Community Bank Closures

Jamie Stone Excerpts

Thursday 8th February 2018 Commons Chamber

[Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)]

I thank you, Madam Deputy Speaker, for calling me so early in this debate, because I have a very long way to travel. I apologise to the House for not being present when the winding up speeches take place; it is not an intentional discourtesy.

I also congratulate the hon. Member for Stoke-on-Trent North (Ruth Smeeth) on making a really first-class speech. She covered every single point, and I am left with almost nothing to say as a result, which is rather distressing for someone like me who has a tendency to be verbose.

This issue causes me an element of personal pain because I have a number of friends who work for the Royal Bank of Scotland, at all levels of the bank. My comments about the bank are not intended particularly for the bank; they are aimed at the system in general. In my constituency, we face the closure of three RBS branches. One, in Tongue in north-west Sutherland, may be on hold—there has been a stay of execution. However, in the old royal boroughs of Tain and Wick, the intention is to close the branches. I have never seen an issue that has caused so much deep unhappiness among my constituents.

Call me old-fashioned, but the bank and the bank manager were as much a part of the social structure of these communities as the doctor, the minister and the school teacher. I think particularly of what happens when someone has, for example, a seed corn business—from little acorns mighty oaks grow. The point is that, in the past and even in recent times, someone with a business idea could go to the branch of their bank and say to the manager, “I have this idea. This is my business plan. Will you take a punt and lend me the money?” I have seen, in my home town, some seriously big businesses grow in my lifetime from absolutely nothing—there was a brave bet by the bank manager. We should not underestimate that.

The point has been made about the post offices. Our main post office in the town of Tain in the north of Scotland closed. Our post office now, which is very well staffed by well-intentioned individuals, is essentially a newsagent. The gap between the counter, where a person does their business, and the magazines is only the distance between two Benches in this place. If someone is trying to bank large amounts of money at the same time as Mrs McKenzie is trying to buy her copy of the Scots Magazine, everything gets muddled and, frankly, the staff get hassled. I really do not envy their position one little bit.

I have a short anecdote, which reflects on the banks. My first bank account, with the Royal Bank of Scotland, was opened by my father when I became a student. He put in £16—I did not see many £16s after that. In due course, I spent all the money because I was a young first-year student who did not know what he was doing. When my grant cheque came in, I opened another bank account in the Bank of Scotland and then I spent all that, too. The trouble came when the two bank managers talked to each other and said, “Do you realise that young Jamie Stone has two bank accounts and he is spending money like water?” Then they went and told my dad. There was absolutely no end of trouble over that. In a way, for those Members who are experts on Adrian Mole, that conversation, perhaps not completely correct today, headed off a potential multiple debt situation. I was pulled up and stopped—well, I had to be—which was probably to my great benefit in my life.

Banking is about the human face—of course it is. It is about seeing someone in the branch of a bank who says, “Don’t worry. What’s happened here is that the payment will not clear for three days.” That can be the difference between peace of mind and mental torture. It takes someone just to say, “Wait a minute, I will go online and take a look. Oh, here’s the problem. This is what’s happening.” You cannot take that away. We talk about online banking. Well, let me tell Members: if I hit the icon on my phone, it says that I have been logged out and, no matter how hard I try, I cannot get back in again. I do not have a clue, just like when I was 18, I do not know what my bank account is doing. Therefore, online banking is not for everyone.

The issue, as the hon. Member for Hazel Grove (Mr Wragg) said, is one for Government. The only way in which we will stop this endless gloomy slide of closures, which is eating into our communities and sapping morale, is for the Government to say, “Wait. What is the public service responsibility here?” They should then come forward with some thoughts and guidelines. It has been suggested that perhaps we should combine banking facilities and get the clearing banks to work together to form a one-stop shop. That is a very interesting idea.

I look for something from the Government saying, “We recognise that this is a responsibility, that this is dangerous for the structure of society and that these are the proposals that we intend to bring forward.” I am an optimist, so I wait in the hope that there will be something that will sort this out once and for all.

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[Jamie Stone]

I entirely take on board what the right hon. Gentleman is saying about post offices. But I have just outlined the case of a post office that is using a retail premises that is entirely unsuitable. It must therefore be up to the Post Office to negotiate premises that are suitable for the service he is talking about.

[Nick Herbert]

The hon. Gentleman has anticipated exactly what I was going to say. If the post office premises become the location of the only banking services in a village or small market town, we must ensure that they are suitable, and the Post Office needs to ensure that that is the case when it identifies premises. It must also ensure that the banking services can be provided. The online systems have been down in the post office in Arundel over the past few days and as a result there have been no banking services.

As suitable premises can often not be found, suitable post office sub-postmasters cannot be found in various villages and small market towns in my constituency. This means that there is sometimes a suspension of post office services for a period of months, even though the Post Office’s policy is that there will be a post office outlet in these communities. That cannot happen if the post offices become increasingly important owing to the fact that they are providing banking facilities as well as all the other important facilities that they provide for the local community.

We need some more creative thinking. We cannot just allow the banks to step away and absent themselves from their responsibilities to ensure better services in this regard. To that extent, I agree with the hon. Member for Stoke-on-Trent North. The Government do have a role to play, by stepping in where the market is not working properly. The market is not working because there is insufficient demand in some areas for banking services in their traditional form, but those services are still important to local communities.

We must remember that local high streets are already under great stress. High streets in rural areas have really been suffering from the impact of globalisation and competition from online retail services. It is very difficult for small businesses to keep their heads above water as it is, so banking services are very important for them. If the Government’s objective is to maintain the vibrancy of these high streets—and I think it is—we need some active measures to ensure that post offices are promoting the best banking services and that these services are well publicised. We need banks to step up to the plate and contribute to ensure that the banking services can be universal and just as good as the services that were provided before. All those things can be done.

I recently had a useful meeting to discuss the issues with the Post Office’s senior management and the Minister’s predecessor, who acknowledged all these points. I know that the Government are concerned to ensure that banking services are provided. We must look forward to what can be created using the existing post office network and ensure that services are provided properly. It does not help to look backwards and think that we can somehow set a retail banking model in aspic, when it is actually failing because it does not provide the services necessary for the wider community and only supplies a very small number of customers. We need banking services in these areas, and they could be provided more creatively and innovatively. The situation needs a bit of Government help, but we also need the banks to play their part.

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[Michelle Donelan (Chippenham) (Con)]

I commend my hon. Friend the Member for Hazel Grove (Mr Wragg) and the hon. Member for Stoke-on-Trent North (Ruth Smeeth) for securing the debate.

My constituency is formed of four market towns and a lot of villages, so it will be no surprise to Members that we have seen a number of bank closures in the past few years. In fact, there are no branches left at all in Bradford on Avon and Corsham. Locally, a key part of the problem has been insufficient transport infrastructure to get people into those towns, particularly from surrounding villages such as Neston, and an above-average ageing population.

Nationally, the banking industry estimates that branch visits have fallen by roughly a third since 2011. I understand and recognise that banks are businesses and that branch closures happen for commercial reasons. Fundamentally, advances in technology—online and mobile banking—have significantly reduced demand. Cheques are still the main reason customers go into a branch, but cheque usage has declined severely—by 13% between 2014 and 2015 alone. Things have changed: I remember back in the day my Mum paying in the supermarket with a cheque and cheque guarantee card. Now she uses Apple Pay on her iPhone!

To explain the decrease in demand, we must consider the purpose of banks. For some people, as Members have suggested, banks are more than a normal service. They are a part of the community, offering people a personal relationship and an opportunity to chat. They can prevent loneliness. That is why, for some, closures are not just an inconvenience or a sting: they can actually hurt. I know that that has been the sentiment in my constituency.

That view of banks, however, is decreasing, especially among younger generations, hence the need to specifically help and consider the elderly when banks close. I must note at this point, as other Members have, that provisions are already available to reduce the impact of bank closures. The industry’s access to banking standard, launched in 2017, makes a commitment to provide information about branch closures, along with options locally to continue to access banking services. It also includes specialist assistance to customers who need specific help. Importantly, it commits to providing a minimum of three months’ notice of branch closures. However, I do not think that three months is long enough for people to change their habits or prepare themselves. I ask the Minister to call on the banks to operate a six-month policy, which would be fairer and more adequate. It is vital that when banks make decisions on closures they review the transport network and infrastructure, and ensure that provision is available so that banks are accessible in the area.

Mobile banking is a perfect example of a halfway house, costing only 19% of a physical branch. RBS group and Lloyds have built a large network of mobile banks across the country, and HSBC has just started to do the same. They help in areas where there is no accessible alternative provision, and they can be used as transitional arrangements to enable people to adapt and have more time.

[Jamie Stone]

I take on board completely the point about mobile banks, but there are issues with them. The public have to queue up outside in inclement weather and get soaking wet, and they do not have the ability to handle paper transactions.

[Michelle Donelan]

I do not believe that mobile banks are the answer; I am proposing that potentially they are a part of the solution. I agree on the point about cold weather. That is a very valid and worthy consideration.

I have worked locally with Lloyds to reduce the impact and to manage the transition of the loss of branches in Bradford on Avon and Corsham. I am pleased to say that we have a provisional agreement for a mobile bank trial in Corsham. Madam Deputy Speaker, I am sure you will agree with me that the case for such a trial is just as valid in Bradford on Avon. I am sure the Minister, as a local Wiltshire MP, also agrees.

Turning to the impact of bank branch closures, each case is different in every circumstance. When severe, it can suggest, alongside closure, a lack of investment in training and support for older and vulnerable people. That is why I reiterate that a three-month notice period is not long enough. It takes time to build some people’s confidence in the security of digital banking. Alongside Lloyds bank and Barclays, I have run three fraud workshops, which were heavily attended, particularly by the elderly community. Support to vulnerable residents and the elderly is crucial. It is important to remember that about 4 million people—mainly the elderly—are not online at all. However, we must not write off older people as incapable of using the internet. We must support and manage them, and give them the tools and skills to make progress. More than 600,000 people aged over 80 already have online banking. They put me to shame, as I joined only last year.

Another stumbling block to digital banking can be deprivation, which can render people unable to own a computer or a smartphone. Mobile blackspots and patchy internet services are both common in the villages in my constituency. Banks should ensure that an alternative option is accessible, such as mobile banking or sufficient public transport to the nearest branch, and I again make the point that Bradford on Avon really needs mobile banking.

Post offices are not the answer, but they are part of the solution and can play an essential role. Our post offices have been struggling for years, but incorporating banking into their services is proving to increase their footfall and helping to engage people in their services again. The Post Office currently offers basic banking services to many bank customers and is expanding that to business customers. As has been noted, awareness is the key problem, but it is also about changing consumers’ habits. I was pleased that at the autumn Budget of 2017, the Treasury wrote to the Post Office and UK Finance to stress the importance of raising public awareness. I would like to hear the result of that from the Minister.

In conclusion, it is important that we do not resist technology, but that we accept and embrace change to enable progress, grow our economy and compete on the international stage. However, I want to be realistic. I believe that it is inevitable that all branches will eventually close. The supply of them has reduced by 60% in my lifetime, so I think that we should encourage a sustainable hub model to emerge—a one-stop shop—where post office and banking facilities can be offered, as well as debt advice and potentially even a citizens advice bureau. That will help to safeguard our high streets. The transition period is so important, along with the support available. Banks need to lead the way in training and supporting people who are currently unable to support themselves through their digital skills. We must also encourage the roll-out of mobile banking.

I hope I have outlined today that the banking world is changing, but that there is a process whereby we can improve the transition, so that everybody in society can continue to embrace technology. We must support our community.