High Street Bank Closures

Debate between Matt Rodda and Andrew Griffith

Tuesday 28th February 2023 Commons Chamber

[The Economic Secretary to the Treasury (Andrew Griffith)]

Let me begin by thanking the hon. Member for Pontypridd (Alex Davies-Jones) for securing the debate and raising an important issue that I know is of concern to many Members’ constituents. She is clearly a vocal and passionate champion for her high street, which does her credit. May I also prematurely wish her a happy St David’s Day?

Our local high streets are of the utmost importance in towns throughout the country. They are the beating hearts of communities and form an intrinsic part of the social fabric of our cities, villages and communities. I know that, in joining this debate, all Members will be thinking of their own constituencies and the many conversations that they will have had with people there about—and often standing on—their local high street. I also know from speaking to my own constituents in rural West Sussex that there are legitimate concerns about the decline of our high streets, especially among vulnerable, elderly or isolated people who rely so heavily on what the high street provides. Let me therefore say at the outset that the Government recognise the vital role that the high streets play in society, and that we are implementing policies and directing resources toward protecting them, because that is the right thing to do.

I am proud to be part of a Government that are providing long-term, enduring support. How are we doing that? We are doing so through a combination of direct funding, tax cuts and legislation. The Government have provided a comprehensive package of around £400 billion of direct support. The towns fund and the levelling-up fund are together investing £8 billion in regenerating local communities and high streets. In May 2022 we introduced the Levelling-up and Regeneration Bill, bringing in new legislation to introduce high street rental auctions that will tackle decline by bringing vacant units back into use. We sometimes refer to them as the broken teeth of our high streets, and it is welcome that these measures are being put forward. Just months later, at the 2022 autumn statement, we announced a package of business rate support worth £13.6 billion, including an increased 75% relief for retail hospitality and leisure properties. If the hon. Lady’s constituency is anything like mine, that will have been a lifeline for so many small businesses on the high street. Under this policy, businesses can claim up to £110,000 each in 2023-24. It is a tax cut worth over £2 billion for more than 200,000 local businesses.

I am here as the City Minister to respond to the hon. Lady’s specific point about the closure of local bank branches and how this impacts the high street—I accept that it does. The difficult fact is that the way people are banking is changing. Innovation has led to more online banking, which for many—not all—is more convenient and quicker than banking in branch. It liberates people and allows them to work at different times of the day or night, or perhaps to juggle childcare responsibilities, because banks were never always open. We know that anecdotally, as well as from the data. The industry body UK Finance found in 2021—that is already some time ago—that 86% of UK adults made contactless payments, 72% banked online and 57% banked on their mobile phone. That is not just young people; the latest data shows that more than 70% of people aged over 65 use online banking. We should not be dismissive of the so-called silver surfers. None of that is to deny the fact that there are significant minorities that are excluded from those figures.

In that context, local bank branches are simply receiving fewer visitors than they once did, and I think it is incumbent on all Members to recognise, as the hon. Lady did, that banks and building societies have difficult decisions to make about how best to provide services to those who need them and to support communities. Members should also recognise—this is certainly the view on this side of the House, although I respect other views on the matter—that it is not the role of the Government to intervene in these decisions; nor do we have the powers to do so.

The hon. Lady gave the example of the Barclays branch closing in Talbot Green. According to Barclays—I am not here to defend its actions in any way, but we should look at the data—91% of the people who used that branch also banked using alternative means. Only 35 customers used that bank regularly as their only way to do banking. So although bank branches are an important part of the community, we need to be careful that we do not follow the behaviour of our constituents rather than leading it or maintaining it.

I will come on to the measures that the Government are taking in the Financial Services and Markets Bill—with, I think, the broad support of the House. I am very concerned about access to cash, and we are legislating on that. I took the liberty of looking at the hon. Lady’s constituency, and according to Link there are 97 cash machines there, more than three quarters of which are free to use. Those are probably the ones that we all care about most on behalf of our constituents. That is a substantial number, offering people at least the ability to access cash.

The hon. Member for Strangford (Jim Shannon) mentioned credit unions. The Government support the credit union sector in order to have a greater diversity of provision. The Smart Money Cymru and Dragonsavers credit union both serve the constituents of Pontypridd, and I salute them. This Government will do whatever we can to improve the viability of the credit union model and ensure that we have appropriate, proportionate regulation that promotes the growth of credit unions and the mutual sector more generally.

Some 99% of personal banking customers and 95% of business banking customers—this is measured by the relationship with the banks with which they do business—can do their banking, although not all of it, at one of the more than 11,500 post office branches across the country. While I understand that that will not always be the perfect answer, that is a substantial lifeline for banking services. It also puts a substantial amount of revenue into the Post Office business, and if we do not make a success of it, we might be sitting here on another evening having another debate about the loss of post offices in our communities.

[Matt Rodda]

The Minister may be interested to know that the issue in my constituency was with the Nationwide building society, with many of its members unable to use the post office, which affected thousands of people.

[Andrew Griffith]

I thank the hon. Member, as I thank all hon. Members for their contributions to the debate. The issue we are debating is why we have urged all banks seeking to close branches to examine the Financial Conduct Authority’s guidance to ensure that, when they do make closures, they carefully consider the impact. I hope that those procedures have been followed in the case of the hon. Member for Pontypridd, and I encourage her to contact the FCA if she is concerned. Where firms fall short of expectations, the FCA can and will ask for closures to be paused.

We are taking strong steps on access to cash. We must not impede innovation. People and businesses are embracing the benefits of new services. Some small micro-services are benefiting, and some female entrepreneurs are setting up businesses without the overhead of having to have access to cash. Many people do like to tap and go, so that flexibility is important. As I mentioned earlier—the hon. Lady was also kind enough to mention it—the Financial Services and Markets Bill will protect access to cash, both withdrawals and deposits, because that gives businesses the confidence to take cash safe in the knowledge that they can deposit it, hopefully not too far away. It will be the first time since the ancient Celts first started minting coins in this realm that there will be a statutory right to access to cash.

I must not digress, but I recently visited the Royal Mint in Wales—