Community Bank Closures

Phil Wilson Excerpts

Thursday 8th February 2018 Commons Chamber

[Phil Wilson (Sedgefield) (Lab)]

I congratulate my hon. Friend the Member for Stoke-on-Trent North (Ruth Smeeth) and the hon. Member for Hazel Grove (Mr Wragg) on securing the debate.

At the end of June, four bank branches will close in my constituency of Sedgefield. NatWest is closing two branches, one in Ferryhill and one in Newton Aycliffe, Santander is to close its branch in Newton Aycliffe, which is just across the street from the NatWest branch that is to close, and Barclays is to close its branch in Sedgefield village. This recent round of closures will deprive every community in my constituency of a bank branch except Newton Aycliffe, which will still have a Halifax, a Barclays and a TSB. It is the biggest town in the constituency, with about 30,000 people living there. The local post office still operates in these communities and offers banking facilities, but it is hardly the place to discuss banking issues such as mortgages or loans. Sedgefield is a rural constituency, with up to 40 towns, villages and hamlets over 150 square miles. The bus network is not what it should be and it is difficult to get around without a car or other means of transport.

Much banking is now done online, on a mobile app, or on the telephone, but there are still those in our communities who need to be able to walk into their local bank branch because they are not online or do not have access to a telephone or mobile, especially the elderly. I know that the banks that are closing branches in my constituency say that they recognise those concerns. NatWest, for example, has a network of community bankers—I believe the number is 1,000—around the country who will be deployed to reach out to and support vulnerable customers when a branch is closed.

All the banks have pointed out to me that how people do their banking has changed radically over the past few years. NatWest told me that the number of people using its branch network has fallen by 40% since 2014. In the same period, mobile transactions have increased by 73% and, in the first half of 2017, 1.1 billion mobile and online transactions were carried out by the bank’s customers. Since 2012, in the two NatWest branches in my constituency, 88% of the customers in Ferryhill and 89% of the customers in Newton Aycliffe have banked in other ways. Transactions at the Ferryhill branch have fallen by 30% and at Newton Aycliffe the figure was 34%. The number of customers using both branches has fallen to between 60 and 100 a week, although whenever I speak to customers who use the branches they always say that there are queues and that they are busy. The reality for customers seems to be completely different from the statistics revealed by the branch. It is a similar story with Santander in Newton Aycliffe. Santander says that 91% of customers use other means of banking besides walking into the local branch. Some 45% use other Santander branches and 40% use their mobiles to do online banking.

I used to live near Sedgefield village, and I can always remember there being a Barclays bank there. I asked how long a branch had been there and was told that there had been a Barclays in that same building in Sedgefield for nearly 100 years. Now, Barclays says that 74% of its customers use other forms of banking. Of 5,000 customers, 22% use the branch exclusively for their banking. Barclays has identified 200 people it considers vulnerable and tells me that it is proactively contacting them to help with their future banking needs. Overall, the number of transactions at the branch has fallen by 17%, whereas in the wider region the fall has been 12%.

Banks such as Barclays, NatWest and others that are closing branches should report how many vulnerable customers they have been able to retain or how many have gone on to other banking mechanisms and systems, to ensure that they are not financially excluded. If they did that, we would be able to take a snapshot of how many people are becoming financially excluded because of closures.

[Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)]

The hon. Gentleman is giving a fine speech. Does he agree that the large number of closures throughout the United Kingdom have badly affected elderly constituents and those who are disabled? Soon, there will be no banks within large radiuses around most of our towns and people will resort to putting money under the bed again, just as they had to do in my grandmother’s day. The humanity has gone out of banking.

[Phil Wilson]

The hon. Lady makes a valid point. There has to be a social conscience in banking, and it should not just be for the public sector to sort out. The private sector has to be part of it.

We cannot deny the growing trend in banking being done online and by mobile phone and telephone. Barclays pointed out to me that on average its customers use mobile banking more than 28 times a month and visit a branch less than twice a month. The bank carries out 12 digital transactions a second and, since 2014, has started to use video banking.

The way we bank is changing, and it is not just a UK phenomenon; it is happening across mainland Europe, too. According to data from the House of Commons Library, by the end of 2016, the number of bank branches in Germany had fallen to something like 32,000, which was a reduction of nearly 6% on the year before. In France, where there has been more robust opposition to branch closures—apparently, it is more difficult to close branches in France than elsewhere—Société Générale has announced the closure of 20% of its branch network by 2020. That bank is going to close one in five branches. However, the French bank branch network is still extensive, with six branches per 10,000 head of population, which I believe is the highest proportion in the EU. In Spain, 10,000 branches were closed between 2012 and 2016. Banking is changing, driven by technology that is obviously convenient to the vast majority of customers.

I would like the Minister to address two areas of concern. First, what more can the Government do and what work are they undertaking with the financial sector to encourage banks to look after their vulnerable customers so that they are not left behind? There is also a wider concern. Rural areas, such as County Durham, are seeing the destruction of rural bus services and there are issues with whether broadband provision is sufficient to allow customers to access the internet and therefore access online banking in the first place.

Secondly, the closure of bank branches highlights a key problem that faces our town centres. For example, the future of Newton Aycliffe town centre has been controversial for many years. Although Freshwater, the shopping centre’s owner, has invested in the centre and won awards for its efforts, the closure of two bank branches will only add to the number of already vacant shops. This is not a story reserved for Newton Aycliffe; it is true of town centres throughout the country. Town centres need to be more leisure-focused, with bars, restaurants and coffee shops, as retail moves online, where people are more likely to shop—with Amazon being a case in point. As a consequence, we see many retailers quitting jobs and issuing profit warnings. I make this request to the banking sector: look at how you can change your offer on the high street; look at how you can make the physical bank presence more affordable and more accessible; and look at whether there is a way to merge banking with leisure, such as, for example, placing bank branches within a café.

The closure of banks does not happen in isolation. It affects vulnerable people, it affects our town centres and it affects our communities and their way of life. The banks must remember that, although there is a trend with new technology towards online banking, other people can be left behind; and there is a life that is offline as well as online. All I ask is for the banks to think creatively, because they, too, have a social obligation to their customers, not just to their bottom line.

--- Later in debate ---

[Ruth Smeeth]

I thank the Minister for his response. I have a great deal of respect for him, and I wish him more luck with Lloyds tomorrow than I had. We need more clarity on a few issues, and the emphasis should be on the banking sector to resolve them, but if they will not act—so far, they have not—the Government and Parliament will have to act to hold them to account. The banks are not being imaginative, so we may have to make them.

The first issue is with LINK and access to ATMs. While I welcome the new announcement and what that may mean for access, the evidence suggests that 3,500 ATMs may close. Given what we are already seeing, that could be a challenge, so I urge the Minister to consider that more closely in addition to using the post office network. Colleagues across the House have agreed that face-to-face, personal contact is vital, and the post office network, while helpful, does not currently provide what we need from it. We also need to start talking about public transport infrastructure, so that people can access alternatives.

I thank the Minister for the debate and look forward to working with him on this issue.

Question put and agreed to.

Resolved,

That this House recognises the vital importance of community-based banking; believes that national banks have a responsibility to their customers; is concerned about the effect of branch closure announcements by Lloyds Bank, RBS/Nat West, Santander, Yorkshire Building Society and the Co-operative Bank; and calls on the Government to support measures to protect access to banking services in local communities in the UK.

[Phil Wilson (Sedgefield) (Lab)]

On a point of order, Madam Deputy Speaker. On 17 January, in moving my ten-minute rule Bill on tightening the regulations on private landlords, I should have declared that my wife owns two houses that she lets out. I regret that oversight, and I take this opportunity to correct the record.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I thank the hon. Gentleman for putting his point on the record.