Community Bank Closures

Lord Herbert of South Downs Excerpts

Thursday 8th February 2018 Commons Chamber

[Nick Herbert (Arundel and South Downs) (Con)]

I congratulate the hon. Member for Stoke-on-Trent North (Ruth Smeeth) on securing this debate. I am grateful to the Backbench Business Committee for granting it. This is an important issue, particularly in rural constituencies such as my own. My constituency of some 250 square miles in West Sussex consists only of small market towns and villages—there are no large towns. If one of those villages, which have high streets with a few important shops and stores, loses its banking facilities, that will immediately have a knock-on effect on the businesses in the village or small market town and the neighbours. It is of little use to those businesses and indeed it is very inconvenient to be told that they have to travel to a settlement that is some miles away.

Very often, following such closures, there has not been an alternative retail high street banking facility in the same village or small market town. Therefore, I think we start off with a collective agreement that it is important that we maintain banking facilities in these areas. We do not yet have a cashless society. Small businesses still need cash facilities. Local charities, many of which are still wedded to collecting cash and cheques, also need these facilities. That said, there are two important points to consider.

First, we have to acknowledge the march of technology and the huge growth in the number of customers who are now using online banking services. This has entirely changed the shape of retail banking. The number of people visiting some of the high street banks that face closure in my constituency has fallen to an unsustainably low level.

It is analogous to the situation that existed for police stations in some areas. Police forces were confronted with the reality that often only a handful of people a week were visiting police stations, many at the instigation of the police themselves, who required reporting to take place at the stations. Some forces recognised that maintaining an underused building was not actually the best way for the police to maintain a footprint in their community, and that there were more innovative ways to maintain a presence in their local communities, including the use of shared facilities, setting up pop-up shops in places where lots of people were such as supermarkets and developing their online presence.

There has been a change in the nature of the business and shape of policing, and in how it has to respond to today’s needs. But police forces also recognised that they could not simply withdraw. There has to be accessibility and a policing presence in communities, although that presence may now take a different form.

We have the opportunity to ensure that local banking services can be provided in communities on an ongoing basis, by post offices. As my hon. Friend the Member for Hazel Grove (Mr Wragg) said, following the new deal that the Post Office has done with Lloyds, the coverage that post offices can provide for basic banking services is now very high. As he said, there will be 99% coverage for individual private customers and 95% for businesses.

I suspect that there is relatively low awareness that post offices can provide these services. I therefore agree with the hon. Members who said that it is important that there is a proper information campaign to explain to local businesses which services their local post office can provide when high street banks are lost. It is not good enough just to put out a news release and write a letter to customers to say that the bank is closing. The banks have a responsibility and they should exercise it.

Secondly, it is important to maintain the post office network, especially if post offices are to become local banking hubs as well as providing their other services. This is a great opportunity for the post offices. It is a useful way to maximise the asset and to ensure that the investment in the post office network can be realised.

[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.

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Just before I call the next hon. Member to speak, I ought to point out, for the sake of clarity, that we are in very unusual circumstances today because the timing of this business has changed and changed and changed again. I appreciate that this is the last day before a recess, and that Members—especially those with long distances to travel—are in some difficulty. I have therefore allowed far more leniency than is usual, first in the timing of people arriving for the beginning of the debate and, secondly, in the timing of their departure, either before or after the wind-ups. I would like to make it clear to the House that this does not create a precedent—absolutely not. We have a combination of circumstances today, which is highly unusual and is why I have allowed leniency. That will not be the case on other occasions.