Bank Branch Closures

Margaret Ferrier Excerpts

Thursday 30th June 2016 Commons Chamber

[Christian Matheson]

I thank my hon. Friend for her intervention, and I was about to make exactly the same point.

People drop into shopping areas such as Hoole to go to the bank and then perhaps to one of the local shops. Incidentally, Hoole recently won the outstanding award from the “Great British High Street” awards, for which I thank the Under-Secretary of State for Communities and Local Government, the hon. Member for Nuneaton (Mr Jones). I would be grateful if the Minister passed on my thanks to him.

The bank is very much part of the ecology of the local high street. If we take it away, we damage that ecology and the other small businesses that rely on it for increasing custom, as people pop to the bank and then to one of the small shops. We rely on it, too, to provide easy access to banks for small businesses, as my hon. Friend the Member for Llanelli (Nia Griffith) pointed out. Small businesses feel able to put up a small “back in 10 minutes” sign on their door in the middle of the day as they pop down to the local bank to get change or pay in money, but they would not feel able to put up a “back in two hours” sign if they were they forced to go into the city centre of Chester or indeed any large town. It is tough running small businesses and time away from the shop is business time lost.

For all the advantages of internet banking—and there are many—the blunt truth is that a small business cannot pay cash into the bank through a laptop computer. I cannot help but wonder whether all of this is made worse because of the advertising these banks use. No wonder HSBC moved away from calling itself “the world’s local bank”; yet we still have Lloyds bank saying that it has been “by our side” for 250 years—at the same time as it closes its Hoole branch. It is not by our side any more in Hoole, I am afraid. The very untruths of the advertising campaigns, claiming to be local and supportive of local small businesses, while making access to branches harder, exacerbates the crisis that we face—and it is a crisis.

Reuters reported last week that 600 branches closed in the 12 months to April this year. There is a social division in these closures. It says that more than 90% of the closures were in areas where the median household income was below the British average of £27,600, according to an analysis of Office for National Statistics data on average incomes in the locations where branches were closed. By comparison, five out of the eight branches opened by these banks over the same period were in some of the wealthiest neighbourhoods in Britain: Chelsea, Canary Wharf, St Paul’s, Marylebone and Clapham, all districts in London. That is right: despite the onward march of technology, banks are still opening new branches, but in highly affluent areas.

The Reuters report cites concerns from campaigners that

“banks are cutting too fast in places where people are less able to fall back on digital banking services because of a lack of access.”

That reminds me of the words of my good friend the hon. Member for Ynys Môn (Albert Owen) about the different ways in which access to banking services might be prevented. Problems can be caused by people’s finances, the lack of physical access or the inability to use the internet. The report quotes Fionn Travers Smith of Move Your Money, which campaigns for ethical banking. She says:

“We are witnessing the creation of a dual financial system: one for the middle class and wealthy and another for the poor.”

Indeed, I have found that one of the groups to be hardest hit by the recent closures in Chester are pensioners, not necessarily the most tech-savvy group—although I do not want to make assumptions—who now have to make the journey into the centre of my city.

[Margaret Ferrier (Rutherglen and Hamilton West) (SNP)]

On that point, I have been dealing with a constituency case in which a couple were conned out of their life savings—some £50,000—in a sophisticated telephone and online scam. Does the hon. Gentleman agree that forcing people to adopt these services rather than giving them the option of over-the-counter services serves only to enable organised crime and scams?

[Christian Matheson]

I have to say that the thought had not occurred to me, but I think that dreadful case illustrates a problem on which we should all focus. We can have a lot more confidence in dealing with a bank when we are inside a physical bank and dealing with an individual as opposed to being subjected to one these terrible scams. I am most grateful to the hon. Lady for bringing that awful case and awful problem to our attention.

--- Later in debate ---

[Ronnie Cowan (Inverclyde) (SNP)]

I am grateful for the opportunity to speak on a subject of particular importance to my constituents in Inverclyde. As Members are aware, there has been a steady decline in the number of bank branches over the past 20 years. Between 1997 and 2014, almost 4,000 bank branches closed across the UK. Worryingly, this rate of decline shows no sign of decreasing, with figures obtained by the BBC indicating that a further 600 branches closed between April 2015 and April 2016. Proportionately, Scotland, Wales and the south-west of England are the hardest hit by closures.

Unfortunately, Inverclyde has not been immune from the effects of this decline and in recent years there have been a number of prominent branch closures in my constituency. My constituents have clearly expressed their opinion about these closures. They feel frustrated and dissatisfied. They feel that their views about an important community service have not been respected.

[Margaret Ferrier]

I have been contacted by several of my constituents who are concerned about the branch closure of the Royal Bank of Scotland, which is just across the road from my constituency office in Cambuslang, and about the Clydesdale bank in Blantyre. They rely on over-the-counter services and no reasonable alternatives are being put forward. Does my hon. Friend agree that banks have a responsibility to these people, many of whom have been customers for many decades?

[Ronnie Cowan]

I certainly agree. When the Gourock branch shut in my constituency, the Royal Bank of Scotland gave me four alternatives within travelling distance, one of which is in Dunoon. Those with local knowledge will be aware that 5.72 miles from Gourock might seem fine, but it is not possible to drive there because it is across a body of water! A ferry journey there and back would be required. That is a good instance of where the geography of the area has not been taken into consideration.

When the Port Glasgow branch of RBS closed in 2012, my constituents were told that it was not a problem as they would still have access to the branches in the neighbouring towns of Kilmacolm and Greenock. When RBS took the decision last year to close the Kilmacolm branch, my constituents were told that that was not a problem as they would still have access to the Greenock branch. How long will it be until RBS tells my constituents that it is closing the Greenock branch, but that that is not a problem because there is a branch in Glasgow?

RBS made a promise that they would never close the “last bank in town”, but since 2014 that is precisely what they have done—165 times. Kilmacolm is now one such place without a bank. Instead, it is serviced by a mobile banking van of the kind we might see travelling around rural communities such as Mull or Iona. In January, RBS invited me to Kilmacolm to see how the new system and the mobile banking van worked in practice. I watched constituents lining up on the pavement in the pouring rain waiting to be served. They stood outside in the open, often with large sums of cash in their bags. When customers eventually reached the front of the queue, they had little or no privacy in which to carry out their personal banking. The procedure was even worse for elderly people and those with a disability, since the van’s narrow, steep and slippery stairs restricted accessibility. For example, a person in a wheelchair can expect to be served outside in the open, as it is physically impossible for them to enter the vehicle.

There was anger and frustration among customers using the service. Their most pressing concern was about the security of undertaking their personal banking in this way. The van was set up just metres from the empty shop unit that had once contained the permanent branch, which only compounded the agitation of customers as they stood in the rain waiting to be served. I have since revisited the van several times, and it is obvious that it is not an acceptable substitute for a bank branch permanently based in a community.

Gourock has also been hit by recent bank closures. Earlier this month, the Bank of Scotland closed the only remaining bank in the town. I appreciate that the way people bank is evolving and moving into the digital world—I wrote IT banking systems in a previous life—but it is important that all people within society be catered for, and that is not happening. The Bank of Scotland report into the Gourock branch closure showed that 44% of its customers were aged 55 or over, and undoubtedly some will not have been comfortable with online banking. That figure alone should have been sufficient to keep a branch open as a service to the community.

I know that banks undertake consultations and implement transitional arrangements, but are increased profits an acceptable excuse for providing a reduced service to the community? Perhaps a balance can be found, but I fear that branch closures are already undermining the service required by my constituents. Banks have an obligation to communities and play a key role in local economies. My constituency is fighting a war of attrition against economic stagnation and a declining population. High street bank closures are only making it harder for us to overcome those difficulties.

I shall end with a direct appeal to the major banks. I understand their need to evolve and adapt, but the closures have come too fast and lasted too long. It is time for that to end. I hope that the banks will give serious consideration to the concerns raised in the Chamber today.