Local Bank Closures

Stephen Kerr Excerpts

Wednesday 12th June 2019 Westminster Hall

[Douglas Ross (Moray) (Con)]

I beg to move,

That this House has considered the Government response when the closure of the last local bank is proposed.

It is a pleasure to serve under your chairmanship, Ms Ryan. I am delighted to have secured this debate, because the closure of our local bank branches in Moray has been an issue of significant concern for some time. I want to start with a roll call. Since 2015, we have seen 16 bank closures in the following towns in Moray: Cullen, Dufftown, two in Aberlour, three in Keith, two in Buckie, Elgin, a further two in Lossiemouth, two in Forres, Burghead and Fochabers. Those bank closures have affected communities in the north, east, south and west of Moray—no part of our area has been unaffected. The issue continues, with growing frustration for my constituents in Moray and constituents across Scotland and the UK.

In the UK, bank branches have reduced from 11,365 in 2007 to just 7,207 10 years later. In Scotland, between 2010 and 2018, a significant number of branches closed. RBS reduced its branch network by 70%, Clydesdale bank by 53% and Santander by 42%. Which? estimates that there are 130 communities in Scotland alone that are described as cash deserts. That means they do not have access to either a local bank branch or an ATM.

The banks have their reasons for doing this. They explain that footfall is decreasing, that more people are taking up online banking and that people can use different methods to deal with their banking needs. I disagree with that for a number of reasons, but an email I received from a constituent summed it up perfectly. The constituent comes from Portknockie, and wrote:

“I support you in calling banks to account. We know that bank closures in Moray have been severe and that banks have not even followed their own protocols when closing branches.”

She continued:

“I use online banking and am fortunate to have both the skills and fast broadband which make this possible, but I think that it is wrong that banks are acting on the assumption that everyone has these and increasingly that they have smartphones and good mobile signals. I have a smartphone but the mobile signal where I live in Portknockie is so poor that SSE were unable to install a smart meter.”

Yes, the banks do have many reasons for suggesting that these closures are the right way forward, but I believe that this constituent and many more who contacted me ahead of this debate are absolutely right. People are not unaffected by these closures. A large number of people in our communities either do not have access to fast broadband, to allow mobile banking, or simply do not want to use it, but wish to continue the face-to-face contact that they value with their banks.

[Stephen Kerr (Stirling) (Con)]

I congratulate my hon. Friend on securing this debate. His constituent also raised the question of the procedures and processes that banks go through before they disengage with a community. In the experience of my constituents and my own experience in Bridge of Allan, that is a tick-box exercise and nothing more.

--- Later in debate ---

[Stephen Kerr]

The key thing is that post offices have to be financially viable. If they are to take on more services, they have to be able to make a living from them. That is a fundamental challenge to the existence of many sub-post offices.

[Douglas Ross]

I agree wholeheartedly. That is an issue for the Government, but not for the Minister; I know that the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Rochester and Strood (Kelly Tolhurst), has been discussing it. I want our post offices to be rewarded for doing the tasks that the banks are currently doing, because they are not being rewarded at the same level as banks for the jobs that they do.

My final point about closures goes back to the figures on footfall. In Lossiemouth, we have been told, “Your nearest branch is in Elgin, which is not too far away.” It is not far away in mileage, but getting there can be quite difficult because our bus services are not as good as they once were. People are expected to get the bus from Lossiemouth into Elgin, but ironically the branch there is not as accessible: people cannot park very easily on the high street, so they have to pay to use a car park and then troop round to the bank. Customers of the same bank used to go from Elgin to Lossiemouth because it was easier to park outside, and now we have closed the branch that they actually wanted to go to. Again, that shows how ill thought-out these plans are.

I know that many hon. Members want to speak in this debate, but I will just highlight access to cash. I have already mentioned the scenario in Lossiemouth where there was no cash available over the weekend. There has been a decline in the use of cash, but research undertaken in 2018 showed that 73% of people used cash frequently—that means once or twice a week.

The next figure that I will cite is interesting: 60% of 18 to 24-year-olds use cash frequently—again, that is once or twice a week. I am looking around me in Westminster Hall; before my hon. Friend the Member for Angus (Kirstene Hair) came in, I thought I was the youngest Member here, but she has beaten me to it. My hon. Friend the Member for East Renfrewshire (Paul Masterton) may have a complaint to make about that. Generally, we think that younger people—those in their thirties, or younger—are more likely to use smartphones, other technology or contactless payment, but we are told that 60% of 18 to 24-year-olds still use cash. Access to cash is not just something that affects the older population; it affects everyone in our communities. Industry figures predict that in a decade’s time, cash will still be the second most popular payment method.

A further concern that was mentioned today in a press release from Which? is that 7 million people were unable to use a payment card last year because of IT glitches. We can encourage people to use different payment methods and move away from cash, but people will still be affected if there are IT glitches, and such problems sometimes cost them money. We need to bear in mind that in the last year, 7 million people were affected by IT glitches.

--- Later in debate ---

[Stephen Kerr (Stirling) (Con)]

It is a pleasure to serve under your chairmanship, Ms Ryan. I congratulate my hon. Friend the Member for Moray (Douglas Ross), who gave an excellent speech, logically and rationally explaining a situation that we face in many parts of the United Kingdom but which, speaking parochially, is very much an issue for Scotland. If my hon. Friend the Member for Waveney (Peter Aldous) thinks that people look at him strangely when he uses cash in London, I encourage him to try using a Royal Bank of Scotland £20 note. Recently I was refused the opportunity to spend my money in London—an issue that I took up with WH Smith. I got a good apology, which is only appropriate.

Since I was elected to this House, I have been involved in many campaigns to fight unwanted and unnecessary branch closures. In my constituency, Balfron, Bannockburn, Bridge of Allan and St Ninians have no bank branches at all, owing to recent branch closures, and Callander is down to its last branch. When a town is down to its last bank and that bank is threatened with closure, I strongly believe that it is right for the Government to act—and I say that as a Conservative Member of Parliament.

We had an anomalous situation in Bridge of Allan, which may be of interest. Clydesdale Bank and the Royal Bank of Scotland both closed their branches at the same time. Each bank justified its closure by citing the existence of the other branch. How ridiculous is that? They have now both closed leaving the people of Bridge of Allan without a bank branch, despite both banks stating that there would be one. That situation must not be allowed to happen. The Government must be prepared to act to remove that kind of justification, when two bank branches announce their closure at the same time. When Royal Bank of Scotland closed its Bannockburn branch, it justified it in terms of proximity to city centre premises—but guess what: it then moved those premises further from the customers. The branch in question happens to be very plush, but there are a few obstacles to getting there in the first place.

It is important that the consultation process that banks are required to go through should not just be a tick-box exercise. I am fearful that it is exactly that—a fait accompli from the point of announcement—and that any consultation is a completely pointless exercise. I might add that that could also be true when post office closures are announced. They are also, I think, nothing more than a tick-box exercise. I should like to hear from the Minister what the Government plan to do. I know him, and he is a very good fellow. There have been many representations, debates and speeches on the subject, and it is time for the Government to produce some kind of policy initiative, to do something about it.

The Treasury Committee has been referred to, and post offices are not a fair substitute for a branch of a bank. It is very unfair: many sub-postmasters in my constituency do not have the facilities or resources to become an alternative to the bank branch that once existed next door to them, or on the same street. It is not fair on the customers, or on the community that those branches served.

Another suggestion that has been made—and it is a fair one—concerns banking hubs. I strongly believe—as, I say again, a Conservative—that the banks should be encouraged, and perhaps more than encouraged, in the light of the earlier reference to carrots and sticks, to come together and fund the creation of a community banking hub. Perhaps that could be done in conjunction with the Post Office, but I do not think that just taking a laissez-faire approach to the facilities will hack it. The banks have said that the Post Office should be encouraged to take up the slack, and they have said they will support local post offices, but I asked one postmaster in my constituency what support the bank gave him when it moved out of town. He said, “I got a bundle of leaflets, so I could put them out on my counter.” That was the sum total of the support.

When bank branches are closed and the community is told that the banks will support it through local post offices, what is the mechanism for delivering that support? What positive encouragement is there for the bank to deliver on that? What will the Government do about the situations that I describe? Is it not time we came up with a policy to deal with the situation? I hope that the Minister will be able to describe fully what the Treasury will do—because this is not any old Minister of the Crown replying to the debate: he is a Treasury Minister, so we have great expectations. We need radical ideas now to make sure that vital banking and community services will be available across the villages and towns of Scotland and the whole United Kingdom. The Government have a role in enabling and supporting that, and a responsibility to do so. I urge them to do it.

I cannot sit down without mentioning the people of Dunblane, who were told they would have a mobile banking service for a few minutes every other week. That is not a replacement for a bank facility. However, it is the kind of support and recompense that communities have been offered by banks that have deserted them, although the people of this country were not slow to step up to the mark and bail them out of the mess they had made. My colleagues and I will not forget that in a hurry.