Santander Closures and Local Communities

Lord Walney Excerpts

Thursday 14th February 2019 Westminster Hall

[John Woodcock (Barrow and Furness) (Ind)]

It is a pleasure to see you in the Chair, Mr Rosindell. I thank the hon. Member for Glasgow East (David Linden) for securing and organising this debate, which I was happy to support.

To strike a note that may be slightly discordant with the speeches of other hon. Members, I must say that I really value online banking. It has been transformative for me personally in terms of ease of access to finance, and we should not forget how many people’s lives it makes easier. I am cautious about unduly amplifying people’s fears about the security of transactions. Yes, there is clearly a big problem with online fraud—I myself was recently a victim to the tune of several thousand pounds—but it is a very small percentage of the overall number of transactions, and the risk lies squarely with the banks themselves. A genuine and proportionate look at the risks associated with online banking suggests that they are often outweighed by the level of convenience that it can bring if we increase people’s online access and computer literacy and ensure that they have a proper understanding.

It is ultimately futile, although it may be gratifying, to rail against individual banks every time they pull out of a high street. I am deeply disappointed that Santander is pulling out of Ulverston, especially given the track record of other banking institutions that have said they foresee only one set of closures, but then, a couple of years down the track or even sooner, close other branches as well. I am waiting for the figures that Santander said it would try to get for me about the busyness of the Barrow-in-Furness branch that customers will be transferred to.

[Stephen Gethins (North East Fife) (SNP)]

The hon. Gentleman is making a good case. Given the nature of his constituency, which in some ways is very similar to mine, does he agree that the branch network is particularly important to rural areas? In places such as St Andrews and Ulverston, having that rural network goes beyond the personal banking that people can do online; it connects small businesses.

[John Woodcock]

It absolutely does, and let me say a little more about that point before I go in what may be an unexpected direction and ask whether beating up the banks will really work. The banks on our high streets in communities such as the hon. Gentleman’s and mine are so important for individual customers and businesses. Businesses need access to cash. At the meeting we had last week on the closure in Ulverston, I resolved to help the local business improvement district to survey its businesses about their priorities and needs.

Businesses report a loss of footfall every time a high street branch goes; the evidence is anecdotal at the moment, but we want to put more data behind it. There is also a community aspect. Every bank has a cohort of relatively vulnerable people who rely on it, not only for financial transactions but because it gets them out of the house and, basically, enables banking staff to check that they are okay. As those things are eroded, our communities themselves will bear the brunt.

We will not get anywhere if we do not properly acknowledge the drivers of change within our communities, where people increasingly go online. We have to see what genuine levers we have to change things. That does not mean coming into the House of Commons and shouting at institutions; none the less, we do have levers if we are prepared to come together to demand that the Government use them. For private sector institutions, of course we can do our best to promote the business value of a high street presence. I said last week and I say it strongly again, let us be loyal to the banks that choose to be loyal to our areas.

At the meeting I mentioned, I was impressed to hear from individuals such as the mayor of Ulverston, Dave Webster, who says he has tracked his finances over the years as more and more banks have closed, and will do so again as a Santander customer moving to a branch of a bank that is prepared to have its roots in the town centre. It is good to have the Cumberland Building Society there, which prides itself on keeping footfall in the area. Let us vote with our feet and for institutions that are prepared to root themselves in our areas.

Ultimately, it will be down to the Government to respond. Some Members have rightly mentioned the Post Office. We were pleased and proud to be able to save Ulverston post office from the threat of closure. My goodness, how much more important it will be now as Santander becomes the latest branch to pull out of Ulverston. We require a loss-leading investment in communities and I suggest the Government should ultimately be the guarantor of financial services in an area through an expanded post office network.

I very much add my voice to those speaking out against further branch closures, but I want to add two more elements. First, we have the Post Office card account. I realise that primary responsibility for that lies with the Department for Work and Pensions, but I remember my time in the Department, where I was an adviser to the Secretary of State between 2005 and 2007. Back then, the civil servants, whom we generally worked with very effectively, made the tactics of “Yes, Minister” look timid as they tried to bounce through a policy that radically reduced reliance on Post Office card accounts. Frankly, in the first drafts that we saw, they were not being straight with Post Office card account customers and what their options were. The Minister might like to correct me, but I understand that that process has resumed.

It is outrageous if Post Office card account customers are not clearly told in their advice from the Government and the Post Office that they can maintain a Post Office card account. What was put to us back then and I understand may be being put to the Minister now is advice to customers on how to change from a Post Office card account to a bank account, without telling them explicitly that they have the ability to stay.

Secondly, if the policy is be loss-leading, we cannot just rely on the good will of private banking institutions. Let us put in place an ongoing levy for high street banks to make sure that an institution is rooted in communities, guaranteed by that, and let us strongly consider that institution being the Post Office.

--- Later in debate ---

[John Glen]

As Minister I have conversations with banks and the FCA frequently. These are matters that can be considered.

[John Woodcock]

Will the Minister give way?

[John Glen]

I would be happy to—I was just going to refer to the hon. Gentleman’s points.

[John Woodcock]

Perhaps the Minister should do that first, then.

[Jonathan Reynolds]

Will the Minister give way?

--- Later in debate ---

[John Glen]

I hope the hon. Gentleman will forgive me, but I want to focus on the thoughtful point made by the hon. Member for Barrow and Furness. He referred to his time as an adviser in the Department for Work and Pensions, and to joined-up Government and the Post Office card. It is true that universal credit will have to be paid into bank accounts, but basic bank accounts, which do not involve any fees, are available. Those a viable and accessible alternative. I am happy to take up any further points he wants to make about that, and to learn from his experience in government.

[John Woodcock]

It would be useful to understand why universal credit is not being made available for payment into Post Office card accounts, but I wanted to intervene on another issue relating to the Post Office. The Minister said the Treasury has a policy on access to cash. One of the big issues with Santander going from Ulverston and, I imagine, other areas is that the cash machine will go as well. We have a post office without a cash machine. That will really damage Ulverston, which is a fabulous market town. On festival days, there are huge queues at the existing cash machine. Can the Government direct the Post Office to increase its cash machines in such areas?

[John Glen]

I am very happy to look into that. On access to cash machines, as I mentioned in the Adjournment debate last Thursday, we set up the payment systems regulator, which is responsible for overseeing payment systems. The regulator is closely monitoring the situation with LINK and the commitments it has made to maintain the spread of ATMs across the UK. I recognise that the pressure on that network is growing. However, I need to reflect on the relationship with the Post Office rather than trying to answer the hon. Gentleman’s question now.

I am going to make some progress, because I need to leave time for the hon. Member for Glasgow East to respond. Given unparalleled consumer change, the banks have adapted to keep competitive, including by taking some of the decisions we have discussed. That has meant investing unprecedented amounts in digital development, financial capability and tailored support for vulnerable consumers so banking is more personalised, on-demand and flexible, which many people expect in the modern world.

Let me address the impact on the franchising of Crown post offices, which a number of Members raised. Prior to finalising its plans for franchising, the Post Office runs local consultations to engage the local community and help shape its plans. That is in line with its code of practice and has been agreed with Citizens Advice. Indeed, Citizens Advice reported that the Post Office’s consultation process is increasingly effective, with improvements agreed in most cases, demonstrating its willingness to listen to the community.

The Government acknowledge that the post office plays an important part in the lives of customers, and accessibility of post office services is a key Government priority. That is why we have set specific access criteria, requiring 99% of the UK population to be within 3 miles of their nearest post office. Despite the point made by the hon. Member for Heywood and Middleton (Liz McInnes) that legislation does not impose a specific requirement for Post Office Ltd to undertake an equality impact assessment, the Post Office considers the impact of proposed changes to the network on its customers, and the Post Office and all its franchise partners, including WHSmith, are subject to all relevant accessibility legislation.