Bank Closures (Northern Lincolnshire)

Martin Vickers Excerpts

Wednesday 15th July 2015 Westminster Hall

[Martin Vickers (Cleethorpes) (Con)]

I beg to move,

That this House has considered bank closures in Northern Lincolnshire.

It is, as always, a pleasure to serve under your chairmanship, Mr Davies. I sought this debate because our high street banks are reducing the service that they give to my constituency and the neighbouring constituency of Gainsborough. My hon. Friend the Member for Gainsborough (Sir Edward Leigh) has asked for his name to be associated with my comments. Unfortunately, a diary clash prevented his being here.

It might be helpful if I give a brief outline of Barton-upon-Humber, which is the northernmost part of my constituency. That market town is being affected by two bank closures. Both HSBC and NatWest have announced that they are closing their local branch; the NatWest one will close on 20 August and the HSBC one in early September. Barton-upon-Humber is a long-established trading town, situated on the southern bank of the River Humber. It has held some significance from as long ago as Saxon times. It has developed into what I think it is fair to say is a typical market town. The banks have announced the closures at a time when the population is increasing and there is a real boost to the local economy, wrought in part by the reductions made by the coalition Government in the Humber bridge tolls, which have made journeys between the northern bank and the Barton area much more accessible.

When we talk of a high street, we have a vision of a cluster of small shops—butchers, bakers, newsagents and so on—but they are always supplemented by the local solicitor’s office, perhaps an insurance broker and, of course, our high street banks. They come together and provide the essential ingredients of a thriving local economy, not just in our provincial towns but—perhaps even more so—in our market towns.

Barton-upon-Humber is one such place. Three years ago, it suffered a major setback when the Kimberly-Clark factory closed. That resulted in more than 500 job losses but, thankfully, Wren Kitchens took over the factory and it is now a thriving commercial enterprise, employing almost as many people as when Kimberly-Clark had it and with the prospect of yet more jobs in the pipeline. As I mentioned, the reduction in the Humber bridge tolls has been a real boost to the local economy, but the offshore renewables sector, based around the ports of Immingham and Killingholme, has made Barton very much an expanding town. More residents equal more potential customers, whatever the business—or so people would think. That will not be so at our high street banks, NatWest and HSBC, which, as I said, have recently announced the closure of their branches.

Of course, we all recognise that banking has changed, particularly for the personal customer, and in that respect most of us are to varying degrees guilty. We want the bank or the bookshop there when it suits us, but for the rest of the time we are tempted by online banking, Amazon or whatever. However, that is no help to our local butcher, newsagent or other trader who wants to offload his takings for the day.

Let me focus on NatWest, as it was the first of the two banks to announce the closure of its branch. Like most high street banks, it occupies a major building in the marketplace in Barton. It has been there since 1913. The announcement came as a major disappointment to the community: private customers and, as I have mentioned, small businesses. Older residents in particular feel it as a blow. Once again, personal contact is being taken away from a commercial transaction. Local people, of course, are concerned that this might be the start of a trend. I am pleased to say that I met officials from Barclays earlier this week and they have given me an assurance that they are not planning any closures—for the moment; that is the big concern of local people.

I mentioned the neighbouring constituency of Gainsborough, where two towns, Caistor and Market Rasen, are affected. For Caistor, it is a particular blow because the NatWest is the last bank in town.

There are more ways than ever to bank. NatWest has provided me with a host of statistics. It says that branch transactions have fallen by 36% in the past five years and mobile transactions have increased by 300%. It states:

“Only 9% of our transactions were undertaken in our branches in 2014, compared to 25% in 2010”.

It goes on to state:

“We know the value of the High Street branch, we have the second largest branch network in the UK, and it will remain the cornerstone of our service to customers.”

How will it remain the cornerstone if it is closed?

Branches are important because, as I mentioned, they provide an opportunity for customers to interact with staff on what may be big life decisions, such as taking out a mortgage or starting a business. Both NatWest and HSBC are very keen to tell me that they are making alternative arrangements with the Post Office. That, of course, is in line with the protocol agreed between the British Bankers Association and the Government earlier this year, but local post offices do not constitute a vast network. As anyone who has queued up in the post office with loads of money from their takings will know—I used to work in Market Rasen and can tell my hon. Friend the Minister that even to go and buy a stamp was a half-hour job—the reality is that post offices are not an ideal alternative.

The British Bankers Association has provided me with a host of information about how banks go about assessing closures. As the Barclays representatives told me yesterday and, indeed, as the HSBC representative told me, this is customer-led—customer-led meaning, of course, that people are moving online or to mobile transactions. I hope that the Minister will be able to give some reassurance that the agreed protocol will be firmed up a little. As I am sure she will appreciate, people are rather cynical about consultation processes. They tend to think that the bank decides on closure and consults on how to go about the closure, not on whether the closure should take place. I hope that the review of the protocol, which is scheduled for a year after it comes into force, will result in its having a few more teeth than has been the case up to now.

The British Bankers Association protocol does go into a fair amount of detail, whereas the Government’s website is a bit thin on the ground when it comes to what should actually be provided. The previous Minister, who is now my hon. Friend the Minister of State at the Department of Energy and Climate Change, said at the time of the protocol’s introduction:

“I’ve received a lot of correspondence from consumers and businesses who are worried about bank closures and the trend in banking services moving online, and I think it is essential that banks continue to take into account the impact of their decisions on their customers.

I therefore welcome the agreement announced today that banks will work more closely with their customers and local communities to minimise the impact of bank closures.”

In other words, it is an acceptance that bank closures will take place. My constituents look to me, and I look to the Government, to be on their side and the side of customers—not on the side of the banks, which are well positioned to take account of themselves.

If we look further at the details from the British Bankers Association, they go on to outline community engagement. Although it happened eventually, NatWest was seemingly somewhat reluctant to meet Barton Town Council. It has now done so, and has also met North Lincolnshire Council. The meeting was to discuss the impact of the closure on the community and customers, and to look at alternative provision. It was not—I repeat not—to discuss whether alternative arrangements could be made, such as mobile banking or reduced opening hours. I look to the Minister to give some reassurance that when the review takes place, she will seek to strengthen the protocol on behalf of my constituents.

Hon. Members across the political spectrum continually speak about the high street and how important it is to maintain a vibrant local economy and support our local shops. If we are to expand our market towns, however, shops need the services of our local banks. Banks, I am afraid, take a rather high-handed attitude. It is easy for us all to slip into the much-favoured habit of criticising bankers, and I accept that we are talking about high street bankers rather than those who have even less public appeal. The reality, however, is that customers, such as the local newsagent, who are looking for services from their bank will easily notice the large profits and the rather generous—to put it kindly—payments to senior directors. If just a little of that were to trickle down into the local branch network, perhaps we could sustain our market towns and small shops to a much greater extent than we have done in the past.

I go back to the Government’s website, which is, as I say, a bit basic when it comes to outlining the protocol. The website states:

“Today’s ground-breaking agreement will make sure customers still have banking services close at hand if a branch closes. Communities will be given fair notice of any closure and clarity about the alternative places and ways to bank. This includes the Post Office, which is an ideal shared service for customers who prefer to use counter services. The agreement will also make sure there is the right support to help customers use internet or mobile banking.”

I have to say that my constituents in Barton have not seen many examples of support for customers when it comes to greater involvement of online banking.

I conclude by appealing once again to the Government to be on the side not only of my constituents in Barton and those in the neighbouring constituency, in Caistor and Market Rasen, but of customers throughout the country who deserve and need a proper high street commercial banking network if high streets and the business community are to survive.

[The Economic Secretary to the Treasury (Harriett Baldwin)]

What a pleasure it is to serve under your chairmanship this afternoon, Mr Davies! I congratulate my hon. Friend the Member for Cleethorpes (Martin Vickers) on securing the debate. He has spoken eloquently on behalf of his constituents and communities. He is without a doubt the most diligent and effective Member for Cleethorpes I have ever known.

As my hon. Friend set out, bank branches play an important role in their communities—communities such as Barton-upon-Humber, Caistor and Market Rasen. They are valued by individual consumers and small businesses, and the services that they provide make a real difference to people’s lives. One of my key priorities as Economic Secretary is financial services that deliver for customers. I strongly believe that banks should be there to help and enable customers to achieve their aspirations at every stage of their lives, whether that is saving for their first home, taking out a mortgage, buying a car or saving and investing for the future.

As my hon. Friend mentioned, how we bank is going through a period of unprecedented change. New online and mobile technology means that customers are reducing their use of high street branches. As he mentioned, some banks had pledged not to close a branch if it was the last one in town, but since those pledges were made the volume of transactions in high street branches—including in the last branches in town in places such as Caistor—has continued to decline. Those changes mean that the banking industry, which has to modernise and improve its services to maintain profitability, often has to make tough decisions. They are commercial decisions for the individual institutions, but it is right for the Government to seek to ensure access to banking services for everyone, wherever they live.

We made strong progress on that agenda during the last Parliament. In March this year, the Government welcomed an industry-wide agreement known as the access to banking protocol. I am pleased to say that all the major high street banks agreed to that protocol, which came into effect in May this year. The protocol means that when a bank decides to close a branch, it must think carefully about the consequences of doing so; it must engage with its customers; it must consider the needs of its customers; and it must identify ways for its customers to continue banking after the branch has closed. The results of that engagement with the community and an impact assessment will be made public before the branch is closed. We have also made it easier for my hon. Friend’s constituents in north Lincolnshire to switch their bank accounts, with seven-day switching to one of the banks that remain open.

I appreciate my hon. Friend’s concern about the impact that branch closures will have on shops in local high streets. I assure everyone that the Government are committed to safeguarding high streets and town centres. For example, through the high streets innovation fund we have provided funding to the 100 towns that have the highest rates of empty property. Small business rate relief is also a valuable bonus for high street shops. In March 2015, the vacant share of retail outlets fell to 13%, which is the lowest vacancy rate since 2010.

As well as taking seriously the impact of branch closures on local communities, we must consider how customers will continue to access banking services. A range of alternative measures is in place, and I would like to talk in more detail about some of those measures. As my hon. Friend mentioned, at more than 11,500 of its branches in the UK, the Post Office allows customers to access their bank accounts, check their balances, withdraw money and deposit cash and cheques. Sixteen banks offer services to their personal customers and small businesses through the Post Office, including those that he mentioned. That is a huge network, which offers most customers a real opportunity to continue banking locally.

I know that more can be done, however. The range of services offered by the Post Office may be more limited than those offered in a traditional bank branch, and my hon. Friend has mentioned how popular they are. Service provision may vary by bank and by the capacity of each post office. That is why the Government are supporting measures to improve the banking services that the Post Office offers and to make those services more consistent for customers.

Late last year, the British Bankers Association and the Post Office began negotiations to agree a standard set of services, such as withdrawals, deposits and balance checking. The agreed services will be made available to bank customers at post office counters across the country. The negotiations are ongoing, but I make it clear that the Government consider completion of that work to be a priority. The protocol includes a measure for an independent review after one year, which I hope will indicate whether it has been effective—I will take a close interest in that matter.

We also expect to see concrete progress on publicising the services that are already available. As I have made clear, banks should be there to help their customers achieve their aspirations at every stage of life. We should also recognise that the modernisation of banking services is leading to new opportunities for customers, and we should all be excited about that. Since April 2014, for example, customers have been able to transfer money instantly to another bank account using only their mobile phone number; from 31 July 2016, customers will be able to use their smartphone to photograph cheques for payment into their bank account, helping to make life easier for customers in remote areas. Banks are taking action to ensure that customers are able to use such new and exciting technologies with confidence.

Those innovations also apply to the UK’s ATM network, which can play a more important role in addressing some of the concerns voiced by consumers when their local branch closes. Steady progress is being made in extending the ATM network across the UK, and the number of free-to-use ATMs is at an all-time high. In fact, 97% of withdrawals are now made free of charge. Isolated, disadvantaged and rural communities often have the worst access to free-to-use ATMs, however, so the Government are working closely with the Link network’s financial inclusion programme to subsidise free-to-use cashpoints in more than 1,400 remote and deprived areas across the UK. Importantly, members of the public in my hon. Friend’s constituency can nominate their area for inclusion in that programme.

This debate has focused on branch closures, but it is also important to recognise that many banks are choosing to prioritise their branch network and are opening new high street bank branches, with TSB and Metro bank being good examples. Metro bank is planning to open 150 branches by 2020, and its branches are open seven days a week.

[Martin Vickers]

I thank the Minister for the information she has provided. My constituents, and people across the country, would appreciate more opportunities for face-to-face contact. Can she give an assurance that the Government will do all they can to influence the banks to make provision for people who want personal contact? It is one thing for people who are applying for a car loan of a few thousand pounds not to have face-to-face contact, but people who are committing to a mortgage for 25 or 30 years need detailed, experienced advice. It is much easier to provide such advice on a one-to-one basis.

[Harriett Baldwin]

I agree. My hon. Friend will be glad to know that 58% of people agree with both of us that face-to-face contact and having a local branch are important when choosing where to bank and engaging in major transactions. Some banking organisations take the view that they will gain market share by opening new branches. I have mentioned Metro bank, and TSB currently has 630 branches serving 4.5 million customers, which makes it the eighth-largest branch network with 6% of all UK branches. The Government are keen to encourage such healthy competition between different brands, some of which offer a face-to-face banking model.

The Government’s ambition is for 15 new banks to enter the market over the life of this Parliament. If we achieve that, it will give customers far more choice of whom to bank with and encourage banks to compete more effectively with one another. Competition will also continue to drive innovation in the delivery of banking services, such as contactless payment and payment by mobile phone. Atom bank, which recently received its banking licence, is a good example of innovation. It plans to be an online-only organisation and has ambitions to offer a range of innovative services to customers, which could include face-to-face contact through technology, as well as between individuals in the same location.

One often suggested solution is the sharing of bank branches, which would allow banks to lower overheads and maintain local provision when they may otherwise have to close their branches. Of course, each bank must specialise and differentiate itself from its competitors, but that should not prevent the industry from thinking creatively about how premises and services could be shared. The British Bankers Association is currently considering that issue in consultation with its members. In particular, it is exploring where local circumstances may mean that sharing a branch is the best solution.

I understand the concern of communities in northern Lincolnshire about local bank branch closures—my hon. Friend mentioned Barton-upon-Humber, Caistor and Market Rasen—and many communities across the UK, including the one I represent, are experiencing a similar situation. Changes in the banking industry reflect changes to customers’ needs and habits. Banks and building societies need to balance customer interests, market competition and other commercial factors when considering their strategy. It is right that the Government do not intervene in such commercial decisions, but we are clear that banks and building societies should support access to banking services for everyone.

Once again, I congratulate my hon. Friend on raising these important issues today.

Question put and agreed to.