Bank Closures: Impact on Rural Communities

Lord Holmes of Richmond Excerpts

Thursday 13th February 2025 Lords Chamber

[Lord Holmes of Richmond (Con)]

My Lords, it is a pleasure to follow my noble friend Lord Arbuthnot and to have the opportunity to congratulate him again on being recognised as Parliamentarian of the Year for all the work that he did to represent the postmistresses and postmasters through that terrible period: one of the darkest periods in this country’s legal history.

I also congratulate and thank the right reverend Prelate the Bishop of Newcastle for securing such an important debate. I declare my technology and financial services interests, not least as adviser to Ecospend and Trustly.

I will concentrate on connectivity, cash and community. Connectivity is the essence of being human: how we relate and how we connect with one another in real time, in the physical world. With bank branches retreating from our high streets, gaining financial services is becoming vanishingly impossible in the real world.

So, what is the solution for people who want to do their daily banking, not just for individuals but for micro and small businesses as well? The stats tell us that, whichever one chooses, you can be, in a certain percentage, a mile or three miles away from your nearest branch. But when one looks at other elements of connectivity, that is as good as being 300 miles away if you cannot get there.

I, too, will focus on the key role I believe the Post Office can play to bring forward solutions in this space. It is a brand that has been in our communities and our society for over half a millennium. There has to be a future for such a brand to deliver on the financial, digital inclusion and community cohesion challenges to connectivity.

What happens if people find themselves without a banking branch or easy access to a post office? We are told, “You can go online”. But what if you cannot? It might not be accessible or, indeed, you may not want to—and there are many reasons for that, not least the fact that we are in the midst of a fraud epidemic. The three largest economies on planet earth are, first, the United States of America, secondly, China, and thirdly, economic crime and fraud. Can the Minister say whether the Government understand why people may not choose to go online? What are they doing further to help people online and in particular, when they are in that online world, with something as personal and serious as finance?

I turn to connectivity. What happens if you have no bank branch, and the broadband and mobile coverage isn’t all that in your area? That is especially the case in rural communities, but there are also some city not-spots. You can be as financially savvy and digitally smart as you want, and you can have the best device, but with no broadband or mobile connectivity that payment will not be made. What is the Government’s plan to look at all these elements of connectivity, to enable everybody to have the financial and digital inclusion not only that they deserve and need but that is vital if the Government are to deliver on levelling up and their growth agenda? If the bank branch has gone and there is no bus and no broadband, it is difficult to see financial and digital inclusion.

A lot of good work has happened around access to cash. What is the Government’s medium-term commitment to enabling access to cash and to the very service that underpins cash and the ease of accessing it in communities across our country? Can the Minister say whether there is a continuing commitment to free access to cash at all ATMs across the country?

What is the Government’s plan for cash acceptance? To put it in terms: what currency does cash have if there is no place to spend it? As my noble friend Lord Arbuthnot said, cash is such a key underpinning for resilience, including financial resilience for individuals who do not want to go online or who want to run their household or business with cash for reasons of control. Similarly, for the broader economy, what is the Government’s view on the resilience of continuing the cash system, if and when things go wrong in the digital space?

Finally, what are the Government’s plans for further innovating around access to, and acceptance of, cash? I was fortunate to bring an amendment to the Bill that became the Financial Services Act 2021, which enabled cashback without the need for a purchase. What is the measure of its success? Most of the transactions that have occurred as a result of that service are for £20 and under, so it is really delivering financial inclusion.

The third “c” is the most important: community. Yes, we can build digital communities, and they can be incredibly effective, but ultimately it is important how and where we meet and come together, and how we relate in the physical space—the human world. Some may say “IRL”, but it is that community space where so much human potential—and economic, social and psychological good—can get done.

I have a quartet of final questions for the Minister. How many hubs should be established by the end of this year? I agree that we could be more ambitious. Will the Minister consider setting an ambitious target of 1,000 hubs by the end of this Parliament? It would take at least 2,000 hubs to properly cover the branches that have disappeared—and continue to disappear. What are the Government’s thoughts on increasing business banking services within these hubs? For people who run small and micro-businesses, this could be a lifeline. They do not have time to get into a vehicle and go five miles to another town, they want to run their businesses. What are the plans for increasing business banking facilities at the hubs?

While we are on the issue of financial inclusion, I ask the Minister: what are the Government’s views on flat-screen card payment devices? These are completely inaccessible for blind people and many other people. The worst thing about it is that it is taking away something which was previously accessible—the card payment machine, which had buttons on—and enabled independent payments. Now, because of that technological change, they are completely inaccessible. Will the Government consider looking at this and giving their view on whether this breaches equalities legislation?

Financial and digital inclusion often walk hand in hand. It is the Government’s role—it is all of our role—to play a part in bringing them about. The social, human and community possibilities that come as a result are what makes it worth being in a country such as the United Kingdom. I look forward to the Minister’s response. Ultimately, it is an issue for rural communities. It is an issue for all communities because, at its heart, finance is how we enable possibilities. That is the purpose: individual possibilities, business possibilities and community possibilities. I thank the right reverend Prelate again for giving us the opportunity to discuss these matters this evening.