that should not prevent the industry from thinking creatively about how premises and services could be shared. The British Bankers Association is currently considering that issue in consultation with its members. In particular, it is exploring where local circumstances may mean that sharing a branch is the best solution.

I understand the concern of communities in northern Lincolnshire about local bank branch closures—my hon. Friend mentioned Barton-upon-Humber, Caistor and Market Rasen—and many communities across the UK, including the one I represent, are experiencing a similar situation. Changes in the banking industry reflect changes to customers’ needs and habits. Banks and building societies need to balance customer interests, market competition and other commercial factors when considering their strategy. It is right that the Government do not intervene in such commercial decisions, but we are clear that banks and building societies should support access to banking services for everyone.

Once again, I congratulate my hon. Friend on raising these important issues today.

Question put and agreed to.

Financial Ombudsman Service

Harriett Baldwin Excerpts

Tuesday 14th July 2015 Written Statements

[The Economic Secretary to the Treasury (Harriett Baldwin)]

The annual report and accounts 2014-15 of the Financial Ombudsman Service has today been laid before Parliament.

The report forms an important part of the accountability mechanisms for the Financial Ombudsman Service under the Financial Services and Markets Act 2000 (FSMA), and assesses the performance of the Financial Ombudsman Service over the past 12 months in discharging its functions.

[HCWS105]

Equitable Life

Harriett Baldwin Excerpts

Monday 13th July 2015 Written Statements

[The Economic Secretary to the Treasury (Harriett Baldwin)]

The Equitable Life Payment Scheme has issued payments of over £1.06 billion to 902,000 policyholders as of 31 May 2015. With final tracing efforts now concluding, the scheme is reaching the limit of how many policyholders it will be able to trace and pay. As announced in the Budget on 8 July, the scheme will close to new claims on 31 December 2015. Payments to with-profits annuitants are unaffected and will continue as planned for the duration of their annuity.

Before it closes, however, the scheme will continue attempts to trace and pay eligible policyholders, including tracing policyholders through the Department of Work and Pensions due £50 or more. I would urge colleagues to make constituents aware that if any of them are holders of an Equitable Life policy and have not yet claimed a payment under the scheme, they should contact the scheme on 0300 0200 150 as soon as possible, quoting their policy number.

Despite these efforts, the scheme expects that some policyholders will remain unpaid as of 31 December 2015. The scheme will use money that would have been distributed to the untraced policyholders to double the amount of the lump sum payments of 22.4% of relative losses to policyholders on pension credit. Around 40,000 people are expected to benefit by an average of over £1,000, although actual payments will depend on the amount of an individual’s relative loss.

In order to benefit from this payment, policyholders must be in receipt of pension credit. Policyholders are therefore urged to check whether they can make a claim for pension credit by calling the pension credit claim line on 0800 99 1234 or contacting a local advice centre as appropriate.

[HCWS96]

Financial Services Compensation Scheme

Harriett Baldwin Excerpts

Monday 6th July 2015 Written Statements

[The Economic Secretary to the Treasury (Harriett Baldwin)]

The level of protection offered by the Financial Services Compensation Scheme (FSCS) is changing. The statutory level of deposit protection is set by the European deposit guarantee schemes directive (DGSD), which was updated last year. It requires that all European member states provide for a deposit protection limit of €100,000. The FSCS limit must be set at the prevailing exchange rate on 3 July 2015.

Given the strength of sterling in relation to the euro, this means that the current level of protection provided by the FSCS under the statutory scheme will reduce. The Government have taken action to ensure that depositors are not exposed to a sudden reduction in the level of protection they receive from the FSCS.

HM Treasury has laid a statutory instrument to ensure that depositors who are currently entitled to up to £85,000 of protection from the FSCS will continue to be so until 31 December 2015. This is to ensure that depositors can have clarity and certainty about the protection they are entitled to, and time to react accordingly. These depositors will continue to be protected up to the maximum level of £85,000, by the FSCS until 31 December 2015, after which the new rate of £75,000 announced by the Prudential Regulation Authority (PRA) will come into effect. The PRA must review the coverage level at least every five years.

Individuals and small businesses that are depositors of banks, building societies or credit unions authorised by the PRA will qualify for the protection. The protection is not dependent on the time when the deposit was made—eligible deposits made after 3 July 2015 will also be protected.

These actions ensure that depositors who are currently entitled to protection of up to £85,000 are not subjected to a sudden reduction in this protection. It will ensure that there is sufficient time available for depositors to be made aware of the changes, and to take such steps as they feel necessary to manage their financial affairs appropriately in light of this change.

Implementing the new DGSD has resulted in a number of changes to deposit protection in the UK including expanding the coverage provided by the FSCS to cover large corporates and small local authorities; and provision of a new “temporary high balance” cover of up to £1 million for six months for certain deposits, such as the proceeds from the sale of your home. The extended coverage will not apply to deposits which only became entitled to protection under the new DGSD, which came into effect on 3 July 2015.

[HCWS86]

Financial Conduct Authority/Payment Systems Regulator

Harriett Baldwin Excerpts

Thursday 2nd July 2015 Written Statements

[The Economic Secretary to the Treasury (Harriett Baldwin)]

The annual reports and accounts 2014-15 of the Financial Conduct Authority and Payment Systems Regulator have today been laid before Parliament.

These reports form a key part of the accountability mechanism for the Financial Conduct Authority under the Financial Services and Markets Act 2000 and the Payment Systems Regulator under the Financial Services (Banking Reform) Act 2013. They assess the performance of the Financial Conduct Authority and Payment Systems Regulator over the past 12 months against their statutory objectives.

[HCWS84]

UK Debt Management Office (Business Plan)

Harriett Baldwin Excerpts

Thursday 25th June 2015 Written Statements

[The Economic Secretary to the Treasury (Harriett Baldwin)]

The United Kingdom Debt Management Office (DMO) has today published its business plan for the year 2015-16. Copies have been deposited in the Libraries of both Houses and are available on the DMO’s website, www.dmo.gov.uk.

It is also available online at: http://www.parliament.uk/writtenstatements.

[HCWS58]

Equitable Life Payments Scheme

Harriett Baldwin Excerpts

Tuesday 23rd June 2015 Written Statements

[The Economic Secretary to the Treasury (Harriett Baldwin)]

As of 31 May 2015, the scheme has now issued payments totalling over £1.06 billion to 902,508 policyholders. The scheme will today be publishing a further progress report, which can be found at www.gov.uk/equitable-life-payment-scheme.

Eighty-seven per cent of eligible policyholders have now been traced and had a payment issued; this represents nearly 92% of the total amount estimated to be due to policyholders.

The scheme encourages any policyholders who believe themselves to be eligible to call the scheme on 0300 0200 150. The scheme can verify the identity of most policyholders on the telephone, which means any payment due can usually be received within two weeks.

[HCWS48]

EU Payment Accounts Directive

Harriett Baldwin Excerpts

Tuesday 23rd June 2015 Written Statements

[The Economic Secretary to the Treasury (Harriett Baldwin)]

I am today publishing a consultation on the draft payment accounts regulations 2015.

The regulations make provision regarding the transparency and comparability of fees charged in relation to payment accounts; payment account switching and access to payment accounts with basic features for all consumers legally resident within the EU.

The regulations are required in order to implement the requirements of the payment accounts directive (2014/92/EU) (“PAD”) which was adopted on 23 July 2014. In order to meet treaty obligations, EU member states must implement the majority of the measures set out in PAD by 18 September 2016.

The Government have already taken forward a number of initiatives for the purposes of improving the experience of UK current account customers. For example, the seven-day current account switch service (CASS) supports current account switching and basic bank accounts have been available in the UK for over 10 years, most recently augmented by the December 2014 agreement concluded by the nine largest providers of current accounts in the UK. That new agreement clarified and improved the terms upon which basic bank accounts are offered.

To complete the transposition of PAD, the UK must establish these initiatives in legislation and amend existing legislation related to the provision and regulation of payment accounts. However, due to the measures that the UK already has in place, the proposed regulations aim to minimise any negative impact on structures and services that are working well.

PAD allows member states to extend provision in a number of areas. Under the draft regulations, application will not be extended beyond what is necessary.

The exception to this is chapter IV of PAD—payment accounts with basic features—where UK policy on basic bank accounts is more developed than that set out in the directive. As a result, the Government intend to implement PAD in such a way as to preserve the UK’s existing basic bank account policy, while creating the necessary legal certainty for consumers required by PAD.

The consultation closes on 3 August. The consultation document is available online at: https://www.gov.uk/government/latest?departments%5B%5D=hm-treasury

[HCWS51]

Oral Answers to Questions

Harriett Baldwin Excerpts

Tuesday 16th June 2015 Commons Chamber

[Iain Stewart (Milton Keynes South) (Con)]

13. What steps his Department is taking to (a) support savers and (b) promote home ownership.

[The Economic Secretary to the Treasury (Harriett Baldwin)]

The Government stand firmly on the side of people who want to work hard, save up, buy their own homes, and retire with dignity. We have increased allowances for individual savings accounts, introduced the Help to Buy scheme, pensioner bonds and pension freedoms, and taken 95% of people out of tax on their savings.

[Alan Mak]

Alongside the support that has been introduced over the last five years, maintaining a strong economy and low interest rates is one of the most important ways of helping home owners. Can my hon. Friend assure my constituents in Havant that the Government will continue to ignore the Opposition’s calls for more taxes and more spending, which put our economy at risk and make it harder for people to get on to the housing ladder?

[Harriett Baldwin]

What a pleasure it is to welcome my hon. Friend to the Chamber. He is absolutely right: more people are employed than ever before, and mortgage rates are extremely low. As a result of our long-term economic plan, my hon. Friend’s constituents in Havant, and constituents elsewhere, can now aspire to own their own homes one day.

[Iain Stewart]

Policies such as Help to Buy have proved very popular in my constituency, but may I urge my hon. Friend to be more ambitious in the longer term? Will she consider expanding the shared-ownership model, which enables people to take an initially small equity share in a property at the start of their careers, and then save up in order to expand it as their careers progress?

[Harriett Baldwin]

I congratulate my hon. Friend on the strong endorsement he received from the voters of Milton Keynes to return here and express their interests. I am very pleased to hear Help to Buy is so popular in Milton Keynes. The town tops the charts for the attractiveness of buying versus renting. Shared ownership is indeed an excellent way to help people take their first steps on the property ladder, and the Government remain committed to it.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

The Minister talks about housing topping the charts in Milton Keynes, but in my constituency we are in danger of topping the charts in house prices, with the average price now £606,000. That is being fuelled in part by overseas buyers who purchase a property and either rent it out or do not live there. Have the Government any plans to tackle this and help my constituents get on the housing ladder?

[Harriett Baldwin]

My hon. Friend the Member for Milton Keynes South (Iain Stewart) topped the chart in Milton Keynes personally as well, but the hon. Lady raises an important question: London house prices are a key issue for her constituents. That is why the Government have brought in so much support to increase the number of affordable homes. The number of social homes and affordable homes increased by over 200,000 in the last Parliament. We are committed to continuing that great work and to bringing in the concept of starter homes, which we hope will add further to housing supply.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

I genuinely welcome the Minister to her post, but I ask her to be very careful about the right to buy housing association properties. Will she look across at cities such as Paris, where people on low incomes have been driven out and live in ghettoes many, many miles outside the city? If we do not build more social housing that is available to lower-income people, that will happen in our cities.

[Harriett Baldwin]

I am sure the hon. Gentleman—who kindly welcomes me to my place—will welcome the fact that more social housing was built in the last Parliament than in the entire 13 years of the last Labour Government. He rightly raises a point about housing associations: we must allow more supply of housing association properties. That is why this Government will bring in the right to buy for housing association tenants, which will enable more capital to come into that sector and more housing association properties to be built.

[Mrs Maria Miller (Basingstoke) (Con)]

11. What steps his Department is taking to promote home ownership.

[The Economic Secretary to the Treasury (Harriett Baldwin)]

The Government are taking a range of steps to promote home ownership, including helping almost 100,000 households through the Help to Buy scheme. The Government have extended the Help to Buy equity loan to 2020, introduced a Help to Buy ISA and extended the right to buy, and we are delivering 200,000 new starter homes.

[Mrs Miller]

Hundreds of Basingstoke residents have a home of their own because of this Government’s Help to Buy policy. What assurances can the Minister give today that Help to Buy will continue into the future, because we are currently putting together our local plan, which includes a commitment to more affordable housing?

[Harriett Baldwin]

I can give my right hon. Friend the assurance that the Government want people who work hard and want to buy their own home to enjoy the security of owning their own home. The equity loan scheme will last until 2020, which should support another 120,000 households in Basingstoke and elsewhere to get on to, and up, the housing ladder. In addition, as my right hon. Friend the Chancellor announced in his recent Budget, the Help to Buy ISA is expected to help over 1 million first-time buyers save for a deposit.

[Wes Streeting (Ilford North) (Lab)]

The Government’s policies were not popular in every part of the country, in particular in my constituency. May I therefore ask the Minister, as this has been a week for U-turns, to listen to the National Housing Federation, the CBI and the Institute for Fiscal Studies and revisit right to buy for housing association stock, which will lead to a decrease in the availability of affordable homes for rent, and to deal instead with the fundamental problem of housing supply?

[Harriett Baldwin]

I welcome the hon. Gentleman to the House. This Government are firmly on the side of those people who want the right to buy their own properties, and that includes extending the right to buy to housing association properties. Perhaps he will agree with the right hon. Member for Birkenhead (Frank Field), who published a report with the Institute for Public Policy Research in recent years calling on his party to do exactly the same thing.

[Julian Knight (Solihull) (Con)]

Many hard-working homeowners in my constituency take in lodgers to meet their mortgage repayments. However, the rent-a-room tax-free threshold has remained unchanged at £4,250 a year since 1997. Now that the deficit is being paid down, would it not be a positive step to help aspirational homeowners by raising the rent-a-room tax-free threshold?

[Harriett Baldwin]

I welcome my hon. Friend to the Chamber. He clearly brings a wealth of experience in this area, and he is right to highlight the fact that people who rent out a room can receive the first £4,250 tax-free. I note the point that he has made. My right hon. Friend the Chancellor of the Exchequer is sitting beside me and he will no doubt take that as a Budget submission and consider it as part of that process.

[Fiona Mactaggart (Slough) (Lab)]

Following on from that question, one aspect of the tax gap that everyone admits is part of the problem is the collection of tax on rental properties. Will the Minister confirm that there will be a Treasury study on how to deal with the tax gap on rental properties, in order to find out how big it is and how we can challenge it?

[Harriett Baldwin]

The right hon. Lady is right to highlight that point. It is important to recognise that although the first £4,250 of rent is covered by the allowance, once it goes above that level it becomes taxable income. HMRC is constantly looking at ways in which it can improve the collection rate in that area.

Prudential Regulation Authority

Harriett Baldwin Excerpts

Monday 15th June 2015 Written Statements

[The Economic Secretary to the Treasury (Harriett Baldwin)]

The annual report and accounts 2014-15 of the Prudential Regulation Authority has today been laid before Parliament.

The report forms a key part of the accountability mechanism for the Prudential Regulation Authority under the Financial Services and Markets Act 2000, and assesses the performance of the Prudential Regulation Authority over the past 12 months against its statutory objectives.

Copies are available in the Vote Office and the Printed Paper Office.

[HCWS35]