Banks and Communities

Mike Gapes Excerpts

Thursday 11th January 2018 Westminster Hall

[Martin Whitfield]

Absolutely. I thank my hon. Friend for that intervention. There is a serious question to be asked about which communities the banks are changing their model of banking for. Is it for the most vulnerable? Is it those who are stuck on the wrong side of the digital divide? Certainly the evidence shows that bank closures have hit hardest in communities that have below average incomes.

Banks are and should be a trustworthy pillar of any community. They should stand proudly on our high streets as responsible hubs, along with post offices, GP and dental surgeries and the high street shops that draw constituents into their community. Recent figures from Unite have shown that the proposed closures of 62 branches will lead to 165 job losses. That is devastating for small communities, but we hear that the losses will be offset by the shifting of jobs to head office and call centres. However, the people losing their jobs are of course predominantly women responsible for families, who are unable to make long journeys to different areas. Are they being asked to move out of their communities? The change in banking models affects vulnerable customers most, with 90% of closures taking place in communities where the income is below the national average.

Members will recognise that the model being advocated by the banks is one in which few industries operate. They are founded on so little face-to-face contact, with such limited real-time relationship between consumers and the organisation, that they represent something more like social media network platforms. I wonder whether in fact the banking industry seeks to move to the Twitter and Facebook models. The relationship of trust that once existed between the bank manager and the individual is in serious danger of being lost to an algorithmic financial model.

I hope that my speech will not lead Members to think I am being luddite about digital reform. I embrace it, and what I am saying is as much as anything friendly advice to the banks, but I cannot envisage, with so many still not using online services, that we should continue dogmatically to push through changes to people’s accounts, affecting such large groups of people. Social media platforms had their users come to them; banks seek to migrate their customers onto their digital platforms. The trust that the banks have had and have treasured so much throughout their and their community’s history is at risk.

As I have made clear, the purpose of today’s debate is not just for the people I serve to hear the Government condemn bank closures. They want to hear how the Government can keep banks at the heart of communities and facilitate genuine discussion so that banking institutions can rediscover the value of the close link that they have had throughout their history with the communities that entrust them with their money—which, indeed, the banks used to invest elsewhere. Very recently the banks looked to those communities to save them and the financial engine, and communities stepped up. Communities are now looking to the banks to save the high streets and the bond of trust that is the cornerstone of the relationship. We need a social responsibility clause so that members of the communities to which our banks belong can have an integral and valued role, and trust can once again be established.

[Mike Gapes (in the Chair)]

I am afraid we have limited time for the debate and I strongly advise that speeches should be no longer than four minutes, or we shall not have enough time for the Minister and the Opposition spokespersons. I intend to move to the Front-Bench speeches at about 4 o’clock, so I should be grateful if, as far as possible, interventions could be limited and speeches concise.

--- Later in debate ---

[John Glen]

I will come in a moment to express where the intervention can take place and where that responsibility lies, but first I want to refer to some of the cases made in the debate.

The hon. Member for East Lothian referred to a bank branch closure where the nearest branch is 12 miles away, but there is a Lloyds bank within walking distance. I also want to refer to the point—[Interruption.] It is important that I try to respond to some of the points made, so let me progress. He and another hon. Member made the point about cash deposits at post offices. All post offices can take cash deposits up to £2,000, which covers 95% of transactions, but arrangements can be made by a bank with a post office should customers wish regularly to deposit more.

My hon. Friend the Member for Ochil and South Perthshire (Luke Graham) intervened and talked about the branch in Alloa. There is a Yorkshire Building Society bank within walking distance. In Kinross, there is a TSB within walking distance. I would encourage constituents to vote with their feet. I may be destroying shareholder value in RBS and therefore the Government, but we should make clear where there are alternatives, because they do exist. The hon. Member for Argyll and Bute (Brendan O'Hara) referred to closures in his constituency—I think it was Campbeltown. There is a Halifax branch within walking distance. In Rothesay, there is a TSB within walking distance—[Interruption.] I can concede—I am not going to give way, I have very limited time.

[Mike Gapes (in the Chair)]

Order. I would be grateful if Members did not shout. We have limited time and the Minister should be allowed to respond without being shouted at.

[John Glen]

Thank you, Mr Gapes. If I am going to get through and give some detail, I need to press on. The point I am making is that, in a number of cases, alternatives are available. I want to make that clear—it needs to be made clear by us to our constituents.

The hon. Member for Bishop Auckland (Helen Goodman) and another hon. Member made a constructive suggestion about shared premises. That is obviously a decision for individual banks to consider, but through the office that I hold I would encourage the industry to think creatively about how banks can continue to serve their customers and minimise the impact of bank closures. Those are certainly conversations that I will take forward in my engagement with the industry.

Let me get back to the script, as it were, and try to make some progress so that I can address some of the issues that have been raised.

--- Later in debate ---

[Martin Whitfield]

I am grateful to the Minister. In the short time we have left, I express my thanks to the hon. Member for Stirling (Stephen Kerr) for being the first co-sponsor for this debate. We have had an interesting debate—

[Mike Gapes (in the Chair)]

Order.