High Street Bank Closures and Banking Hubs

Marion Fellows Excerpts

Thursday 11th May 2023 Westminster Hall

[Marion Fellows (Motherwell and Wishaw) (SNP)]

It is a real pleasure to serve under your chairmanship, Mr Davies. I think that I am about to reiterate a lot of what has already been said, but I think it is worth saying again. I congratulate the right hon. Member for Aldridge-Brownhills (Wendy Morton) on securing this really important debate. Before I start, I should declare an interest: I am the chair of the all-party parliamentary group on post offices. I do not think that I technically have to declare that, but I do know a fair bit about post offices as a result.

Scotland has been hit harder by bank closures than anywhere else in the UK. Scotland is geographically bigger than any region of England or any other nation in the UK, and consequently it has a very spread-out population. Because of that spread, bank closures can be more damaging to us, which is why it is shocking that last year’s Scottish Affairs Committee report found that Scotland has also lost a greater share of bank branches than any other country in the UK. That is diminishing the ability of people to access cash and other banking services. Since 2015, 53% of Scotland’s bank branches have closed, which is the highest percentage loss of all the nations in the UK. In 2009, 56% of transactions were in cash, but today’s cash payments represent only 17% of transactions. Despite that drop, cash remains the second most frequently used form of payment, second only to debit cards.

[Wendy Morton]

We talk a lot about services and access to cash. Does the hon. Lady agree that for people who are on a fixed budget and for whom managing money is difficult, having cash makes that very tricky job just that little bit easier? They can see what they have in their purse, wallet or pocket in front of them. That is why I think—and I hope she agrees—that that is another reason why the banking service and access to cash and advice, particularly at a time of cost of living challenges, are even more important.

[Marion Fellows]

I absolutely agree with the right hon. Member. If someone is poor, they cannot afford to run up bank charges. They cannot afford to be overdrawn. I am old enough to remember my mother having pots of money—some was used for this, and some was used for that, but if it was not there, we could not spend it. It is a better way to keep oneself in the black altogether.

Before 2021, about six branches a month were closing in Scotland, but since 2021 that has increased to about eight a month. Post offices are also now closing: between 2011 and 2021, we lost 112 post offices to closure in Scotland alone.

[Kirsten Oswald]

My hon. Friend is making a really important point about both banks and post offices potentially being lost to communities. Does she agree that when banks close and abdicate their responsibility, their suggestion that post offices will simply take over their services is unfortunate and unacceptable? It is as if the banks think they are not at all accountable. That is not how we should address this.

[Marion Fellows]

Absolutely. Banks are allowed to say, “Well, it is okay if we close, because there is a post office nearby.” That will not always be the case, as more and more sub-postmasters struggle. I will come on to that later.

The head of policy at Age Concern Scotland has noted:

“These closures often hit older customers hardest, leaving them cut off from vital services and making it harder for them to manage their money...As we battle through this cost of living crisis it is more important than ever that older people can access their money as cash, for free, and use it whenever they need to.”

The number of cash machines that are closing is disgraceful. For example, in my local area in Lanarkshire we have lost nearly 100 cash machines in four years. In July 2018, Lanarkshire had 650 cash machines but that had fallen to 561 by last February. And the really important point is that the number of free-to-use ATMs in my area had dropped by 555 to 426. That means that the only ATMs that people can access are ones that charge them for taking out their own money; they are paying a poverty premium. That is ludicrous and it is really affecting people on a daily basis.

As I have said, for years banks have said, “It’s okay if we close our local banks, because there will always be post offices nearby.” However, as I have also already said, post office closures have picked away at their number, too. What will the Department do to protect network and community services that are run through post offices, especially in relation to people who cannot get to banks?

Given the different ways of running post offices, it is really difficult to tell how many sub-postmasters who have taken on banking to a great degree are now struggling. I do not know whether folk here are aware of this, but 70% of the members of the National Federation of SubPostmasters are only earning the national minimum wage, despite the good work that they do in providing post office services and now banking services. That figure came out before the cost of living crisis, so the situation will be even worse now.

It is also very difficult for Post Office Ltd to encourage people to take on post offices or sub-post offices because of the Horizon scandal. The other thing is that the Post Office lozenge—the sign that we are all very familiar with—goes outside a building and says, “Post Office”, but inside that particular building there might only be a drop and collect service for parcels. So, people think that there is a post office where there is not one.

On banking transactions, many Members have already said that many local businesses now use local sub-post offices to pay in takings in cash. That is important, because it keeps money in the local area and it really keeps some high streets going. However, last year new regulations to combat money laundering were introduced by the Financial Conduct Authority—actually, I have found it difficult to find out if it was entirely the fault of the FCA or UK Finance. Recently, it has been very difficult for local businesses. There are no banks, so they take their money to the post office, but a limit was imposed on how much each business could deposit.

I am very pleased to say that last month the FCA noticed that a more tailored approach should be taken by banks for cash deposits by business customers, on the basis of expected business customer activity. However, that also links back to the problem that sub-postmasters have, because they were losing money as customers could not deposit all of their takings and many customers then had to travel many miles to be able to deposit their money safely. I am hopeful that, when this issue is properly sorted out, a tailored approach will allow local business owners to go back in and carry out their business the way they did before.

Real clarity is needed on banking hubs. I have visited the banking hub in Cambuslang, and one is to be opened quite near my constituency in Carluke, hopefully reasonably soon. The building in Cambuslang was fantastic. The way it works is that each bank that has signed up sends a representative to the banking hub once a week to give business advice. As many Members have pointed out, people go to banks not just to take out money; they need advice, help with filling in forms, and other things like that. Those things were being done in the hub. I spoke to many customers that day, and they were very happy with the service given. It was a pilot programme, and it is still unclear what effect it had on the local post office branch, so we have to bear that in mind. The NFSP is concerned about the fact that there is no third-party oversight of the banking hub recruitment process. It is not known how those who gained the right to run the banking hubs were selected. I have already written to LINK about that, and I am awaiting a response.

Consumers are able to access cash at a post office only if their bank has signed up to the banking framework agreement. Which? has raised concerns about the long-term viability of the agreement, as it is voluntary and there is a time limit on it—I think the last one to which banks signed up was for three years. Barclays bank originally did not sign up, which was quite a loss for its local customers. I am calling for access to cash at a post office to be placed on a firmer and more sustainable footing in areas where local cash needs are unmet. Can the Minister comment on that, and update us on where we are going?

Returning to the post office argument, if banking hubs have an impact on local post offices, then that is something that we have to be very careful about. Part of the difficulty is that the Treasury and the Department for Business and Trade are both involved, and there is not a great deal of communication between them. I know it is getting sightly better, but this Government have for many years almost had a silo mentality, in which one Department did not really know what the other was doing. That is to the detriment of people who have to use banks and post offices—if they are still there. I would really welcome the Minister’s comments on that.

I again thank the right hon. Member for Aldridge-Brownhills and all the other Members who have spoken. This is a real ongoing problem, and like my hon. Friend the Member for East Renfrewshire (Kirsten Oswald), I have stood here to speak on the subject innumerable times. I have come at this problem from different angles, and have tried to say something different each time, but hat is proving harder and harder. It is time that the Government got a real handle on the issue, and started to protect consumers more, as well as those who cannot use digital banking. That is not just older people, though many older people struggle with either bad broadband or the inability to handle new technology. We need a joined-up approach from the Government to ensure that people can still access banks, post offices and cash.