Bank Branch Closures

Jonathan Reynolds Excerpts

Wednesday 18th March 2020 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

First, I congratulate the hon. Member for Midlothian (Owen Thompson) on bringing forward the debate—I think there has hardly been a banking debate that I have not been at. The Minister is always in his place to respond, and I am sure he knows what we will say before we say it and that he shares our frustration over bank closures. As I mentioned earlier, my constituency has seen one of the largest numbers of bank closures in the whole of the United Kingdom of Great Britain and Northern Ireland. There has been some attempt to fill the gap with credit unions and post offices, which have done so to a certain extent, but not in totality. That is where my concern lies.

I joined in the debate last June—we had another one a few weeks ago—to express my frustration with the banks that were closing branches because they say there is another one just 15 minutes up the road, or 50 minutes up the road, as the hon. Member for East Renfrewshire (Kirsten Oswald) explained. That is not very helpful for people who are on their lunch break or reliant on public transport, which is not always available at the time that they need it to get them back to work, as she also suggested, especially in a rural constituency.

Physical branches are important to the consumer, but not to the bottom line, and it would seem that that is the only consideration for some of those at the top of the banks. How annoyed was I, last month, to find that yet another bank closure is planned for Newtownards, the main town in my constituency? This time it was Barclays. I got the obligatory email of intent, as we all do, and an offer to meet, going through the format of a visually arranged meeting. I have arranged it in my diary, by the way, and I will meet them, but the fact is that although the meeting might relieve some of my frustration, it will not make one button of a difference to Barclays.

I mean no disrespect—I try to be respectful to everyone as best I can—but I have no hope at all of persuading them to keep the Barclays bank in Newtownards open. I have sat in too many of those meetings, which is why I have become a bit cynical about meeting the banks. I think I have had some nine bank closures in total in my constituency. I have had a meeting with the banks on every one of those occasions, and with all the persuasion of stats and letters from customers that we had, we were not successful in turning things around.

As those branches have closed one by one, I have sat in too many of those meetings and been shown increases in online activity, as the hon. Lady mentioned. If we take the logic that she referred to, it is true that, if we close all the banks, more people will go online. But it does not suit everybody to go online—that is the point we are making, but it seems to fall on deaf ears. What is not explained is that the increase is because staff members have been pushing this, which they have. There is nothing wrong with pushing the online deal if it suits people, but it does not suit everybody, and the bank customers on whose behalf I went to all those meetings were not able to bank by logging on to the system. It is not always easy, either, when people do not have the broadband access to enable that to happen.

Over the years the bank closures in my constituency have been Kircubbin, Portaferry, Killyleagh and Ballynahinch—all Ulster Bank—Danske Bank in Kircubbin and Portaferry, Barclays bank now imminent, Bank of Ireland and Allied Irish. Those banks have all moved to other towns or moved out of the area completely. I remember when we used to have at least four banks on the Ards peninsula, but they have all been closed. There were some sub-banks, which would have been there on certain days a week, but they are away as well.

The hon. Member for Midlothian referred to credit unions, and we have been fortunate that credit unions have grown in my constituency, as they probably have in all our constituencies. They have tried to fill the gap, and they have done so to some extent, but they cannot provide what the banks offer to customers. We have a new credit union in Kircubbin; I am very pleased to see it, and it is very active and very able. The credit union in Portaferry has grown as the banks have closed, as has the credit union in Newtownards. I had the Minister over about a year and a half ago to visit the one in Newtownards, which is doing extremely well. The credit unions are filling the gap.

Then there are post offices. The Minister might say that post offices are able to fill the gap, and in some ways they are, but they cannot provide all the range of support and services that can be given in the banks. Post offices can only fill those in a small way. We need to have all the opportunities that the banks offer. I am becoming increasingly frustrated with the banks. I say that not as a socialist—

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

There is nothing wrong with that.

[Jim Shannon]

There is nothing wrong with being a socialist, by the way—I am letting you know that right now. I am not against the banks, but I get immensely frustrated when it seems that they make decisions in order to bring bigger dividends for their shareholders. I suspect that everyone who spoke and the shadow Minister will say the same thing, but to me it is simple: the wee man and wee woman need help, and they deserve to have their banks, yet it is all about the profit at the end of the year. Whenever banks are making a massive profit, in a way it is about getting more profit. Was it Jean Paul Getty who said that the only thing better than having £1 million is having another £1 million? Speaking about Jean Paul Getty probably ages me, but I am just making the point that banks focus only on their profit margin and how much they can make, not on delivering.

The hon. Members for Midlothian and for East Renfrewshire referred to online banking—I know that others will refer to it as well—but it does not suit everybody. I tried to help a number of customers of those banks to do online banking, but it was lost on them. I hope those people took their savings to the post office or the credit union, but I suspect that some did not, and I therefore fear money being stored under the blanket, the pillow or the mattress, or in some tin box somewhere, because those people want to be in control.

My wife’s auntie was in that situation. She had some money in the house, which we did not know about. One day she was out for only half an hour, but the thieves obviously knew, and they came in and stole her life savings—£8,500—which were probably to pay for her funeral. It is soul-destroying. The community came together to help as best they could. That happened to a couple of others in my constituency as well, and again the community reached deep into their pockets and made some of that money available.

I realise that time is flying. I was sitting here almost loth to speak, to again use the same words and rhetoric, because it is not stopping the closures. Then I realised that this is the place where changes need to take place. I have the utmost respect for the Minister, as he knows, but I urge him and his Department to give serious consideration to supporting those banks that support their local community. For Newtownards, that is the Danske Bank, the Ulster Bank—the one that is left—the Santander bank, which has filled some of the gap for some customers, and the Nationwide building society. Those are the last four banks in Newtownards. All pay rates and council tax, provide local employment and are all available for the vulnerable—for me, this debate is about the vulnerable; those who do not have access to banks—to open their first bank account or for those who want face-to-face advice, because we need that from the banks as well.

I ask the Minister what we can do to reward those banks that do right by local communities and keep an online thrust as well. I understand that some people want to go online. I am an old traditionalist; I will probably still write cheques for all my things every week, as I always do, and I will probably still carry cash in my wallet, because that is how I did it when I opened my first bank account at age 18. How can we encourage more banks to be part of local communities, instead of being removed and literally counting their pounds rolling in? I look to the Minister for guidance, because asking, reasoning and pleading with the banks is not working. Maybe rewarding community-minded banks is the way forward.

--- Later in debate ---

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

It is a pleasure to see you in the Chair, Sir David.

I thank the hon. Member for Midlothian (Owen Thompson) for securing this debate on a topic of vital importance to people across the UK. Today’s debate takes place at a time of unprecedented national crisis, but, as the hon. Gentleman said, the conversations that we are now having about the social and health implications of compulsory isolation show how important our high streets and shared social spaces are. Bank branches play a fundamental part in maintaining contact for vulnerable people. Even in a time of rapid change, when we are shifting a lot of our lives online, we have to make sure that communities that need a physical bank branch are not left behind.

We have had many debates on the issue. We gathered here, by my reckoning, just over a year ago to address it; the hon. Member for Strangford (Jim Shannon) was definitely present. In the year since, the matter has become no less pressing. At the time, I shared with colleagues some of the experiences of my constituents and what bank branch closures have meant for them. Too often, we are distracted by the headline numbers and forget the impact of the closures on real people’s lives. I will revisit some of those comments today.

I represent the towns of Hyde, Stalybridge, where I live, Dukinfield, Longdendale and Mossley. They are exactly the kinds of towns that have suffered very badly from the closures in recent years. I have lost branches of RBS, Lloyds and Yorkshire Bank. Here are some direct quotes from constituents about how it has affected them. One constituent said:

“Losing the Lloyds in Stalybridge has been a blow. Yes there is one in Ashton and there is online banking. But there is no substitute for making an appointment you can walk to and talking to an actual human being.”

A constituent just outside of my area said:

“Here in Droylsden we now don’t have a single bank! We’ve gone from having Lloyd’s, NatWest, Royal Bank of Scotland and Halifax to having none!!! Our infrastructure dwindles by the day.”

For businesses in particular the closures have posed challenges. One of my local business owners said:

“You can do banking at the Post Office but, in order to pay things in, you have to get in touch with your bank first and get paying in slips sent out. Santander would only send me 5 and I have run out now. It means I can’t accept cheques for my business easily. I don’t have the time to keep ringing up for paying in slips…It’s a killer for small businesses who have to close their shops to go and stand in a queue for a lengthy period of time just to get change.”

I have also heard moving stories from those who care for others, who have inevitably borne the brunt of closures. One said:

“My mum with Alzheimer’s relied on her Lloyd’s branch in Droylsden before it was shut. The staff knew her well and helped her. They knew her condition and if she was in a bad way they would phone me and give her a cup of tea while they waited for me to arrive. The staff said there were lots of other people like my mum. The closure really affected her.”

The most recent disappointing news that I have had in my constituency is that Barclays will be closing its branch in Hyde, too. When I announced that on my Facebook page, it very quickly attracted more than 100 comments from local people. People really care about this issue, and they are right to do so. A common thread among the feedback that I hear from constituents is that nobody wants their community to become a ghost town.

Equally, no one is saying that they want to halt progress, but we must ensure that technology works for us and not the other way around. Some of the technological advances could be harnessed to include people who historically have had trouble interacting with traditional banking, such as offering remote video appointments or having speaking ATMs. However, the goal must be to strive to ensure that we use technology to benefit bank customers, rather than creating a pared-down automated banking sector that leaves people without the support that they need.

That is also true of access to cash, which many Members have raised. Although habits around cash are changing—when I am at work in London, I tend not to use cash very much—I certainly need it when I go home at the end of the week. Members are correct to say that we must not allow ourselves to sleepwalk into a system that leaves some communities stranded without ATMs. I know that the Government and the Minister are concerned about that, but communities must have the fundamental right to demand an access to cash review in their area, like the access to cash review proposed, so that the power is theirs to ask for a review of their cash arrangements.

Although, as habits change, we would anticipate that some bank branches would have had to close in recent times, the hon. Member for Midlothian is right that the rate at which the branch network is shrinking is accelerating, which is the primary concern. Figures from Which? show that 3,509 branches have closed across the UK since January 2015. That is at a rate of 55 a month. The scale of those closures seems disproportionate and does not necessarily match what people are saying to us about how they want to use their bank branches. Research conducted in 2016 by the Social Market Foundation found that there remains a strong consumer appetite for a physical presence.

Labour’s proposal in our recent manifesto was to change the law regulating banks so that no closure could take place without appropriate local consultation and without FCA approval. I share the concerns that have been raised about the existing nature of consultation. Crucially, a bank should have to consult with not only the customers of that branch but representatives of the local council. Fundamentally, it should have to publish details of the reasons for closure, including financial calculations showing the revenues and costs of the relevant branch.

The share of central costs, such as those for accounting systems, IT, security, personnel and so on, would have to be allocated to the branch and separately identified, especially as many of those costs are relatively fixed and are not proportionate to the number of branches. The FCA’s approval would then be needed for any bank branch closure. I urge the Government to think perhaps not about the specifics of that, but certainly about the transparency of information published by a bank when a branch is to close. In addition, we wanted to see the Post Office evolve from its current banking framework to being a bank in its own right. Many countries operate very successful postal banks, and that could have been the basis for the long-term future of the Post Office, too.

In the next few months, we will be shown the harsh realities of social isolation. This is an important moment to think about how important communities are, and the role that bank branches play in holding high streets and localities together. Regulators, banks and policy makers must work together to improve what we have at the minute and to ensure that we end up with a banking infrastructure that works for all customers, all communities and the future.