Access to Banking: Devon

Simon Jupp Excerpts

Wednesday 24th April 2024 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Aaron Bell.)7.3 pm

[Simon Jupp (East Devon) (Con)]

I am delighted to have secured this important Adjournment debate on access to banking services and banking hubs in Devon. I welcome the Minister and colleagues to the debate.

Take a quick stroll down your nearest high street, Mr Deputy Speaker, and you will notice that there are fewer bank branches than there were in years gone by—far fewer. In 1992 there were 19,000 bank and building society branches in the UK. In 2022 the number of bank and building society branches had fallen from 19,000 to 8,000. That decline has not happened more quickly on any particular Government’s watch: the fall has been consistent and steady over the past 30 years. However, we have reached a tipping point; bank branches are getting scarce.

We notice when bank branches are gone altogether from our high streets. People cannot deposit cash or pay in cheques; businesses and charities cannot pop to the branch to refill their tills or bank their takings at the end of the day; and we no longer have friendly faces to talk to for financial advice. When bank branches are gone, people have to travel miles to apply for a loan or to arrange third-party access to start bereavement proceedings, for example. People tell me that when those branches are gone, managing their money becomes more difficult, if not impossible. People in my constituency travel to cities and towns such as Exeter or Honiton for their nearest branch. Every time a bank decides to shut its high street branch, my postbag fills up. I share those people’s frustration—I get it.

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Member for securing the debate on this massive issue. Does he agree that banks’ abdication of their responsibilities to rural communities, which often have the worst transport, infrastructure and broadband connections, cannot be paved over with a users’ guide to online banking? At the very least, a hub that is accessible throughout the day and in the evening must be the minimum standard of service that any national bank must be required to provide for its customers.

[Simon Jupp]

The hon. Gentleman is absolutely right. I personally would benefit from a “how to bank online” guide, because it can be quite confusing, even for someone who is relatively technical. I thank him for his point.

It is not enough to say that bank branch closures are commercial decisions. Yes, the Government cannot intervene, and nor can I as an MP stop bank branches from closing, as much as I try. But we have reached a tipping point where enough is enough. Banks must provide core services to loyal customers on our high streets and stop washing their hands of their customers’ needs.

The banks claim that their branches on our high streets are increasingly outdated: they say that more customers are moving online and going cashless. That is broadly true, but it is not an excuse simply to pull up sticks and disappear. In fact, I believe that bank branch closures across the UK are forcing people to change their habits, but people still need access to cash and face-to-face banking services—the demand is definitely still there. To give a couple of statistics, 27% of over-65s and 58% of over-85s rely on face-to-face banking. Some among the older generation are not technophobes. In fact, they may have valid reasons for not wanting to do online banking. According to research by Age UK, fear of being defrauded and a lack of IT skills are common reasons why many people prefer face-to-face banking.

If the need for face-to-face banking is still there, what is the solution? That brings me to the second part of my speech.

[Mrs Pauline Latham (Mid Derbyshire) (Con)]

My constituency has a banking hub in Belper, which has become a lifeline for businesses on the high street, particularly small businesses, because they can access cash and pay cash in. I encourage my hon. Friend to keep campaigning for a banking hub, because they help every section of society: older people, younger people and businesses. That banking hub has rejuvenated the high street in Belper.

[Simon Jupp]

I thank my hon. Friend for her intervention. It is almost as if she knew what I was about to say, because I was about to move on to the topic of banking hubs, which are a relatively new concept. I think of them as shared banking spaces: they look a bit like a traditional bank branch, but unlike a traditional branch, those hubs are available to everyone. They offer counter services: customers from any bank can withdraw and deposit cash, collect change, deposit cheques, pay bills and make balance inquiries. They also offer private spaces for specific banks, where customers can speak to someone from their own bank or building society about more complex issues such as mortgages, loans and pensions. That is not really something that people want to do online.

Banking hubs are an industry-led solution to the demise of physical branches, but the Government have been clear that the delivery of hubs must speed up. They have done important work to legislate to protect access to cash, not least through the Financial Services and Markets Act 2023. I look forward to hearing the Minister’s remarks in this debate and hope to hear about the progress being made in rolling out more banking hubs across the country. I know that he has had discussions with UK high street banks, and has also held roundtables with industry and MPs about banking hubs.

As East Devon’s MP, I have been holding meetings locally to see how we can set up banking hubs in the constituency. Last year I launched a local campaign. Lloyds in Sidmouth, the last bank in town, was going to shut its doors. That is where I live, and local residents and I wanted to send a clear message to the banks that they should staff a banking hub in Sidmouth. Hundreds of people got in touch through my survey and the results were quite startling: 81% of residents who responded said they had visited a bank branch in the past six months, and 96% said they wanted staff from their own bank in the hub. On the question in my survey:

“What is the most common way that you access banking services”,

46% said:

“In branch or in person”,

while 52% said “Online” and only 2% said “Telephone”. My survey showed a clear demand for face-to-face banking, and the need for a banking hub in Sidmouth.

Here is what some local residents told me when Lloyds announced it was closing its branch in Sidmouth. Mary said:

“We wonder why it is Sidmouth, with all the holiday crowds, folk festivals, regatta and jazz festivals that the last bank is set to close. There seems to be no logic. Do these decision makers have a rusty old pin they use to decide which banks stay and which goes?”

Susan told me:

“I am very upset to discover Lloyds bank is closing. I wonder what customers are supposed to do when they need paperwork either for power of attorney or closure of accounts after a death?”

Pauline told me:

“I very nearly got scammed. I am not technology minded and do not bank online. I received a very convincing text message which resulted in my going to my bank to make a payment. If it wasn’t for the lady I spoke to in the bank I would have had my account wiped clean. She was very much on the ball, so I was saved. This shows the importance of having a bank in Sidmouth.”

Local residents such as Mary, Susan and Pauline were delighted when Sidmouth’s banking hub opened its doors last month. It has been very popular, but is it perfect? No—although I would like to pay tribute to the staff, who are fantastic—because it is not yet quite what the town needs, because it needs a cashpoint. It needs to have a 24/7 ATM available outside, with a printer so that residents can get mini-statements, as well as a trial of Saturday opening hours if at all possible. However, I want to thank the team at Cash Access UK and the building contractors for getting the hub up and running so successfully before Lloyds closed its doors. I was also pleased to visit Axminster’s banking hub when it opened. I heard feedback from local residents and businesses about how important it is for that town. More banking hubs such as the ones in Sidmouth and Axminster are needed in Devon, and I want to put that firmly on the record in today’s debate.

I am currently working with local communities to try to get banking hubs in towns such as Exmouth, Budleigh Salterton and Ottery St Mary. Exmouth, the largest town in Devon, will need a banking hub sooner rather than later, and I have already made the case for one. Halifax’s branch in the town will close this summer, which will leave just three banks remaining in Exmouth.

The case for a banking hub in Budleigh Salterton is also strong. It has been without a high street bank due to closures in recent years. The last bank in town, Lloyds, closed in January 2019. The town’s population is significantly older than the national average. Local residents and businesses have only the post office and the Co-op to access over-the-counter banking services. I have seen the queues, and it is not great, although it is a small shop and the staff work incredibly hard. That is why I have made a formal request for a banking hub, alongside a local councillor, Henry Riddell.

I know the Government want the delivery of banking hubs to be sped up, and I hope that Exmouth, Budleigh Salterton and Ottery St Mary will be in line for banking hubs too. I would cite these examples as to where a problem lies. I believe the criteria for whether an area should get a banking hub must be relaxed, because the bar is far too high at the moment. Generally, in order to get a banking hub a town needs 7,000 people within 1 km of the centre and at least 70 retailers. It also needs there to be no banks at all—in other words, the last bank in town must be closing or already have closed. Too often it takes the last bank in town to shut before the industry gets its act together and opens a banking hub.

On this point, Exmouth will not get a banking hub under the current criteria until 2028. Nationwide told me when I visited last week that it will keep its Rolle Street branch open until at least 2028. I of course welcome that commitment by Nationwide, which is playing fair by the high streets, but that commitment in effect means that a banking hub will not open in Exmouth while the branch remains, which makes no sense to me. We have to consider the size of Exmouth, and we also have to consider the number of banks the town used to have. We do need to look again at the criteria and to lower the bar.

I recently co-signed a letter from my hon. Friend the Member for Hertford and Stortford (Julie Marson) to the Financial Conduct Authority to unlock more banking hubs. The FCA will decide on new rules in the third quarter of this year, and I will be watching that like a hawk. This could be an important turning point, so that even more banking hubs can open. As I have said, more banking hubs such as those in Sidmouth and Axminster are badly needed in my part of Devon. People should be able to access banking services on our high streets.

I am delighted to have secured today’s debate and look forward to hearing the Minister’s remarks.