Part of the debate – in Westminster Hall at 11:32 am on 29 March 2011.
It is a pleasure to serve under your chairmanship once again, Mr Caton. I pay tribute to my hon. Friend Roger Williams on securing this important debate. He may not be rewarded by a mass turnout this morning, but he knows that this is an important issue for those of us who serve rural communities, not least in north and mid-Wales.
Much concern has rightly been expressed today about the total number of rural bank branch closures. There has been a 43% net reduction in branches since 1990 and an 18% net reduction since 2000. Figures from the Campaign for Community Banking Services show that the UK has significantly fewer branches than other comparable European states. There are 170 branches per million inhabitants in the UK, compared with 440 in France, 570 in Italy, 480 in Germany and 1,010 in Spain. I do not know what the trend is in those countries, but I suspect that some of their communities have been better served by the banks than ours.
There are obvious reasons why banks choose to close less-well-used branches. They operate in a very competitive environment, but, none the less, access to banking services is essential in any community, and we have to find ways to ensure that that presence remains throughout the country. The CCBS has talked of the need for flexible format-shared branching, whereby third party providers provide services through a variety of channels, such as post offices, village shops or even community shops. I emphasise that the services provided are essential. The anecdotal evidence that we have heard from Arfon and from Brecon and Radnorshire makes that point strongly. I concur with what has been said about duty of care. Anger is felt in communities such as Rhayader over the billions of pounds that the banks currently earn.
In 2009, a report by the Commission for Rural Communities, “Rural Money Matters”, considered the difficulties associated with rural financial inclusion in England, but much of what it says also resonates throughout the rest of the UK, including rural Wales. The report points out the consequences of the lack of access to financial services. For example, the fact that most employers require wages to be paid into a bank—many do not—limits the employment opportunities for those without a bank account. Many will miss out on the discounts available for direct debit and online payment, and even the ability to shop around for credit could force those in rural areas to pay more.
Another impressive organisation, Consumer Focus Wales, published a report, “The Cost of Cash”, in November 2009. It recommended several steps, including face-to-face support for those opening a bank account for the first time; explaining how direct debit works; and exploring alternative arrangements for electronic payments, such as setting up sub-accounts solely for bill payments, to alleviate some of the fears associated with direct debit payments. The infrastructure needs to be in place, however, if many of those suggestions are to become a reality.
The number of free ATMs has increased, but, in smaller communities and the more rural areas, many of our villages are five miles or more from a cash point, which is a concern, particularly when we also see deficiencies in public transport. My bank for the past 27 years has been Lloyds in Aberystwyth, and I live six miles away from that town. My community is still served by some modest public transport and I own a car, but many people in my constituency do not have that luxury and live considerably more than six miles away from their nearest bank.
We also need to look at the impact—this is a fundamental point—on the local economy. It is very difficult for small businesses to operate in rural areas without immediate access. My hon. Friend mentioned the proprietor of the newsagent in Rhayader taking her cash in. I can guarantee that, at 4.30 pm on any day of the week, local businesses are queuing at Lloyds bank in Aberystwyth to pay cash over the counter. In Ceredigion, we have the largest proportion of people employed by small businesses anywhere in the UK, and those businesses are vital to our community. I think we could multiply a thousand times the anecdotal evidence that my hon. Friend has given from Rhayader. It is a big issue for our small businesses.
One of the additional barriers that we face to accessible financial services is the lack of digital inclusion. Those of us with rural constituencies will be familiar with the figure that is bandied around of 99% of exchanges being broadband enabled, but the picture is very different on the ground. Even those who are able nominally to receive broadband often find that their service is slower and less reliable. The Government have indicated welcome investment in superfast broadband, but it is also key that they tackle existing not-spots as a priority, so that those who currently do not have access to broadband, who are often also likely to be those without access to physical services, are able to access things such as online banking. I pay tribute, in a cross-party way, to some of the initiatives undertaken by the National Assembly. Certain communities in Ceredigion have certainly benefited from remedial action by the Assembly Government.
Another broadband-related issue that we face in rural areas is that, as well as generally receiving a slower line speed and a more patchy service, people have had to pay rather more for it. In areas where BT is the sole wholesale provider, internet service providers have been charged line rental, which has then been passed on to the customer, meaning that many of the cheap deals advertised by ISPs are out of reach for many living in rural areas. In January, Ofcom proposed that BT reduce those charges, and it would be helpful if the Minister or one of his colleagues could update us on that.
The lack of bank branches and, indeed, other financial services means that there is a need to use the facilities that we have, most obviously post offices. The Government have announced plans to make post offices what they call a front office for Government. Those of us who have been arguing against the retreat of Government from our post offices would certainly welcome that in order to make services accessible and to safeguard the remaining post office network. There was disappointment that the Government did not advance the suggestion of a post office bank, but they have reached an agreement with banks, whereby 80% of current accounts will be accessible at post offices. I think that that will have a significant impact where those post offices exist for those communities. It would be helpful if the Minister could outline what steps have been taken to ensure that the aspiration to provide Government services through the Post Office is realised, and that the network can benefit from additional revenue streams.
Another crucial issue—I shall broaden the definition of financial services slightly—is the availability of financial advice and help for people with debt problems. I very much support the efforts of hon. Members, such as Justin Tomlinson in talking about compulsory financial education in schools. That would be of great benefit in establishing financial literacy from a young age. It remains the case that when people have debt problems, financial advice is harder to access. In some rural communities, it is physically harder to access that advice. In Ceredigion, we have two excellent citizens advice bureaux—one in Cardigan and one in Aberystwyth. My wife is the trustee of one. We are lucky because, this Thursday, they will merge to make a county-wide CAB service. However, that still presents a difficult journey for people who live outside towns—although the CAB has undertaken good outreach work in some scattered communities. I welcome the Government’s extension of the financial inclusion fund but, particularly in these difficult economic times, there is still an issue with people accessing such financial advice.
Both my colleagues have expressed concern about the demise of the cheque. I echo the difficulties that that presents for many, especially the elderly. I appreciate that that matter is the responsibility of the Payments Council and not the Government, but it would be helpful if the Minister could assure us that the Government are committed to ensuring that any decision on cheques will not be taken without considering the impact on those who still use them, particularly the elderly. I include myself in that.
In rural areas, we often have debates—both my colleagues have participated in debates for many more years than me—about the importance of retaining services in our communities and the principles of rural entitlement. We have heard both the current and previous Governments talk about how difficult it is to justify the costs of retaining services because of the increased reliance on online methods. However, it is often more difficult to access services online in rural communities. Hon. Members should be in no doubt that rural communities will disappear unless we protect those services. I congratulate the Government on their early pronouncements on the Post Office and the investment—necessarily limited as it is—in superfast broadband. However, much more can and needs to be done.
When we consider community and services, I take a slightly holistic view. Let us reflect on why young families might want to move into the kind of community that I represent. When we consider the specifics of why young families move into a community, there are certain essential ingredients. First, there is an implicit need for a job. Secondly, people might consider the presence of a village school, certain retail outlets, a public transport system, a post office and access to financial services. Those factors are all part of the mix that means we can still have vibrant communities in rural areas. That is why this debate is so important and why we look forward to hearing what the Minister and his shadow, Chris Leslie, have to say on the matter.