Bank Closures: Rural Areas

James Murray Excerpts

Monday 24th February 2025 Commons Chamber

[The Exchequer Secretary to the Treasury (James Murray)]

I commend the hon. Member for North Dorset (Simon Hoare) for securing this debate. He has ensured that the views and concerns of his constituents have been heard by Ministers this evening, and he has set out the particular dynamics of the role of banking hubs in rural communities. The fact that he received so many interventions from other hon. Members underscores how important this issue is to constituents across the country, and I thank him for securing this important debate.

It might be helpful if I outline some of the context around this issue. In recent years, people across the UK have reaped the benefit of the transformations of the UK’s banking sector, particularly the enhanced accessibility and convenience afforded by remote banking. For example, in 2017 40% of UK adults regularly used a bank branch, but by 2022 only 21 % of UK adults did so, and almost nine in 10 banked online or used a mobile app. Notably, that includes 65% of the over-75s. However, the Government recognise that those changes have presented considerable challenges for others.

Bank branch closures can have a particular impact on rural communities given the distances to alternatives—indeed, we heard examples of that from the hon. Member for North Dorset, and other hon. Members who intervened to highlight specific cases and to draw the House’s attention to the challenges facing their constituents. I assure hon. Members, and the people they represent, that this Government understand the importance of face-to-face banking, and banking access, to local communities and high streets. Our objective is to ensure that people and businesses have access to banking services, supporting local communities and local economic growth. Work on that is well under way, and we are working closely with banks to open 350 banking hubs by the end of this Parliament. My right hon. Friend the Chancellor marked the opening of the 100th banking hub in December, and more than 200 hubs have been announced in total.

[Jim Shannon]

The hon. Member for North Dorset referred to 14 banks closing, and I referred to 11 closing. When it comes to the criteria for agreeing where those bank hubs will be, will the Minister reassure me that those constituents who have lost the most banks will be those who get more banking hubs when the opportunity comes through?

[James Murray]

The hon. Gentleman highlights how this issue affects communities right across the UK, and in a moment I will turn to the criteria by which the locations of banking hubs are decided—hon. Members have raised that important issue, and put on record their concerns and feelings about it.

Banking hubs offer counter services provided by post office staff, which allows personal and business customers of more than 30 banks and building societies to withdraw and deposit cash, deposit cheques, pay bills and check their balance. They also, crucially, contain rooms where customers can see community bankers from their bank to carry out wider banking services, such as registering a bereavement or help with changing a PIN. As the hon. Member for North Dorset pointed out, banking hubs offer more than just access to cash—that is an important point regarding why such hubs can bring so much to an area that has otherwise lost its local banks.

Community banking hubs can clearly contribute a great deal to local areas where existing banks have closed, and decisions over the opening of a hub are guided by the Financial Conduct Authority’s regulations. In response to the question from the hon. Member for Strangford (Jim Shannon), it may be helpful for me to briefly outline how the FCA’s process works. When a bank announces a closure, Link, the operator of the UK’s largest ATM network, conducts an impartial assessment of a community’s access to cash needs. Link considers criteria such as population size, the number of small businesses and levels of vulnerability, as well as the distance to the nearest branch, and the cost and time taken to get there via public transport.

Should Link recommend a banking hub, Cash Access UK, a not-for-profit entity funded by major UK banks, will implement it. Crucially, a bank branch cannot close until any recommended services are in place. Additionally, individuals, including Members of Parliament, can directly request an access to cash review via the Link website. In collaboration with industry, the Government remain committed to advancing the roll-out of these hubs.

It is worth pointing out that customers have alternative options for accessing everyday banking services. Notably, 99% of personal and 95% of business banking customers can conduct their banking, including taking out and depositing cash, at over 11,500 Post Office branches nationwide. The Post Office, as several hon. Members have mentioned, has a duty to serve rural communities, with the Department for Business and Trade requiring that 95% of the total rural population across the UK be within three miles of a Post Office. Therefore, where communities might be too small for a banking hub, as may be the case for some of the rural communities we are focusing on this evening, individuals and businesses can still access essential services at their local Post Office.

[Helen Morgan]

Have the people who have developed these regulations considered that three miles is a very long way for those who do not drive or have access to a car, or where there is no bus service? That is certainly the case for large numbers of people in North Shropshire and, I am sure, the other rural communities mentioned during the debate. People have set up their lives to be able to access the services that are available, but if those services are taken away and put somewhere else, they are unlikely to be able to get to that location, which is really problematic. Will the Minister consider reassessing the criteria, so that banking hubs are placed where banks were previously located so that people can still access them?

[James Murray]

The hon. Member is correct that people need to be able to get to banking hubs, and I will address that point later in my speech.

More broadly, this Government are committed to improving the quality of life for people living and working in rural areas, so that rural communities and businesses can realise their full potential. A prosperous rural economy will be underpinned by improvements in rural connectivity, as the hon. Member for North Shropshire (Helen Morgan) pointed out, and access to a diverse range of services. In the autumn Budget of 2024, the Government therefore announced funding of over £500 million next year to deliver digital infrastructure upgrades through Project Gigabit and the shared rural network. That investment will drive roll-out of broadband and 4G connectivity to support access to good internet in rural areas across the UK.

We have also confirmed investment of over £1 billion to support and improve bus services and keep fares affordable. In recognition of the fact that each community has individual needs, we have introduced the Bus Services (No. 2) Bill to put power over local bus services back in the hands of local leaders. Every region in England, including the rural communities at the heart of this debate, will benefit. Taken together, these investments will help improve access to banking services, whether digital or in-person. More broadly, they will help to deliver economic growth more evenly across the country, helping rural areas to thrive.

In closing, on behalf of the Economic Secretary to the Treasury, my hon. Friend the Member for Wycombe (Emma Reynolds), I again thank the hon. Member for North Dorset for his continued work in highlighting this important topic. I assure him and other hon. Members that this Government are steadfast in their commitment to supporting rural communities in their access to banking services, and I thank him again for raising his constituents’ concerns in the House tonight.

Question put and agreed to.