Oral Answers to Questions

James Heappey Excerpts

Tuesday 11th December 2018 Commons Chamber

[Mr Hammond]

We have made it clear that we will first prioritise the security of the UK, and that we will then prioritise the flow of trade. We will not prioritise the collection of customs tariffs. The hon. Lady will be aware that these are tariffs that we are not currently collecting; they would be additional revenues. We will treat that as something that we can do in slower time, if the situation arises.

[James Heappey (Wells) (Con)]

Later today the House will debate fuel poverty. Does the Chancellor agree that the greatest lever that we can pull to alleviate the challenge of fuel poverty is to incentivise home energy efficiency? Will he look at what the Treasury can do to address that?

[Mr Hammond]

That is certainly one of the levers that we can pull, and I am happy to look again at how we support home energy efficiency.

Leaving the EU: Economic Analysis

James Heappey Excerpts

Wednesday 28th November 2018 Commons Chamber

[Mel Stride]

I assume that the hon. Lady is referring to the suggested second referendum. As I said in my opening remarks, I think that that would be entirely the wrong route. The British people took a decision in 2016. At that time the hon. Lady and I were on the same side of the argument, but the difference between us is that I respect that democratic decision. It would not be appropriate to go back with what would be a politician’s vote to seek a different outcome.

[James Heappey (Wells) (Con)]

There is no point in sugar-coating it: there is clearly a cost to Brexit. However, there would also be a democratic cost were we to ignore the will of the people as expressed in the referendum. Does my right hon. Friend agree that if the House were to turn its back on a deal that minimises that cost and respects the will of the British people, we would plunge our economy into a period of great uncertainty, which would have huge costs and at the end of which the options would still be exactly the same?

[Mel Stride]

My hon. Friend is absolutely right. The choice before the House is to go for a deal that will safeguard our economy for the future and deliver on the aspirations and the messages that we saw at the time of the referendum. To go into uncharted territory beyond this deal—which could potentially end in a no deal—would not, I suggest, be in the best interests of any of our constituents.

Tourism Industry: VAT Reduction

James Heappey Excerpts

Wednesday 21st November 2018 Commons Chamber

[Mr Carmichael]

The hon. Gentleman makes the point well. I am aware that Northern Ireland has a particular issue as it shares a land border, a fact that is fairly well discussed at the moment, with the Republic of Ireland. The Republic is one of those countries that in 2011—I will doubtless be corrected if I am wrong—cut their rate of VAT on tourism services to 9%. There is a particular sensitivity about the cross-border issues there, which may assist the hon. Gentleman in making the case, because there is a good working example on his own doorstop of the opportunities that are presented.

I know it is counter-intuitive in the Treasury to suggest that cutting taxes will bring an increased return in revenue, but there is good objective evidence to support that very proposition. I was a member of the Cabinet in 2015 when the Budget cut the rate of spirits duty by 2%. We did that expecting it would result in a reduced return of about £600 million, but we felt it was an important thing to do. In fact, the revenue return as a whole was significantly increased. So having taken the expected hit, we got a better return at the end of the day. This is the same thinking that underpins the Government’s reductions in corporation tax in recent years.

[James Heappey (Wells) (Con)]

The Somerset Tourism Association and Visit Somerset have made representations to me on this matter and they very much agree with the right hon. Gentleman that a reduction in VAT on overnight accommodation and visitor attractions leaves more money in the pockets of visitors to spend on other things during their stay. So the money is not lost to the system; it grows the visitor economy even further.

[Mr Carmichael]

The hon. Gentleman leads me on nicely to my next point. I was going to try to explain the way in which this reduced level of VAT feeds into other parts of the economy and the effects it can have. It is argued, with some force, that the reduction in VAT can lead to higher employment levels and better wages, which in turn leads to increased income tax receipts. The increased profitability of businesses, some of which are currently marginal and probably not even paying much tax at all, provides the opportunity for greater returns in corporation tax. Eventually, this feeds through to higher expenditure in other sectors—this is the so-called “tourism multiplier”, which goes back to the hon. Gentleman’s point. It is estimated that for an additional £1 spent in tourism we will see another 70p generated in spend in other sectors.

The European Union VAT laws currently require a broad uniformity of VAT and sales taxes across the whole EU, but there is a specific derogation for certain supplies. The list of these derogations is set out in annex III to the principal VAT directive 2006/112/EC. The three items of particular relevance to the tourism sector are items (7), (12) and (12a). For the benefit of the House, let me read those into the record. Item (7) specifies:

“admission to shows, theatres, circuses, fairs, amusement parks, concerts, museums, zoos, cinemas, exhibitions and similar cultural events and facilities”.

Item (12) specifies:

“accommodation provided in hotels and similar establishments, including the provision of holiday accommodation and the letting of places on camping or caravan sites”.

Item (12a) relates to

“restaurant and catering services, it being possible to exclude the supply of (alcoholic and/or non-alcoholic) beverages”.

It is important that the House understands that we make this case within a fairly clearly defined area, because the question of what constitutes tourism services, and other such issues, is already fairly well established in European law.

The principle of uniformity, subject to these derogations, is now stretched to breaking point. In Europe, only three countries—the United Kingdom, Denmark and Slovakia —continue to charge the full 20% rate of value-added or sales tax. Every other country charges a reduced rate. Some charge as low as the 5% minimum floor set by EU law, and they range right the way through to 15%. The rate in the Republic of Ireland has now been set at 9%, which has been of concern to operators in Northern Ireland and will doubtless affect the considerations of the hon. Members for Strangford (Jim Shannon) and for South Antrim (Paul Girvan), who are sitting behind me.

I know how the Treasury likes to do these things— I have seen it for myself many times over the years—but I would like to hear from the Minister that there is a willingness in the Treasury to engage with a wider range of people and a wider range of stakeholders. The Cut Tourism VAT campaign commissioned Nevin Associates to produce analysis. Its modelling showed that a cut to 5%—the minimum allowed—could generate £5.3 billion in gains to the Treasury over 10 years.

--- Later in debate ---

[The Financial Secretary to the Treasury (Mel Stride)]

I congratulate the right hon. Member for Orkney and Shetland (Mr Carmichael) on securing this debate and on his perseverance in ensuring that we have this opportunity to debate these important matters. He quite rightly raised the importance of tourism, of which the Government are extremely aware: 1.6 million people are employed in the sector. He made important points about the sheer reach across the economy of the tourist sector, right down to the very point that he raised in his own constituency of examples of farms where additional income is being raised through participating in tourist-related activity. The sector provides £66 billion to the UK economy and 3.8% of gross value added. He is also right that, at the moment, tourism is booming not just in his constituency, but across the United Kingdom. Last year, 2017, was a record year, with 39.2 million visitors to the UK, which was 4.3% up on 2016. Not only are more tourists coming, but they are spending more as well, with an even larger increase in the amount that they are spending.

It is important to put on the record the admiration that we as a Government have for the sector and the gratitude that we have for all those who work so hard in what is quite a tough industry—it is one of those sectors that has rather a nice, soft and fun feel to it, but we all appreciate that a lot of hard work goes on behind that. The Government not only recognise the importance of tourism, but are also there to support tourism. I cite three broad areas in which we do that. The first is to get the broader economic factors correct. As the House will know, we have had eight years of economic growth and the Office for Budget Responsibility is now projecting a further five years of growth. We have high levels of employment, low levels of unemployment and we are seeing inflation coming down towards its target as well. That is an important broader macroeconomic context in which we hold this debate and discuss tourism.

The second area is business in general. We have reduced tax on companies across the board from 28% in 2010 down to 17% in the coming couple of years.

[James Heappey]

I am very grateful to my right hon. Friend for giving way. Does he agree that one of the taxes that could really catalyse growth in our visitor economy, not just for tourism, but for business travel as well, is further reductions in air passenger duty, beyond the very welcome announcement in the Budget, because nothing, surely, can catalyse growth in our visitor economy more than further reductions in APD?

[Mel Stride]

APD is certainly one of those taxes that we, along with all others, constantly keep under review. My hon. Friend will have noticed the freezing in short-haul APD that occurred at the time of this Budget, but he is right that we seek to keep that and other taxes as low as we can.

We supported our high streets in our recent Budget by reducing business rates by some 30% for smaller retailers, which will be of great benefit to some of the coastal towns in particular that the right hon. Gentleman will be thinking of, I know, when he speaks about the importance of tourism to the economy.

Finance (No. 3) Bill

James Heappey Excerpts

Committee: 1st sitting: House of Commons
Monday 19th November 2018 Commons Chamber

[Kevin Hollinrake]

It is hugely important that we have the negotiated exit that we all want. No deal is the worst possible option, and it is not where we want to go. Nevertheless, we cannot take no deal off the table.

I return to my key point about our future energy emissions and ensuring that we reduce our carbon emissions wherever we can. We are world leaders in moving our electricity production away from coal, which we have committed to phasing out by 2025, and into gas.

[James Heappey (Wells) (Con)]

My hon. Friend has done an awful lot of research into the energy mix that we might require to achieve those targets. Does he agree that carbon pricing sends an important signal to ensure that the phase-out of coal is delivered on time and that other technologies—such as gas and renewables—come online to enable us to hit those targets?

[Kevin Hollinrake]

My hon. Friend is absolutely right. He has a great deal of knowledge in this area, too, and I absolutely defer to it. This discussion about the most energy-efficient way to produce our electricity has run throughout my parliamentary career. I know that my hon. Friend is not a big fan of shale gas, but there are petroleum exploration and development licences right across my constituency. Over the last three years I have not had a frack-free day; in fact, I spent some time out in Pennsylvania looking at shale gas exploration out there. The US has used shale gas to excellent effect in reducing its carbon emissions.

[James Heappey]

My hon. Friend is very kind to give way a second time. The issue is not necessarily where the gas comes from, but the fact that it is an important part of our future generation capacity and it is, for now, indispensable to the delivery of heat. Whether it is delivered onshore or elsewhere is not necessarily the important part of that debate.

[Kevin Hollinrake]

It is interesting; my hon. Friend says that the point is not where gas comes from, but imported gas has a larger carbon footprint. That is particularly true if it is put in large ships that go from Qatar to the UK, in which case its temperature has to be reduced to about minus 156 °C in order to liquefy it. If we produce gas domestically, its carbon footprint is much smaller, and that is why shale gas makes sense. As he knows, we import about half our gas, but by 2030 we will be importing about 70% of it. It makes sense to produce something that we would otherwise have to import. On that point, I am happy to conclude, and I am grateful for the opportunity to speak.

Question put and agreed to.

Clause 68 accordingly ordered to stand part of the Bill.

Clauses 69 to 78 ordered to stand part of the Bill.

Clause 89

Minor Amendments in consequence of EU withdrawal

Amendment proposed: 22, page 66, line 30, at end insert—

‘(1A) The Chancellor of the Exchequer must, no later than a week after the passing of this Act and before exercising the power in subsection (1), lay before the House of Commons a review of the following matters—

(a) the fiscal and economic effects of the exercise of those powers and of the outcome of negotiations for the United Kingdom’s withdrawal from the European Union giving rise to their exercise;

(b) a comparison of those fiscal and economic effects with the effects if a negotiated withdrawal agreement and a framework for a future relationship with the EU had been agreed to;

(c) any differences in the exercise of those powers in respect of—

(i) Great Britain, and

(ii) Northern Ireland;

(d) any differential effects in relation to the matters specified in paragraphs (a) and (b) in relation between—

(i) Great Britain, and

(ii) Northern Ireland.”—(Jonathan Reynolds.)

Question put, That the amendment be made.

Food Labelling and Allergy-Related Deaths

James Heappey Excerpts

Tuesday 9th October 2018 Commons Chamber

[David Rutley]

Yes, it does need to be wide. Yes, we need to involve other areas such as training for paramedics. We need to make sure that there is much better information and training. It is very serious, and I will make sure that that happens.

[James Heappey (Wells) (Con)]

I very much echo the condolences offered from the Dispatch Box, and warmly welcome the review that my hon. Friend the Minister has outlined today. However, in my constituency there are dozens of small food producers, many of whom produce food for direct sale at markets around Somerset and the wider south-west. While my hon. Friend will want to strengthen the regulations for large retailers, may I encourage him to apply some common sense in the way in which we apply them to small producers selling locally?

Equitable Life Policyholders: Compensation

James Heappey Excerpts

Thursday 23rd March 2017 Commons Chamber

[Kirsten Oswald]

My hon. Friend makes an excellent point. We should commend those people for all their continued work in keeping the issue at the forefront of our minds.

A cynical person might wonder whether—as with the collapse of the Connaught Income Fund, which was mentioned by my hon. and learned Friend the Member for Edinburgh South West (Joanna Cherry)—there is a strategy of dragging action out for an extraordinarily long time to ensure that fewer of those affected are still with us. It is simply not good enough for this sorry saga to continue for even longer. The UK Government must now finally deal fully with the outstanding injustices experienced by these unfortunate policyholders.

We really do need to grasp the nettle, and acknowledge the wrong that has been done and the impact that it has had on people’s lives. It is essential for action to be taken on behalf of the people who have lost out, but we also need to ensure that they can maintain confidence in our pension provision and in financial and regulatory bodies.

[James Heappey (Wells) (Con)]

The hon. Lady is making some powerful points on behalf of her constituents. Many of my constituents have also been in touch to say that they see this as such an unfairness because they did the right thing. They worked all their lives, and they paid into a scheme that they thought was the right one. That sense of unfairness is compounded by the way in which so many other schemes that have failed have been dealt with. Banks have been bailed out by the Government, and policyholders have been refunded. Does the hon. Lady agree that the grievance of these policyholders is perhaps all the more because so many other organisations have already been bailed out?

[Kirsten Oswald]

The point is well made. I think that Equitable Life policyholders, like Connaught Income Fund investors, feel particularly hard done by, and that is perfectly understandable. We need to deal with the compensation, and that can only happen when we have fully quantified the loss by negotiating the sums involved. At present, we are simply not there. After all this time, the Government need to acknowledge and deal with the injustice that people understandably feel. They have worked hard, and they have saved hard. They have done all the things that Governments emphasise are financially responsible and the way to guarantee security in retirement. Imagine how they must have felt when not only did their hard-earned money vanish, but the Government failed to protect them and then, to compound the problems further, failed to offer fair compensation.

Of course I recognise that there has been some compensation, but those affected understandably feel that that is not good enough and that it is not right for them to lose out because the Government claim that there are financial constraints. Why should they pay the price for failures of Treasury regulation in the 1990s? The Government must realise how much damage scandals such as this cause to public confidence in saving and in regulation. Surely, as the hon. Member for Harrow East said, righting wrongs like those suffered by Equitable Life and, indeed, Connaught investors is part of the way to restore that confidence.

There is real confusion, much of it arising from inaccurate communication from the Department for Work and Pensions, about the national insurance contributions that are needed for the new state pension. As we have heard from a number of Members today, WASPI women are marching on Parliament because the UK Government have whipped the pension rug from under their feet. Here, the saga of the Equitable Life policyholders drags on and on, and their pension provision has also vanished into the ether. If the Government are at all serious about pensions and about people saving for their future, they must listen and they must act now, finally, to deal with the Equitable Life scandal once and for all.

Palace of Westminster: Restoration and Renewal

James Heappey Excerpts

Wednesday 25th January 2017 Westminster Hall

[Mr Winnick]

My hon. Friend certainly makes a powerful case for a full decant.

It should not be forgotten that, as has been mentioned, every year the cost of maintaining the building goes up. The figure given in the report for 2014-15—the latest figures, unless the Deputy Leader of the House has further information—is nearly £50 million. That is public money that is essential just so that the building can be in some kind of working condition. I agree that full decanting is essential. I understand why some feel that for historical and ceremonial reasons, and so that people can come to this building, there is a case for partial decanting, but in practice and when we consider the amount of work involved on what would be a huge building site, how on earth could we continue to debate in the present Commons or Lords Chambers, or the Robing Room? Imagine the constant pleas to the Speaker or Lord Speaker: “It is impossible to hear. Can the work stop for a while?” and the rest of it. It is not practical—and I do not understand how anyone could argue otherwise—to work with the constant noise and disruption and constant changes of location between the two Chambers. That is not the way to proceed, even if it was done after the 1834 fire. I think we have made some progress since then.

[James Heappey (Wells) (Con)]

I am the chairman of the all-party group on the events industry; is the hon. Gentleman aware that the delay in making a decision is having an impact on event and conference bookings at the Queen Elizabeth II centre, and that, more generally, the cost of a decant in which the conference centre was used for the Lords would have an impact of hundreds of millions of pounds on the wider Westminster economy that comes with all those conferences and events?

[Mr Winnick]

The hon. Gentleman makes a valid point.

I am speaking in the debate because I want to urge that a decision be reached as quickly as possible. It has been said in some parts of the media that the work is for ourselves. It is not: we come and go; we are tenants. Neither is it for our staff, the officers or anyone else working in the building. That is not why the work should be undertaken, despite the cost. It is for the democratic process. It is for British democracy to have its traditional home, which is recognised throughout the world. We should take pride in the building, and we should take pride in the fact that British democracy is recognised in the way it is, especially in countries in which, unfortunately, the rule of law and civil liberties are totally absent. That is why it is so essential that a decision is taken in the very near future. I want to see a building fit for purpose, a place that ensures the continuation of the democratic process and the rule of law.

Of course, we could go elsewhere. Parliamentary democracy in the United Kingdom certainly does not depend on one particular building—it would be farcical if it did—but this is our traditional home, and hopefully will be for future generations. That is why it is so important that what the report outlines should be seriously considered and a decision should be reached in the near future.

When the Deputy Leader of the House of Commons responds, I hope he has the authority to say that a major debate will take place on the subject this year—in the first part of 2017. The House itself can then reach a decision on option 1, 2 or 3. Whatever it may be, at least the decision will be reached that work should commence following the 2020 general election.

Oral Answers to Questions

James Heappey Excerpts

Tuesday 25th October 2016 Commons Chamber

[Mr Hammond]

I make three points to the hon. Lady. First, we will have an autumn statement in just over four weeks’ time, and I will be able to set out more of our forward plans at that time. Secondly, I am not sure off the top of my head what the population proportion of the UK is in the north-west and north-east regions, but if the figures that she has quoted are correct, I am not so sure that a quarter of infrastructure investment represents disproportionate underfunding. I would need to check that. Thirdly, the very large investment in Crossrail, a strategically important national project, has had the effect of skewing infrastructure investment towards London over the past few years.

[James Heappey (Wells) (Con)]

15. What assessment he has made of the potential effect of a smart energy system on levels of productivity.

[The Economic Secretary to the Treasury (Simon Kirby)]

I thank my hon. Friend for his interest in both these important topics. The National Infrastructure Commission has estimated the benefits of a smart energy system to be between £3 billion and £8 billion a year by 2030.

[James Heappey]

I am grateful to the Minister for his response and am pleased that he agrees with the advantages of a smart energy system. Ahead of the autumn statement, will the Minister look at the role that the Treasury might play in digitising our energy system by accelerating the deployment of storage technologies, demand-side response and the upgrade of our distribution networks so that we can achieve the productivity gains he expects?

[Simon Kirby]

The Treasury will continue to work with the Department for Business, Energy and Industrial Strategy to drive forward a smart energy system. The Government have committed to implementing the National Infrastructure Commission’s recommendations in full.

Small Charitable Donations and Childcare Payments Bill

James Heappey Excerpts

Committee Debate: House of Commons
Tuesday 18th October 2016 Public Bill Committees

[Jane Ellison]

We now change tack slightly. The second issue addressed by the Bill is childcare payments. Clause 5 will make a number of minor, technical amendments to the Childcare Payments Act 2014, which introduced a new Government scheme to provide tax-free childcare. We had a broader debate about childcare on Second Reading, but I make it clear to the Committee that these are technical amendments to ensure that the scheme works for the benefit of parents who claim financial support for their childcare costs. I will first explain how the tax-free childcare scheme will work and then explain the changes and why they are needed.

Tax-free childcare will support working parents and help with the costs of childcare, enabling them to go out to work or to work more. Parents will be able to set up a childcare account online, deposit money into their account and receive a 20% top-up from the Government to pay their childcare providers. For every £8 a parent pays towards their childcare costs through the account, the Government will provide a top-up of £2. Parents will be able to receive up to £2,000 of support towards childcare costs of up to £10,000 per child per year, up to the age of 12. That support will be doubled for parents of disabled children, who are entitled to up to £4,000 top-up on childcare costs of up to £20,000 per year, up to the age of 17.

Tax-free childcare is digital by default. Parents first apply for and then use their childcare account online, although non-digital routes will of course be provided for those unable to use the default digital form. HMRC will check a parent’s eligibility for tax-free childcare. Parents will then be able to open and pay into a childcare account for each of their children, and the Government will top up the account. Parents can then use their childcare account to pay for a regulated childcare provider.

We are ensuring that childcare accounts are as simple as possible for parents to operate, because we do not want to add to their burdens. Once HMRC has confirmed that a parent is eligible, the parent is entitled to use the scheme for a three-month entitlement period. Each quarter, parents must confirm their circumstances and that they still meet the eligibility requirements, with a quick online declaration for all their children at the same time. Tax-free childcare will be trialled with more than 1,000 parents later this year and gradually rolled out from early next year.

[James Heappey (Wells) (Con)]

I speak as a father. My wife and I take advantage of exactly this scheme. Digitising the process once the employer has put it in place is very helpful, but will the Minister look at digitising the process that the employer follows to get the childcare vouchers registered initially? Most employers are still using the paper mechanism for that, which delays the system somewhat.

[Jane Ellison]

I note my hon. Friend’s point and will ensure that it is looked at. It relates to a different aspect of the childcare provision that the Government provides, but he neatly illustrates the point that we do not want the process for getting support for childcare to be onerous. Tax-child childcare, which is designed to be digital by default, is a move forward.

Bank Branch Closures

James Heappey Excerpts

Thursday 30th June 2016 Commons Chamber

[James Heappey (Wells) (Con)]

I join the hon. Member for City of Chester (Christian Matheson) in thanking the Backbench Business Committee for awarding us the debate. As he says, people should not mistake the sparsity of Members in the Chamber for a lack of enthusiasm for this cause. Many of my colleagues have told me just how significant it is to their constituencies, and it is just a shame that, for Members on both sides of the House, there are some distractions at the moment.

The issue of bank branch closures is gathering pace. There were 222 in 2013 and 681 last year, and given that there have already been 333 this year, it appears that the pace will quicken still further. The issue was drawn to my attention in my constituency by the fact that there are too many empty buildings on our high streets which used to be banks. There have been closures in, for instance, Wells, Shepton Mallet, Burnham-on-Sea and, most recently, Glastonbury. I pointed out during Prime Minister’s Question Time some months ago that there was still a chance of saving at least one of Glastonbury’s banks, but all four of them went in one year, and three within 14 weeks. Today’s debate is timely, because the following week there were 200,000 people in fields not far outside Glastonbury. The idea that the town does not have a single bank must seem quite remarkable to all Members.

The Last Bank Standing campaigners in Glastonbury have fought their corner in a formidable fashion. You will be entertained to learn, Mr Speaker, that when Lloyds closed, it marked the closure by putting a mock-up of a black horse in a coffin, feet up, and marching it out of the town in a funeral procession for banking. I am not sure that those in the bank’s PR department were particularly enthused by that. The sad reality is, however, that no matter how hard the campaign group worked to save those banks, their work was ultimately to no avail.

Having just embarrassed Lloyds, I will now praise NatWest, which saw an opportunity to take a mobile bank into the town occasionally. That service is very welcome and many people value it, but it is there for only an hour or two a week. The community is now, very creditably, considering the options for a credit union or community bank, but the hurdles are significant. It is extraordinarily difficult for a community to establish something that is not just a credit union for the purpose of saving, but a bank with functionality.

I do not think that it should have been possible for a town the size of Glastonbury, with such a vibrant economy, to lose all its banks. That suggests to me that the access to banking protocols that were agreed during the last months of the last Government are simply not doing the job that they were intended to do. I shall return to that point later, but one of the challenges posed by the protocols is the requirement for community impact statements to be produced, and in those statements the usage of the banks is hotly contested. The banks say one thing, and campaigners say another. When the Federation of Small Businesses surveyed businesses in the Glastonbury area that were using local banks, 750 of them responded. Glastonbury contains only about 10,000 people, but it serves a much wider hinterland. How extraordinary it is that 750 businesses should reply to a survey entitled “Glastonbury Bank Closures”! That tells us just what an important issue this is.

There is also the challenge of rurality. There are transport links in areas such as mine that do not allow people to travel freely from one town to another to do their banking when the bank on their high street has closed, and the people whom that disadvantages most are the most vulnerable and the isolated in our society.

[Mr David Lammy (Tottenham) (Lab)]

The hon. Gentleman has just made an excellent point, but may I ask him this? Given the iconic status of Glastonbury, and given the problems that clearly existed before the last branch closed, did the bank bother to consult him before making its decision, or was he presented with a fait accompli?

[James Heappey]

To be fair to the banks, they did write to notify me of their decision, and the more noise I made in the media, the more willing they were to meet me here to discuss it. However, the right hon. Gentleman would be right to suggest—and I would agree—that it was not exactly a process whereby the local Member of Parliament was encouraged, as a representative of the community, to take soundings on what was actually of value to that community. It was more about assuaging my fears and trying to persuade me that various steps were being taken in mitigation.

I was talking about the vulnerable and the isolated. There are certain things that draw the elderly, in particular, out of their homes over the course of a week, such as going into town to do their banking and to visit the market and the library. When banks are removed from towns and people are told, “We will teach you to be better at using a computer”, that is all well and good, but it does not alter the fact that, for some, that journey into town will have been their interaction with the outside world for that week.

Moreover, digital exclusion is a real problem, in two respects. First, there is the issue of competence. There are people who are just not very good at handling their affairs over the internet. There are people who have been doing things in the same way for a lifetime, and who do not trust the process of putting their financial affairs in the hands of electrons on a screen. They want to give their money to a person over a counter, and see it locked away in the drawer and on its way to the bank’s vaults.

Then there is connectivity. I know this is not a rural-urban issue and I know that the Government’s broadband roll-out programme is making great advances in areas like mine, but the reality is that these banks are closing more quickly than the broadband network is being improved and so even those who are willing and able to do their banking online are not always able to do so.

[Albert Owen]

The hon. Gentleman is giving a very eloquent description of his area’s situation, which I am sure is mirrored across the whole of the United Kingdom. What he is suggesting is that there is no joined-up thinking. We have one Department—BIS—that is responsible for one area and the Department for Culture, Media and Sport responsible for another. There is also a survey by Government to retain and regenerate town centres, which has been ignored, because the hon. Gentleman highlighted four empty buildings in his relatively small town.

[James Heappey]

I am grateful to the hon. Gentleman for his intervention. While of course the Treasury will have an interest in the provision of banking, DCMS will have an interest in the provision of broadband, and the Department for Communities and Local Government and perhaps the Department for Environment, Food and Rural Affairs might concern themselves with the overall impact on the viability of communities in both rural areas and towns.

I am also concerned about the capacity of the post office network to pick up the slack. They are offered again and again as the route out of a bank closure, yet too often there are reasons why the Post Office cannot do more, and I will come to that shortly.

Finally, there is the availability of free-to-use ATMs in our town centres. Replacing an ATM outside a bank with something we need to pay a few pounds to use is not fair on the community that then finds itself needing to access its cash at that expense.

[Mr Gareth Thomas]

In the United States, when banks take significant deposits from particular communities, they are required by regulators to demonstrate that they are offering significant financial services to those communities in return. Does the hon. Gentleman think that such a requirement might have meant that his Glastonbury constituents might have had some confidence that the banks were at least going to help a credit union or community bank to get up and running, to offer an alternative service if those banks were still determined to leave?

[James Heappey]

The hon. Gentleman steals my thunder, because I had indeed read Congress’s Community Reinvestment Act and I think there are some very interesting things in it. For the benefit of Members who might not be familiar with it, it does exactly as the hon. Gentleman suggests: it is a safety net that means that those getting a banking licence in the United States can of course bank in all the affluent areas, but they are also required to offer equal access to banking in less affluent areas, and there are ways to make sure that that is happening, which the Government may wish to consider.

The hon. Member for City of Chester (Christian Matheson) picked up on the very worrying Reuters research reported by Andrew MacAskill and Lawrence White. I hope that the Treasury is aware of it. That 90% of closures are in areas where the median household income is below the national average is deeply suspicious and I am sure cannot be just a coincidence. It concerns me enormously that the two banks that have closed the most branches since 2008 are those that benefited the most from the bail-out by the hard-working taxpayers whom they have subsequently turned their backs on. As a good Conservative, I do not propose to advocate interference with the business plans of those banks, but I do think it is important to make sure that they are not focusing their branch network on the areas where they can make the most cash, when the nation collectively bailed them out not so long ago.

Worse still, as those bank branches close—we are now down to fewer than 9,000 branches on UK high streets—payday lenders are opening branches at an alarming rate. I draw no connection with the fact that payday lenders are targeting high streets where the conventional banks have gone. However, if the Reuters research is correct and the banks are closing at a quicker rate in less well-off areas and the payday lenders, as we know, are targeting the very same areas, it bothers me enormously that on those high streets there is no access to proper conventional banking products but plenty of access to payday lenders. I am not sure that that is socially just and it must be a concern for us all.

The impact on small businesses is significant. Representatives of the Federation of Small Businesses met with me at the Royal Bath & West Show, having heard that this debate today had been granted, and were falling over themselves to say that they would be able to provide me with information. They have been hugely helpful. The reality is that the bank branch network is most valuable to small businesses. Yes, we must worry about the vulnerable and the isolated, but they are a relatively small number of those who need to access banking. It is the small business community that has no other choice. Small businesses rely on cash, and sometimes they have no other staff.

Glastonbury is a great example of a high street where there are lots of small shops. If you are in the market for all sorts of crystals or joss sticks and everything else, Glastonbury is the place. There are dozens and dozens of tiny shops that have only one person working in them at a time. So when the moment comes in the afternoon to clear out the till from that day’s takings and leave just the float for the next day, the shop must close. A year ago, the person would run round the corner, do their banking and then be back in the shop about 15 minutes later, and that was all the custom they lost. Now, unless they are fortunate to bank with one of the banks with which the Post Office has agreed full functionality, they must get in their car, or on the bus, and travel a few miles away and potentially be closed for an hour. It is unworkable. The travel is simply not an option for them and digitisation will not change that. People going into small shops such as these, where they are buying knick-knacks—I am sure Hansard will enjoy that term—for relatively small amounts of money, will invariably pay in cash.

The Competition and Markets Authority has also done some research, and has found branch convenience to be the second most important factor when choosing a bank. Some 84% of respondents classed bank branches as important to their business. Further research by McKinsey found that one third of small and medium-sized enterprises use bank branches at least once a week, and 52% of respondents to the FSB rural banking survey said that they communicate with their bank in branch and three quarters said that if they still had a branch they would prefer to be doing their communication there, face to face. It is important to state that what they are concerned about is not just their ability to bank in cash; they are also concerned about that relationship—their ability to informally access advice from someone in a branch who understands the business climate in their area. That is being taken away from them. They want something that is tailored, trusted and freely available from somebody they know and who lives and works amongst them, rather than somebody on the end of a phone in a call centre located who knows where.

The basic backing that is required for business is coming; this process is not entirely without mitigation. There is greater online functionality—the ability to pay in a cheque by taking photographs of it on your smartphone and so forth is all great. The arrival of smart ATMs that will be able to process cash deposits is also very welcome. G4S—who we remember from the Olympics—now says it will drive around and collect people’s cash from them and return cash to them; businesses can make their own minds up about that. But the reality is that whatever G4S may or may not do and however brilliant smart ATMs may be, their roll-out is not happening before these branches close and, as a result, communities are being left with a gap.

As I have said, the post office network is the alternative. The Post Office is enthusiastic about the opportunity, of course, as it is a significant opportunity for it as a business, but the banks cannot have it both ways. If post offices are going to be offered up as the alternative when a bank branch closes, the bank must be willing to surrender full functionality to the Post Office so that businesses and private users are able to access the full suite of banking services. As I understand it, the banks are offering up post offices as an alternative in their community impact statements, only to say subsequently that they will not give up those functions to the Post Office because they are worried that it will steal their business. I believe that if they are worried about losing out to the competition in that town, they should stay in the town. If they have made the decision to leave, they should accept that they need to surrender some of the functionality so that their customers will have the mitigation that the banks have promised in their community impact statements.

Some anomalies have been identified. It is rumoured that there are issues over the limit on the amount of cash that the post offices are willing and able to deal with. That limit clearly needs to be removed. If someone with a small business has a monster day of trading, they need to be able to go round the corner and pay in the full amount that is in their till rather than having to sleep uneasily that night through worry that a great day’s take is still in the shop. There is also an issue over paying-in slips, which we must surely be able to get over. The banks need to sit down with the Post Office to ensure that post offices are fully able to deliver the banking the businesses need, not just the bits that the banks will allow them to deliver.

The Government obviously also have a part to play in this. The Post Office’s arrangement with the Government is up for review in 2018, and I know that the Minister will speak forcefully in that renegotiation to stand up for the needs of the banking community, given how important post offices are becoming to communities around the country for the purposes of doing their banking.

My asks to the Government also include, first, that the access to banking protocols review should be thorough and candid. Community impact statements are too debatable, as I have said. The transport data that are used in them are too often inaccurate, as are the data on the number of people using a branch. Banks say that regular users number a couple of dozen, but campaigners standing outside the branch counting people in and out say that there are many thousands. The catchment areas are shrunk right down almost to the postcode in which the branch is situated, yet the reality is that they serve a rural hinterland that is much larger. [Interruption.] I will be about one minute, Mr Deputy Speaker, if you will indulge me. The connectivity issue is also often not fully understood in the impact statements.

When I spoke to Messrs MacAskill and White from Reuters, they told me that it was extraordinarily difficult to access the data on what had closed and where since 2008. If their research is right, this is happening disproportionately in poorer areas, but I am sure that the banks will want to make it clear that that is not the case by publishing their data in full. I am sure that the Government will be keen to check the data and we in this House will also be keen to know that that is not the case. This is a simple matter of fairness. People value their access to a bank. There are many reasons why the access to banking protocols need to be strengthened, and I am sure that the Treasury will take note of this debate today.

--- Later in debate ---

[Chris Evans]

I promised my hon. Friend before I stood up to speak that I would not say “Clwyd West”, but I knew I would get it wrong. My hon. Friend the Member for Clwyd South (Susan Elan Jones) has been a good friend for a number of years. Like my hon. Friend the Member for Ynys Môn, she cares about these issues. I thank her for her passion and for the strength that she has shown, especially this week, given the difficult circumstances.

Sadly, the debate has come at a bad time for me. Only last night I received the terrible news that yet another bank—Lloyds in Newbridge, a town in my constituency—is to close in October. That follows the closure earlier this month of HSBC in Risca, another town in my constituency. Sadly, such closures are not unique to my constituency. They are widespread throughout the whole country, and some sections of society are experiencing a considerable loss. The BBC reported in May that between April 2015 and April 2016, more than 600 bank branches were closed across the UK. More have closed since, including that HSBC branch in Risca, and soon there will be that closure in Newbridge and others across south-east Wales.

Local residents are being given the usual reason by their bank, namely that more customers are turning towards online banking and footfall at branches is falling. It is hard to deny that online and telephone banking are on the rise. Although I use bank branches from time to time, my own daily banking needs are usually met over the phone or through an app. This trend is underlined by Barclays, which says that on average its customers use mobile banking more than 28 times a month, but visit their local branch less than twice in that time. The banks say that it therefore makes commercial sense to close branches that are expensive and not being utilised enough to justify their cost. When I worked in banking in the early part of the 21st century, I noticed that footfall was going down, but the banks were not really very nice places because we would have a customer’s arm up behind their back trying to sell them as much as we could as soon as they walked through the door.

If we look only at statistics and reduce customers to numbers on a graph or spreadsheet, saying that they are only one of a minority who do not use online or telephone banking, we ignore the cost and the burden that closures place on the individuals who are left out. When we dig a little deeper to see who exactly loses out the most from the closure of a bank branch, it is almost always the most vulnerable in the community. I have spoken in the House about the perils of payday lending, legal loan sharks and doorstep lenders. If someone needs a loan, they will trust the person at the door if there is no bank at the end of the road to meet their borrowing needs. That is the danger. When a bank closes a branch, that person, who is usually unbanked, becomes even more vulnerable than they already are.

I have to make an example of HSBC and the branch closure in Risca. When I launched an online petition, which was signed by hundreds of residents, some of the comments truly summed up the problem with branch closures. One constituent said:

“My parents use this bank. If this branch closes they will not have a branch within a 5-mile radius. The nearest branch will be at least 30 minutes away by bus. Both of them are in their 70s and cannot use internet banking as they have no internet connection nor computer. They are hard of hearing, so telephone banking is also out of the question. How are customers like them supposed to deal with any issues if they cannot speak to someone face to face?”

HSBC’s closure of Risca’s branch was bungled, and the same goes for branches all over the country. The first I heard about it was in an email on a Friday night. I was told, “Do not say anything, because we have not told the customers or the businesses. Keep it to yourself.” I wrote to the bank and asked for an exact closure date and when it was going to be announced, but I was met with silence. It was only when I put it in the press and set up the petition that HSBC wanted to talk to me. Even then, it was like pulling teeth.

I asked to speak to the chief executive—like the hon. Member for East Lothian did with RBS—and I was given a regional director who popped by in Risca for the day. Guess what I found when I walked into the HSBC? Did I find a branch on its last legs? Did I find a lack of staff? No, people were queuing out the door to use the services. The average age of the people was 70s or 80s and they were complaining that the branch was going to close, yet the representative was in the office telling me that no one was using the service. Who am I supposed to believe?

Another thing that I have to say about HSBC is that when it did finally put out a press release, it told me that footfall had dropped by 70% in Risca. That was very good, and I accept that, but when branches were closed in the constituency of my hon. Friend the Member for Rhondda (Chris Bryant) in Porth and Tonypandy and in the constituency of my hon. Friend the Member for Ogmore (Chris Elmore), the bank said exactly the same thing: footfall had fallen 70% as well. I am sorry, but I do not believe that figure.

[James Heappey]

The hon. Gentleman makes an excellent point. The difficulty is the ambiguity over the definition of “regular users” that the banks try to use in their impact statements. I am not absolutely sure what it is, even though I spent some time researching for today. There needs to be a clear definition of what a regular user is so that the number in an impact statement can be interrogated.

[Chris Evans]

I totally agree. When I go to a bank that is about to close, I want to know the exact figure. I want to know what the footfall is even if that means just clicking the numbers as people walk through the door. At least then there would be some raw data that could be used to justify a branch being closed.

There is also a social impact. Risca once had several banks and building societies, including branches of Lloyds, HSBC and Barclays. Lloyds and HSBC have now closed, leaving the town with one remaining bank, which is fortunate because people still have the option of moving to Barclays if they want to continue to bank locally. What happens if, as in so many communities up and down the country, Risca or Newbridge lose their last remaining bank as the long trend of bank branch closures continues, as predicted by fintech companies?

I say to my hon. Friends the Members for Ynys Môn and for Clwyd South and the hon. Member for Ceredigion that I am lucky in Islwyn because we have good transport links. We have a trunk road that goes right through the constituency, the bus service is good, and there is a new train service. People can get from town to town. However, Ceredigion, which is a huge constituency that I know quite well, Anglesey and Clwyd South all have country lanes and one-track roads. How can people get from one branch to another? It is a major outing for many people.

Before a bank closes, it is imperative that a full assessment is carried out of the impact that the closure will have on the local community and that local stakeholders are consulted. Steps have been taken. In March 2015, banks published their access to banking protocol, which laid out their commitment to ensure financial inclusion and to undertake an impact assessment through community engagement when a branch closure was planned. I look forward to the publication of the independent review led by Professor Russel Griggs of how banks have implemented the protocol. In my anecdotal experience, however, they have not. They have been found absolutely wanting.

It is very clear that some banks provide a better service than others. For example, I compare the closure of Barclays in Newbridge with the way that HSBC was closed in Risca. When I see something good, I say so. The way that Barclays managed that closure was far better than what happened at Risca. Barclays had the raw data, there was a point of contact, it spoke to all the customers, and I pay tribute to its community relations manager, Jonathan Brenchley, who was fantastic all the way through that process. The great thing about him is that if customers have a problem, they can pick up the phone to him and he will deal with it. It is an example that many other banks should look into.

In May 2013 Barclays launched its Digital Eagles programme, which is designed to support and educate customers to help them feel comfortable with using digital channels not only for their banking, but in all aspects of their lives. So far it has trained over 16,000 Digital Eagles across the country and has held 5,200 learning sessions. The expansion of such programmes among other banks would be a very important step towards ensuring that nobody was left behind as banking changes.

However, switching to online or telephone banking alone will not be enough to ensure that nobody is badly affected by branch closures. The parents of my constituent, who have no computer or internet, should not be expected to buy a computer, and their hearing problems make telephone banking an obstacle. If they are to keep their independence as more bank branches close, banks must move towards a model whereby the bank will go to the customer if the customer cannot get to the bank physically, digitally or otherwise.

I pay tribute to NatWest for its service, which is akin to a mobile library. Its van turns up once a week in hard-to-reach communities so that people can do their banking there. A promising solution might be a vast expansion of mobile banks which, although they are not perfect, could at least dampen the impact of bank closures. Customers who seek the kind of banking and financial advice they would otherwise receive at a branch should have the option to request one-to-one meetings with bank staff, either at home or in a nearby public space, such as a library.

It is important to remember that among the biggest customers of local bank branches are small businesses, with regular trips to their local branches to make deposits. The closure of branches means that they have to go further and further and waste precious time when they could be chasing sales and business. If time is money, they are certainly losing out. As in the case of personal banking, I believe banks must change their approach so that they are the ones to come to the customer. In January 2016 Barclays introduced a Barclays Collect service, which will travel directly to business and corporate customers to collect deposits directly from their door. I welcome that news. Barclays plans to roll out the scheme more widely next month. I hope the scheme is successful and that other banks follow suit.

We have to consider other options, and credit unions must be part of the mix. Earlier my hon. Friend the Member for Harrow West (Mr Thomas) said that in the new banking world credit unions must play a role. They will bring people to banking. I know that the Minister has been a champion of credit unions in the past. They bring people to banking, but very often they are the victims of their own success. Because they are voluntary organisations, when they get huge they get even more difficult to manage, as people do not have the necessary skills and experience.

Credit unions do not know where to go as they get bigger. I think building societies have a role and should offer back-up to credit unions, as should post office credit unions. There is much work to be done in credit unions, but there needs to be a next step for them, such as the opportunity to become a community bank, a post office-style credit union, or even a building society. I urge the Minister to look into this. Legislation is needed to enable huge credit unions run by voluntary staff to become the new banks or smaller community banks or building societies. I hope she and her officials will give some thought to that.

We need to start thinking about the social impact when a bank closes. The premises usually remain vacant or become a pub, for example, which is a waste.