Face-to-Face Banking: Rural Areas

Sarah Dyke Excerpts

Tuesday 1st September 2026 Westminster Hall

[Sarah Dyke (Glastonbury and Somerton) (LD)]

It is a pleasure to serve with you in the chair, Mr Wishart. I congratulate my hon. Friend the Member for South Devon (Caroline Voaden) on securing this particularly important debate. The decline in face-to-face banking services is evident across the country—just visit any high street—but it is felt most acutely in rural areas. While the Government have taken steps to protect access to cash, protecting cash is not the same as protecting access to banking services. The number of bank and building society branches has declined dramatically, from 21,600 in 1986 to fewer than 6,900 in 2025, with more closures scheduled for 2026 and 2027. In rural areas, only 33% of people live within three miles of a bank branch, compared with 93% in urban areas. When bank branches are closed in rural market towns, it does not just inconvenience people, but can be the difference between a small business thriving and a small business failing.

[Wendy Chamberlain]

One of the problems we have experienced with the Link criteria is that the town is classed as urban by the Office for National Statistics, but is actually servicing a rural community. That mismatch means that some hubs are being missed out.

[Sarah Dyke]

I thank my hon. Friend for her intervention. She makes a very good point, which I wholeheartedly agree with.

Small businesses also suffer from bank closures because they are not able to deposit their takings, transfer money between accounts, manage fraud or get simple advice on opening a business account. This has a large impact on small businesses in rural areas. For local charities, closures can mean the difference between banking the proceeds of a coffee morning and not banking them at all.

This also demonstrates the impact of the rural premium that people in rural communities face when living their everyday lives. My constituency of Glastonbury and Somerton has felt the full consequences of the decline. Many market towns have lost all banking facilities already, and the Lloyds branch in Street is due to close next March. I have collected many signatures from concerned constituents who will be impacted by this change, and I have urged Lloyds—and will continue to do so—to reconsider the decision. I recognise that a community banking hub is expected to begin visiting Street from early 2027, and I welcome that effort to maintain some local presence of banking services, but let us be clear: a fortnightly visit from a community banker is not a substitute for a staffed bank branch. Of course, banking hubs and community bankers do have an important role to play, but they must be integrated as part of the conversation around banking services, rather than being the Government’s answer to it.

In addition, the Coventry Building Society branch in Wincanton will close in nine days’ time, leaving the town without any face-to-face banking services. Coventry Building Society has informed its members that they will be able to deposit their cash at their nearest branch in Frome, but that is a 40-mile round trip, so the closure will undoubtedly affect both rural local residents and local businesses, who will now need to make alternative arrangements.

[Jim Shannon]

Does the hon. Lady agree that there is something immoral about banks that make such exorbitant profits money closing branches and penalising their customers?

[Sarah Dyke]

The hon. Member makes a very good point. For people wishing to access banking services in Wincanton only the post office remains, despite the town’s continued growth, with more homes being built. Yet research from the Post Office found that 82% of consumers find it important to be able to access at least one in-person banking service, and the many small local and independent businesses that make Wincanton such a lovely market town will undoubtedly be inconvenienced.

In a rural county such as Somerset a significant number of businesses are SMEs: 78% employ fewer than five people. As the Countryside Alliance outlined earlier this year in its submission to the Treasury’s call for evidence on access to banking services, cash plays

“an important role across much of the rural economy.”

Business owners in rural areas are forced to travel further to bank their takings, deposit cash and obtain change. That reduces their productivity, increases fuel costs and adds to their administrative burden when they already operate on tight margins. SMEs, on average, deposit cash twice per month, but rural businesses may now postpone cashing in until they have more to deposit in order to avoid additional travel. However, that makes them more vulnerable to a growing rural crime epidemic. The total cost of rural crime in 2025 was estimated by the National Farmers Union Mutual to be £41.5 million, and increasingly sophisticated and organised gangs are operating in rural areas.

If rural economies are to thrive it is vital that rural businesses are not put at a disadvantage simply due to their location. That is why Liberal Democrats in the other place tabled an amendment to the Financial Services and Markets Bill that would require the Treasury to assess alternative frameworks, including the post office banking framework, for providing access to banking and cash services.

In many rural areas the post office network has become a lifeline. It is often the only local place to make cash withdrawals, deposits, and everyday banking transactions. During the summer recess I was delighted to support the reopening of two post offices in my constituency. Henstridge post office recently opened after local residents Lesley and Andy Scard and their neighbours Barry and Helen Howlett worked tirelessly to reopen the much-missed and much-needed community shop and post office. In Somerton the long-awaited post office has also returned, based inside the Stationery House, after Malcolm Adams stepped up and refurbished part of his shop to accommodate it. However, many local post offices are still under threat and we have seen closures recently in Butleigh and Charlton Adam.

Following last year’s Green Paper, the Government must commit to rural-proofing the post office and look at ways in which the post office can drive wider access to banking as part of the Treasury’s ongoing access to banking services review. Without adequate investment post offices cannot replace bank branches. Will the Minister commit to properly rural-proof the post office network so that postmasters are adequately resourced to take on the increased demand for local banking, rather than forced to absorb the cost when they are providing such a vital service?

The Liberal Democrats support the introduction of a fair banking Act to tackle financial exclusion. We have committed to the introduction of a national financial inclusion strategy that would require both the Financial Conduct Authority and the Prudential Regulation Authority to have regard for financial inclusion, such as by protecting access to cash in remote areas and supporting banking hubs.

Of course, the impact of bank closures is compounded by a deeper problem of digital exclusion. Across the country 1.7 million households have no broadband or mobile internet at home, around 2.4 million people cannot complete a single basic online task such as opening an internet browser, and over 5 million employed adults cannot complete essential digital tasks at work. Basic digital skills are set to become the UK’s largest skills gap by 2030. With the cost of living still biting, up to 1 million people have cut back or cancelled their internet packages altogether in the past year, while banks push them to access services online. In rural Somerset, patchy mobile signal and frustratingly slow broadband are not just an inconvenience; they are the difference between banking and not banking at all. Older and disabled residents, and those with visual impairments, are too often advised to download an app as if that were an appropriate solution; instead, it simply causes a further barrier.

Rural communities are not asking for special treatment or to be treated differently. They ask for a fair formula so that they are not left behind. Face-to-face banking, a functioning post office network and reliable connectivity are not luxuries; they are part of the basic infrastructure of rural life. Will the Minister commit to rural-proof banking policy and to bring forward without further delay a national financial inclusion strategy that genuinely supports rural communities? Unreliable access to face-to-face banking stymies economic growth and drives people and businesses out of rural communities. Somerset cannot wait, and neither can rural Britain.