Financial Services (South-east London)

Nick Raynsford Excerpts

Friday 18th March 2011 Commons Chamber

[Mr Nick Raynsford (Greenwich and Woolwich) (Lab)]

I am grateful for this opportunity to raise concerns shared widely across south-east London about the threatened closure of a large number of Nationwide branch offices. That is part of an even wider programme of branch office closures by Nationwide that will impact on many other areas, but the scale and nature of the closures in south-east London are particularly extreme and have aroused substantial anger and concern. I am pleased to have the support this afternoon of my constituency neighbours, my right hon. Friend the Member for Lewisham, Deptford (Joan Ruddock) and my hon. Friend the Member for Lewisham East (Heidi Alexander), whose constituents will also be seriously affected by the closures. I am sure that they will add their comments in so far as time allows.

Before getting into the details of what is happening, let me make it quite clear at the outset that the debate is not just a knee-jerk reaction to the threatened closure of one or two local branches. Like my right hon. and hon. Friends, I fully understand that any organisation operating on Nationwide’s scale must review from time to time the viability of its branch network in the light of changing demographics and trading patterns. We are not arguing for preserving the full existing network of branches in aspic. Change is inevitable, but what is not inevitable and is particularly shocking about Nationwide’s proposal is the closure of every single branch in inner south-east London while all the outer south-east London branches remain unscathed.

I realise that we cannot use visual aids in the Chamber, but a quick look at the map would make clear the scale and enormity of Nationwide’s actions, and I ask the Minister and colleagues to try to visualise its proposals. All seven existing branches inside the south circular road in south-east London—Walworth road, Peckham, Lewisham, Catford, Blackheath, Greenwich and Woolwich—are to close. At the same time, all the branches outside the south circular road—Beckenham, Bromley, Petts Wood, Orpington, Sidcup, Eltham and Bexleyheath—are to stay open. That is quite simply a crude and discriminatory exercise in which the leafy suburbs are favoured while inner London is punished. Not only is that socially divisive, but it leaves a huge section of London without access to the branches of the largest surviving mutual building society.

I estimate that some 670,000 people live in the area affected by the closures—the whole population of the London boroughs of Southwark and Lewisham and two thirds of the population of the London borough of Greenwich. Putting this in perspective, this is more than the entire population of a large city such as Sheffield or Manchester. Suggesting that an organisation calling itself Nationwide should entirely pull out of Manchester or Sheffield would be self-evidently extraordinary, but that is precisely what it is doing in inner south-east London.

Not surprisingly, this has provoked a great deal of anger and concern. Constituents who have contacted me as well as Nationwide have made their views very clear. Mr Daly from Woolwich writes to say:

“The suggested alternative Nationwide branches to Woolwich are Eltham and Bexleyheath which are not easy journeys, especially by public transport. The decision in respect of the Woolwich branch I find baffling as it is always busy and I don't see how closure of this branch can be justified”.

Mr Aldous from Blackheath says:

“Does the Nationwide as a mutual not have a moral obligation to the inner suburbs, where the presence of mutuals can help economic renaissance? Does the Nationwide, as a mutual, not have an obligation at least to consult its members in a timely and meaningful way before taking such a drastic decision?”

Mr Kidley of Westcombe Park writes:

“It rather looks as if someone drew a five mile circle around my house and decided to close all branches inside the circle. I can understand that the Blackheath branch could be replaced by Lewisham and Greenwich for most people, though I will miss the very helpful staff at Blackheath. I really cannot see how it makes sense to close the Greenwich and Lewisham branches, both of which are local transport hubs, easily reached from much of South East London. I can only assume that Nationwide is no longer much interested in South East London business”.

Mr Reader from Greenwich writes:

“I find this decision completely unacceptable by a major branch. I could stomach closure of my branch, but to close my next nearest six branches as well defies logic. I would ask that you contact the Nationwide and ask that they reconsider and show more respect for South East London customers, staff and local communities”.

That is precisely what I did, but when I met Mr Matthew Wyles, the group distribution director of Nationwide, on 1 March, the response was frankly shocking. Nationwide was clearly unwilling to reconsider its decision and showed little or no concern for the interests of its customers. When it suggested that none of the seven inner south-east London branches was economically sustainable, I pointed out that this might reflect on how Nationwide was running its business, as it seemed inconceivable to me that a major financial institution could not make a single branch viable in such a large and diverse area. Mr Wyles responded by saying:

“I can’t explain it to you because I myself can’t understand the reason”.

Nationwide’s behaviour is all the more extraordinary when one looks into the history of the various branches. Some were opened relatively recently. Indeed the Nationwide chief executive, Graham Beale, boasted less than four years ago when opening the Woolwich branch:

“The branch is in a central location and is a prime example of the investment and commitment Nationwide has in its branch network”.

I expect he regrets these comments now. He probably also regrets the fact that these closures come at a time when Nationwide is running a high-profile advertising campaign, including the lines:

“With no shareholders our only focus is you. Talk to the mortgage experts. Ask in branch”.

This is frankly adding insult to injury to the residents of inner south-east London who unless Nationwide reconsiders will be left with no branches to visit.

By contrast with the recently opened Woolwich branch, the Greenwich branch has a long and distinguished history. Originally it belonged to the Greenwich building society, which when established in 1809—more than 200 years ago—was the first recorded building society in London. In the 1990s, as consolidation occurred throughout the sector, the Greenwich building society merged with the Portman building society, which in time was absorbed by Nationwide. That long history of serving the community that I am proud to represent is now being snuffed out without any serious exploration of options to keep at least some of the local branches open.

What is particularly galling about this sad process is that Nationwide had its origins as the Co-operative building society, and continues to proclaim its commitments to mutuality. Indeed the advertisement to which I have referred uses the strap line, “Proud to be different”. The cynic might say that Nationwide will certainly be different from other banks, if it no longer has any branches in inner south-east London, but that is hardly something to be proud of. It is sadly reminiscent of that unhappy period in the 1970s when mortgage lenders had a tendency to “red line” inner-city communities that they regarded as undesirable and refused home purchase finance in those areas.

Those practices are now largely confined to the dustbin; indeed American experience has shown that many supposedly impoverished inner-city areas can be profitable locations for financial institutions to work in. The position in the US is helped by the Community Reinvestment Act, which imposes an obligation on banks to demonstrate that they are adequately serving low and middle-income communities. Will the Minister give some attention to whether similar obligations might be considered in the British context, if financial institutions disregard the interests of their inner-city customers?

I would also appreciate the Minister’s thoughts on how the objectives set out in the coalition agreement to

“protect consumers, particularly the most vulnerable”

and

“to promote more responsible corporate and consumer behaviour”

might be applied in the context of Nationwide’s actions. Specifically, I draw his attention to the commitment in the agreement to

“bring forward measures to enhance customer service in the private and public sectors”.

Unless Nationwide accepts that it is making a serious mistake and agrees to consult its customers further on options to maintain access to some branches in the area, it will stand accused of walking away from the inner city, from its history, and from social and economic responsibility. It will be a sad epitaph to the long, proud history of mutuality in the financial sector.