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Bank Branch Closures

– in the House of Commons at 2:09 pm on 30th June 2016.

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Photo of Chris Matheson Chris Matheson Labour, City of Chester 2:09 pm, 30th June 2016

I beg to move,

That this House
is concerned about continued bank branch closures and the damage that this causes to local communities, small businesses and the welfare of senior citizens;
and calls upon the Government to help maintain access to local banking.

The motion stands in my name and those of the hon. Members for Wells (James Heappey) and for Ceredigion (Mr Williams). This has been very much a joint effort and I pay tribute to them. I would like to thank the Backbench Business Committee for the opportunity to bring this motion and debate before the House today. When the three of us approached the Backbench Business Committee, hon. Members serving on it graciously offered us the day of the local elections as a possible occasion. Knowing that there was wide support for the debate and not wanting it to get swamped by external events, we declined and asked for a later date. That worked out well, didn’t it?

I have a smartphone in my pocket that has an app—let me explain to more senior hon. Members that that means an application—through which I can access my banking services, pay my bills, check my balance and transfer money between my accounts, none of which, I hasten to add, are sited offshore. I can probably even apply for a loan. Banking is changing, and in many ways it is becoming more convenient and perhaps changing for the better.

Convenience, however, does not rely solely on the possession of a smartphone. The physical presence of a bank is still important. Today, I shall not call for a halt to all technological advances in banking. I do not want to go back to the days of accessing cash by having to cash cheques in a branch, and I certainly do not want to go back to the days of using credit card devices that the shopkeeper used to have to fill in by hand and then run a mechanism over to print the credit card details on carbon paper.

Photo of Albert Owen Albert Owen Labour, Ynys Môn

In my pocket I have a cheque book and a mobile phone, but when I go to the bank, I do not have much of a choice when it refuses to provide many services. The serious point is that many places in my constituency do not have a mobile phone signal, so people face even greater limitations on how they can provide or access services.

Photo of Chris Matheson Chris Matheson Labour, City of Chester

My hon. Friend makes an extremely useful point, and if he will bear with me, I may come on to say more about some of the areas that are suffering the most from these bank closures.

As my hon. Friend has perhaps alluded to, we need to recognise that for many—the elderly, people with caring responsibilities, and small business owners—high street banks’ programmes to close many of their smaller branches and centralise everything in the centre of large towns create havoc for individuals and businesses and damage local communities.

My interest in this issue was prompted by a spate of branch closures in the Hoole area of Chester. Last summer, NatWest announced it was closing its branch there. The excuse was that the branch was underused. Yet I and my team undertook a scientific survey of usage by standing outside and counting people going in over several hours that flatly contradicted the suggestions made by NatWest. HSBC had already gone in Hoole, and it was followed more recently by Lloyds, leaving only a Barclays branch as the so-called last branch in town. Bank branches around Chester had been closed previously, including in the Boughton and Saltney districts.

All our banks are now in the centre of Chester, which has several profound effects. First, it increases traffic into the city centre. Ours is already a congested city built on the beautiful River Dee, but when the Romans founded it and when it became a bustling market town in the middle ages, nobody thought to design it with the needs of 20th and 21st-century car use in mind. Keeping satellite branches is, strangely, good for the environment. More importantly, satellite branches support local businesses.

Photo of Nia Griffith Nia Griffith Labour, Llanelli

My hon. Friend hits on the point that it takes up a lot of small businesses’ time if, instead of banking locally, they have to go to another town where the traffic is piling up. That is the complaint I have heard from people in Cross Hands because that is what they will be forced to do when their bank closes.

Photo of Chris Matheson Chris Matheson Labour, City of Chester

I thank my hon. Friend for her intervention, and I was about to make exactly the same point.

People drop into shopping areas such as Hoole to go to the bank and then perhaps to one of the local shops. Incidentally, Hoole recently won the outstanding award from the “Great British High Street” awards, for which I thank the Under-Secretary of State for Communities and Local Government, Mr Jones. I would be grateful if the Minister passed on my thanks to him.

The bank is very much part of the ecology of the local high street. If we take it away, we damage that ecology and the other small businesses that rely on it for increasing custom, as people pop to the bank and then to one of the small shops. We rely on it, too, to provide easy access to banks for small businesses, as my hon. Friend Nia Griffith pointed out. Small businesses feel able to put up a small “back in 10 minutes” sign on their door in the middle of the day as they pop down to the local bank to get change or pay in money, but they would not feel able to put up a “back in two hours” sign if they were they forced to go into the city centre of Chester or indeed of any large town. It is tough running small businesses and time away from the shop is business time lost.

Let me say that for all the advantages of internet banking—and there are many—the blunt truth is that a small business cannot pay cash into the bank through a laptop computer. I cannot help but wonder that all of this is made worse because of the advertising these banks use. No wonder HSBC moved away from calling itself “the world’s local bank”; yet we still have Lloyds bank saying that it has been “by our side” for 250 years—at the same time as it closes its Hoole branch. It is not by our side any more in Hoole, I am afraid. The very untruths of the advertising campaigns, claiming to be local and supportive of local small businesses, while making access to branches harder, exacerbates the crisis that we face—and it is a crisis.

Reuters reported last week that 600 branches closed in the 12 months to April this year. There is a social division in these closures. It says that more than 90% of the closures were in areas where the median household income was below the British average of £27,600, according to an analysis of Office for National Statistics data on average incomes in the locations where branches were closed. By comparison, five out of the eight branches opened by these banks over the same period were in some of the wealthiest neighbourhoods in Britain: Chelsea, Canary Wharf, St Paul’s, Marylebone and Clapham, all districts in London. That is right: despite the onward march of technology, banks are still opening new branches, but in highly affluent areas.

The Reuters report cites concerns from campaigners that

“banks are cutting too fast in places where people are less able to fall back on digital banking services because of a lack of access.”

That reminds me of the words of my good friend Albert Owen about the different ways in which access to banking services might be prevented. Problems can be caused by people’s finances, the lack of physical access or the inability to use the internet. The report quotes Fionn Travers Smith of Move Your Money, which campaigns for ethical banking. She says:

“We are witnessing the creation of a dual financial system: one for the middle class and wealthy and another for the poor.”

Indeed, I have found that one of the groups to be hardest hit by the recent closures in Chester are pensioners, not necessarily the most tech-savvy group—although I do not want to make assumptions—who now have to make the journey into the centre of my city.

Photo of Margaret Ferrier Margaret Ferrier Shadow SNP Spokesperson (Scotland Office)

On that point, I have been dealing with a constituency case in which a couple were conned out of their life savings—some £50,000—in a sophisticated telephone and online scam. Does the hon. Gentleman agree that forcing people to adopt these services rather than giving them the option of over-the-counter services serves only to enable organised crime and scams?

Photo of Chris Matheson Chris Matheson Labour, City of Chester

I have to say that the thought had not occurred to me, but I think that dreadful case illustrates a problem on which we should all focus. We can have a lot more confidence in dealing with a bank when we are inside a physical bank and dealing with an individual as opposed to being subjected to one these terrible scams. I am most grateful to the hon. Lady for bringing that awful case and awful problem to our attention.

Photo of Gareth Thomas Gareth Thomas Party Chair, Co-operative Party

The trend is towards bank branch closures, and we tend to see that more in areas of deprivation and of the greatest need. Given that in these areas people often face high interest rate alternatives, does my hon. Friend think that we should hear more from the Government about how they intend to create more responsible finance options in areas where bank branch closures are happening—such as more support for credit unions and for community banks, of which there are a number in the UK?

Photo of Chris Matheson Chris Matheson Labour, City of Chester

My hon. Friend has a long, proud and honourable history of working within the co-operative movement, and he is an expert in this area. I intend to touch briefly on the role of credit unions as I progress through my speech.

Let me return to the problems faced by pensioners in accessing bank branches. I realise that this is not necessarily the responsibility of the Minister who is present, but at the same time as branch closures in the satellite districts are forcing people into the town centre, privatised bus companies are cutting the bus services on which pensioners rely more than any other group in society, this making it even harder for them to make that journey into the centre.

It is clear that local post offices have taken up some of the demand. Members, both current and previous, have fought long and hard against the closure of those post offices, whose continued existence has been aided by their provision of banking services. I am pleased that they have that role, but it does not constitute a suitable total replacement,

I suspect that Members may criticise the banks for the manner in which they undertake their closure programmes. I, too, am critical of the seemingly hasty and often desperate way in which those programmes are conducted, based solely on cost-saving and with no eye to service. Today, however, I want to be positive, and to propose a new solution which I hope the Minister will consider.

My suggestion is that high street banks should come together where they are closing branches to form local banking hubs. In other words, they should maintain provision on local high streets, as opposed to major town centre high streets, in shared premises and with shared costs. They could provide the automatic paying-in and cash withdrawal machines that we see in bank branches now, along with, perhaps, booths containing phones so that clients could contact bank call centres if necessary. As was suggested by Margaret Ferrier, it might also be helpful if staff were present to assist.

I accept that there are technicalities to be resolved—who would employ the staff, and who would own or lease the properties?—but today I am concerned only with floating the principle, and, indeed, it is not my role to be prescriptive to the banks about the specific business model. It is possible that various models could be tried and tested, and I wish to offer Chester as a test bed where the banks could come together and provide a model community banking hub. Perhaps Chester’s credit union could be involved as well.

Let me therefore throw down the gauntlet, and challenge the banks to take my proposal seriously. I invite them to come to Chester—or Wells, or Aberystwyth—to set up a joint hub, and give it two years to see if it works. That is a serious offer, and I will help the banks to make a success of it in my patch. Either that, or they should stop using advertising that suggests that they are more human and accessible, while continuing to close local branches and make access harder. Banking is a private sector business, but it is also an essential service. A bank is an essential part of the local high street ecosystem. There must be no more cavalier closures of branches which, in turn, damage the local economy: banks are too important for that. In 2008, we learned that some big banks were—apparently— too big to fail. Perhaps the message today should be that some local banks are too important to local communities to be allowed to close.

Photo of James Heappey James Heappey Conservative, Wells 2:23 pm, 30th June 2016

I join Christian Matheson in thanking the Backbench Business Committee for awarding us the debate. As he says, people should not mistake the sparsity of Members in the Chamber for a lack of enthusiasm for this cause. Many of my colleagues have told me just how significant it is to their constituencies, and it is just a shame that, for Members on both sides of the House, there are some distractions at the moment.

The issue of bank branch closures is gathering pace. There were 222 in 2013 and 681 last year, and given that there have already been 333 this year, it appears that the pace will quicken still further. The issue was drawn to my attention in my constituency by the fact that there are too many empty buildings on our high streets which used to be banks. There have been closures in, for instance, Wells, Shepton Mallet, Burnham-on-Sea and, most recently, Glastonbury. I pointed out during Prime Minister’s Question Time some months ago that there was still a chance of saving at least one of Glastonbury’s banks, but all four of them went in one year, and three within 14 weeks. Today’s debate is timely, because the following week there were 200,000 people in fields not far outside Glastonbury. The idea that the town does not have a single bank must seem quite remarkable to all Members.

The Last Bank Standing campaigners in Glastonbury have fought their corner in a formidable fashion. You will be entertained to learn, Mr Speaker, that when Lloyds closed, it marked the closure by putting a mock-up of a black horse in a coffin, feet up, and marching it out of the town in a funeral procession for banking. I am not sure that those in the bank’s PR department were particularly enthused by that. The sad reality is, however, that no matter how hard the campaign group worked to save those banks, their work was ultimately to no avail.

Having just embarrassed Lloyds, I will now praise NatWest, which saw an opportunity to take a mobile bank into the town occasionally. That service is very welcome and many people value it, but it is there for only an hour or two a week. The community is now, very creditably, considering the options for a credit union or community bank, but the hurdles are significant. It is extraordinarily difficult for a community to establish something that is not just a credit union for the purpose of saving, but a bank with functionality.

I do not think that it should have been possible for a town the size of Glastonbury, with such a vibrant economy, to lose all its banks. That suggests to me that the access to banking protocols that were agreed during the last months of the last Government are simply not doing the job that they were intended to do. I shall return to that point later, but one of the challenges posed by the protocols is the requirement for community impact statements to be produced, and in those statements the usage of the banks is hotly contested. The banks say one thing, and campaigners say another. When the Federation of Small Businesses surveyed businesses in the Glastonbury area that were using local banks, 750 of them responded. Glastonbury contains only about 10,000 people, but it serves a much wider hinterland. How extraordinary it is that 750 businesses should reply to a survey entitled “Glastonbury Bank Closures”! That tells us just what an important issue this is.

There is also the challenge of rurality. There are transport links in areas such as mine that do not allow people to travel freely from one town to another to do their banking when the bank on their high street has closed, and the people whom that disadvantages most are the most vulnerable and the isolated in our society.

Photo of David Lammy David Lammy Labour, Tottenham

The hon. Gentleman has just made an excellent point, but may I ask him this? Given the iconic status of Glastonbury, and given the problems that clearly existed before the last branch closed, did the bank bother to consult him before making its decision, or was he presented with a fait accompli?

Photo of James Heappey James Heappey Conservative, Wells

To be fair to the banks, they did write to notify me of their decision, and the more noise I made in the media, the more willing they were to meet me here to discuss it. However, the right hon. Gentleman would be right to suggest—and I would agree—that it was not exactly a process whereby the local Member of Parliament was encouraged, as a representative of the community, to take soundings on what was actually of value to that community. It was more about assuaging my fears and trying to persuade me that various steps were being taken in mitigation.

I was talking about the vulnerable and the isolated. There are certain things that draw the elderly, in particular, out of their homes over the course of a week, such as going into town to do their banking and to visit the market and the library. When banks are removed from towns and people are told, “We will teach you to be better at using a computer”, that is all well and good, but it does not alter the fact that, for some, that journey into town will have been their interaction with the outside world for that week.

Moreover, digital exclusion is a real problem, in two respects. First, there is the issue of competence. There are people who are just not very good at handling their affairs over the internet. There are people who have been doing things in the same way for a lifetime, and who do not trust the process of putting their financial affairs in the hands of electrons on a screen. They want to give their money to a person over a counter, and see it locked away in the drawer and on its way to the bank’s vaults.

Then there is connectivity. I know this is not a rural-urban issue and I know that the Government’s broadband roll-out programme is making great advances in areas like mine, but the reality is that these banks are closing more quickly than the broadband network is being improved and so even those who are willing and able to do their banking online are not always able to do so.

Photo of Albert Owen Albert Owen Labour, Ynys Môn

The hon. Gentleman is giving a very eloquent description of his area’s situation, which I am sure is mirrored across the whole of the United Kingdom. What he is suggesting is that there is no joined-up thinking. We have one Department—BIS—that is responsible for one area and the Department for Culture, Media and Sport responsible for another. There is also a survey by Government to retain and regenerate town centres, which has been ignored, because the hon. Gentleman highlighted four empty buildings in his relatively small town.

Photo of James Heappey James Heappey Conservative, Wells

I am grateful to the hon. Gentleman for his intervention. While of course the Treasury will have an interest in the provision of banking, DCMS will have an interest in the provision of broadband, and the Department for Communities and Local Government and perhaps the Department for Environment, Food and Rural Affairs might concern themselves with the overall impact on the viability of communities in both rural areas and towns.

I am also concerned about the capacity of the post office network to pick up the slack. They are offered again and again as the route out of a bank closure, yet too often there are reasons why the Post Office cannot do more, and I will come to that shortly.

Finally, there is the availability of free-to-use ATMs in our town centres. Replacing an ATM outside a bank with something we need to pay a few pounds to use is not fair on the community that then finds itself needing to access its cash at that expense.

Photo of Gareth Thomas Gareth Thomas Party Chair, Co-operative Party

In the United States, when banks take significant deposits from particular communities, they are required by regulators to demonstrate that they are offering significant financial services to those communities in return. Does the hon. Gentleman think that such a requirement might have meant that his Glastonbury constituents might have had some confidence that the banks were at least going to help a credit union or community bank to get up and running, to offer an alternative service if those banks were still determined to leave?

Photo of James Heappey James Heappey Conservative, Wells

The hon. Gentleman steals my thunder, because I had indeed read Congress’s Community Reinvestment Act and I think there are some very interesting things in it. For the benefit of Members who might not be familiar with it, it does exactly as the hon. Gentleman suggests: it is a safety net that means that those getting a banking licence in the United States can of course bank in all the affluent areas, but they are also required to offer equal access to banking in less affluent areas, and there are ways to make sure that that is happening, which the Government may wish to consider.

Christian Matheson picked up on the very worrying Reuters research reported by Andrew MacAskill and Lawrence White. I hope that the Treasury is aware of it. That 90% of closures are in areas where the median household income is below the national average is deeply suspicious and I am sure cannot be just a coincidence. It concerns me enormously that the two banks that have closed the most branches since 2008 are those that benefited the most from the bail-out by the hard-working taxpayers whom they have subsequently turned their backs on. As a good Conservative, I do not propose to advocate interference with the business plans of those banks, but I do think it is important to make sure that they are not focusing their branch network on the areas where they can make the most cash, when the nation collectively bailed them out not so long ago.

Worse still, as those bank branches close—we are now down to fewer than 9,000 branches on UK high streets—payday lenders are opening branches at an alarming rate. I draw no connection with the fact that payday lenders are targeting high streets where the conventional banks have gone. However, if the Reuters research is correct and the banks are closing at a quicker rate in less well-off areas and the payday lenders, as we know, are targeting the very same areas, it bothers me enormously that on those high streets there is no access to proper conventional banking products but plenty of access to payday lenders. I am not sure that that is socially just and it must be a concern for us all.

The impact on small businesses is significant. Representatives of the Federation of Small Businesses met with me at the Royal Bath & West Show, having heard that this debate today had been granted, and were falling over themselves to say that they would be able to provide me with information. They have been hugely helpful. The reality is that the bank branch network is most valuable to small businesses. Yes, we must worry about the vulnerable and the isolated, but they are a relatively small number of those who need to access banking. It is the small business community that has no other choice. Small businesses rely on cash, and sometimes they have no other staff.

Glastonbury is a great example of a high street where there are lots of small shops. If you are in the market for all sorts of crystals or joss sticks and everything else, Glastonbury is the place. There are dozens and dozens of tiny shops that have only one person working in them at a time. So when the moment comes in the afternoon to clear out the till from that day’s takings and leave just the float for the next day, the shop must close. A year ago, the person would run round the corner, do their banking and then be back in the shop about 15 minutes later, and that was all the custom they lost. Now, unless they are fortunate to bank with one of the banks with which the Post Office has agreed full functionality, they must get in their car, or on the bus, and travel a few miles away and potentially be closed for an hour. It is unworkable. The travel is simply not an option for them and digitisation will not change that. People going into small shops such as these, where they are buying knick-knacks—I am sure Hansard will enjoy that term—for relatively small amounts of money, will invariably pay in cash.

The Competition and Markets Authority has also done some research, and has found branch convenience to be the second most important factor when choosing a bank. Some 84% of respondents classed bank branches as important to their business. Further research by McKinsey found that one third of small and medium-sized enterprises use bank branches at least once a week, and 52% of respondents to the FSB rural banking survey said that they communicate with their bank in branch and three quarters said that if they still had a branch they would prefer to be doing their communication there, face to face. It is important to state that what they are concerned about is not just their ability to bank in cash; they are also concerned about that relationship—their ability to informally access advice from someone in a branch who understands the business climate in their area. That is being taken away from them. They want something that is tailored, trusted and freely available from somebody they know and who lives and works amongst them, rather than somebody on the end of a phone in a call centre located who knows where.

The basic backing that is required for business is coming; this process is not entirely without mitigation. There is greater online functionality—the ability to pay in a cheque by taking photographs of it on your smartphone and so forth is all great. The arrival of smart ATMs that will be able to process cash deposits is also very welcome. G4S—who we remember from the Olympics—now says it will drive around and collect people’s cash from them and return cash to them; businesses can make their own minds up about that. But the reality is that whatever G4S may or may not do and however brilliant smart ATMs may be, their roll-out is not happening before these branches close and, as a result, communities are being left with a gap.

As I have said, the post office network is the alternative. The Post Office is enthusiastic about the opportunity, of course, as it is a significant opportunity for it as a business, but the banks cannot have it both ways. If post offices are going to be offered up as the alternative when a bank branch closes, the bank must be willing to surrender full functionality to the Post Office so that businesses and private users are able to access the full suite of banking services. As I understand it, the banks are offering up post offices as an alternative in their community impact statements, only to say subsequently that they will not give up those functions to the Post Office because they are worried that it will steal their business. I believe that if they are worried about losing out to the competition in that town, they should stay in the town. If they have made the decision to leave, they should accept that they need to surrender some of the functionality so that their customers will have the mitigation that the banks have promised in their community impact statements.

Some anomalies have been identified. It is rumoured that there are issues over the limit on the amount of cash that the post offices are willing and able to deal with. That limit clearly needs to be removed. If someone with a small business has a monster day of trading, they need to be able to go round the corner and pay in the full amount that is in their till rather than having to sleep uneasily that night through worry that a great day’s take is still in the shop. There is also an issue over paying-in slips, which we must surely be able to get over. The banks need to sit down with the Post Office to ensure that post offices are fully able to deliver the banking the businesses need, not just the bits that the banks will allow them to deliver.

The Government obviously also have a part to play in this. The Post Office’s arrangement with the Government is up for review in 2018, and I know that the Minister will speak forcefully in that renegotiation to stand up for the needs of the banking community, given how important post offices are becoming to communities around the country for the purposes of doing their banking.

My asks to the Government also include, first, that the access to banking protocols review should be thorough and candid. Community impact statements are too debatable, as I have said. The transport data that are used in them are too often inaccurate, as are the data on the number of people using a branch. Banks say that regular users number a couple of dozen, but campaigners standing outside the branch counting people in and out say that there are many thousands. The catchment areas are shrunk right down almost to the postcode in which the branch is situated, yet the reality is that they serve a rural hinterland that is much larger. [Interruption.] I will be about one minute, Mr Deputy Speaker, if you will indulge me. The connectivity issue is also often not fully understood in the impact statements.

When I spoke to Messrs MacAskill and White from Reuters, they told me that it was extraordinarily difficult to access the data on what had closed and where since 2008. If their research is right, this is happening disproportionately in poorer areas, but I am sure that the banks will want to make it clear that that is not the case by publishing their data in full. I am sure that the Government will be keen to check the data and we in this House will also be keen to know that that is not the case. This is a simple matter of fairness. People value their access to a bank. There are many reasons why the access to banking protocols need to be strengthened, and I am sure that the Treasury will take note of this debate today.

Photo of David Lammy David Lammy Labour, Tottenham 2:42 pm, 30th June 2016

I congratulate my hon. Friend Christian Matheson and James Heappey on securing this important debate and echo the concerns that have been raised. Looking at the evidence, it appears that the Government lack the political will to hold the banks’ feet to the fire. What happened when a review into banking culture was announced? It was quietly shelved a few months later. What happened when branches were closing down at a rate of almost two a day in rural communities and deprived areas across the UK, affecting local businesses, the elderly and the disabled? Very little indeed. And what is happening when banks renege on their promise to retain the last bank in town, meaning that 1,500 communities have lost all their banks? Absolutely nothing.

It does not strike me as fair that ordinary people are paying the price for the failure and mistakes of banking executives. Those ordinary people have been good to the banks. They have loyally paid in their savings month after month. They have taken out their mortgages with their bank. In the cases of Lloyds, Halifax, RBS and NatWest, they have bailed them out after the banks got themselves into trouble during the financial crisis. The banks have got themselves into trouble time and again, lurching from one scandal to the next, by aiding and abetting clients who want to avoid paying their taxes, fixing the LIBOR rate, money laundering, mis-selling PPI—the list goes on. Barclays, HSBC, Lloyds and RBS have been hit with fines of more than £55 billion since 2010, and that figure is set to rise to £75 billion by the end of next year, but who takes the hit? Their customers, whose views and needs are completely disregarded by the banks’ management teams.

It is not as though there is no evidence to tell the banks that their customers value their local branches and want them to remain. Research from the Competition and Markets Authority in April 2015 found that 63% of current account customers felt that having a convenient local branch was either “essential” or “very important”. Research conducted for TSB in June found that 69% of people believed it was important to have a bank branch close to where they lived. Just because more people are repaying small debts to friends or carrying out basic money management online or by using an app on their phone, that does not mean that branches are becoming redundant—far from it. The Social Market Foundation has found that, when it comes to big financial decisions such as taking out a loan or a mortgage, or seeking financial planning advice, the majority of consumers still use bank branches. In these troubled economic times, ordinary folk want to be able to go into their branch and get good advice so that they can properly plan their finances, but in towns, villages and cities across the country, that is soon going to be nigh on impossible. That is why this debate is so important.

Banks are disproportionately shutting up shop in lower income areas. Indeed, 90% of the 600 branch closures between April 2015 and April 2016 took place in areas where the median household income is below the average of £27,600 a year. Move Your Money has told me that, far from responding to demand pressures, the major UK banks are simply closing branches in poorer areas and opening or retaining them in more affluent ones. We are seeing the creation of a dual financial system in all but name, with one section for the wealthy and the middle classes, and another for those on low incomes.

The University of Nottingham has found that the least affluent third of the population has borne the brunt of two thirds of the total closures since 1995. Indeed, the rate of closures experienced in traditional manufacturing and inner-city areas is 3.5 times higher than in areas defined by academic researchers as middle England—mainly suburbs and small towns. It is therefore a cruel twist of fate that those who are most likely to be adversely affected by branch closures are the people living in those areas in which most closures are happening. Do we really want this country to become like some areas of the United States where those who are already deprived and poor are bereft of quality financial services and left to flounder? Again, that is why this debate is so important.

I know the situation to be true because earlier this year HSBC decided to close its branch on Tottenham High Road after almost 100 years. That followed the closure of a branch of Barclays the year before. In just two weeks’ time, that HSBC will close its doors for the last time. My constituents have been told to travel to Southgate if they want to access a branch, but the journey takes at least 45 minutes by bus. What is the impact of that closure on the elderly? What is the impact on the disabled, the vulnerable and local traders who rely on such branches? I am appalled that HSBC’s management did not feel it appropriate, or even a matter of common courtesy, to consult the local Member of Parliament, the local authority, councillors or the community before making that decision.

The situation is an outrage because my constituency is a target regeneration area for the Government and the Mayor. The Treasury has underwritten regeneration in Tottenham to the tune of £500 million. We have Spurs—the best premiership football club—building a new stadium in the constituency, yet the bank did not think that it was worth picking up the phone and calling the local authority leader or the local MP to say, “We are thinking about this. What do you think? What will the High Road look like in the months and years ahead?”

Photo of Mims Davies Mims Davies Conservative, Eastleigh

The right hon. Gentleman is making an important speech about the value of banks to our communities. Barclays and HSBC have contacted me about closures in Hamble and Hedge End respectively. In my experience, there is no point hearing from them because they have already made up their mind. The situation is difficult and disappointing for my elderly, vulnerable and, perhaps, non-internet-savvy residents.

Photo of David Lammy David Lammy Labour, Tottenham

The hon. Lady makes an excellent point; that is also my experience.

I am talking about consultation with democratically elected people. Banks certainly ought to speak to the local authority leader before making a decision to say, “We’re thinking about it. What do you think the impact might be?” All of us, as professionals and Members of Parliament, are used to having private, confidential conversations every day of the week. We are sometimes able to say, in private, “Have you thought about this or that?” We can talk about the future economic context of a community of which the bank may not be aware. But there was none of that; I was presented with a fait accompli. Frankly, HSBC was patronising.

When I was a 16-year-old with what felt like very little prospects way back in the mid-1980s, I got a little job over the summer holidays in that local HSBC branch—it was then Midland Bank. I feel personally affronted that the bank where I saw my first prospects, and where I had put on a suit and thought that I might have serious job one day, is to be shut down without HSBC even thinking of consulting me. It meant a lot in the local community that I used to work in the bank, but HSBC was not interested. That is what big banking has come to in this country after all that we have paid in. I am frankly appalled by HSBC’s behaviour.

Given that the Government talk about being a friend of small business and the high street, it is important that they think carefully about this issue. In June 2014, research by YouGov for the British Bankers Association found that over 50% of people see a branch as important, with that figure rising to 68% for SME customers. The impact of branch closures goes far beyond local businesses having nowhere to go to get credit or to do their banking. The consequences are grave for the whole high street.

Local retailers are hit hard by the fact that customers go elsewhere when they do not have easy access to cash, which is still the preference for many, despite the rise of chip and pin and contactless payments. Cash still accounts for 46% of high street sales, with that figure rising to 75% in newsagents and convenience stores. On average, local ATMs inject some £16 per withdrawal directly into nearby stores, which amounts to £36 billion a year. More than a third of total high-street spending is contingent on the ready availability of cashpoints.

I was told by HSBC that one reason why it was closing my local branch was footfall on the high street. I pointed to the fact, which it had seemed not to realise, that we had had riots just a few years before and that we had found wonderful businesses that wanted to support the high street, not desert it, as it made its way back from the riots. Given that this bank was meant to be one of our national institutions, citing footfall as its reason was deeply painful to my constituents.

In tough times, people remember who their friends are. The banks should think carefully about their customer base and how their customers feel when banks desert a community that has already been through the mill and is trying to build its way back. I think of parts of this country that not so long ago had floods, for example. It takes a long time for a high street, a village or a town to get over a flood. Are the banks going to blame lack of footfall and say, “Things were a bit depressed for a few months so we just couldn’t stand by you. We’re disappearing”? Customers have stood by them, so it is about time that they grew some, as my mum would say, and stood by the community.

Photo of Gareth Thomas Gareth Thomas Party Chair, Co-operative Party

Can I tempt my right hon. Friend to agree that perhaps part of the solution would be more action by regulators and the Government to encourage different kinds of banks to emerge—banks that are profit-making, but not necessarily profit-maximising? Many banks, including those he has listed, will always face pressure from shareholders, in their management’s view, to reduce costs. Bank branch closures are always likely to be among the options available, so perhaps a different kind of bank is necessary.

Photo of David Lammy David Lammy Labour, Tottenham

My hon. Friend is right. The House will recall the hugely important role that building societies played in local communities 20 years ago. We destroyed that important relationship as they all merged and became banks, and now we are left where we are. That local proximity and that different structure were lost and now we have to reinvent it. I hope that the hon. Member for Wells is part of that reinvention. The Government should think carefully about whether we need a review of such new structures. If we do, the man to do it is my hon. Friend Mr Thomas, who knows a lot about mutualisation and co-operatives. We need that back on our high street.

The access to banking protocol is undergoing independent review by Professor Russel Griggs—I am sure that the Minister will refer to it. In response to my written questions last month, the Government revealed their belief that

“banks should act in the best interests of their customers and continue to serve the needs of the consumer as well as the wider economy”,

and that

“it is imperative that the banks live up to the spirit, as well as the letter, of the commitments in the protocol.”

However, the Government also revealed that they have not

“assessed the impact of the protocol or banks’
compliance with their commitments in the protocol”.

Perhaps the Government have not bothered to assess the protocol because they know that it is irrelevant. It cannot and does not aim to alter any decision and, as such, pays mere lip service to the idea of access to banking. The protocol states that after a bank has decided to close a branch, it will engage with local stakeholders in order to understand the impact on the community, businesses and consumers. What is the point of a consultation after the decision has been made? That is not a consultation in the proper sense of the word—it is a notification of the closure. May we change the wording from “consultation” to “notification”? Once the horse has bolted, it does not make a blind bit of difference how customers or local businesses will be affected, so surely it would make sense to have a proper, full and open consultation process in place when the bank is considering the future of a branch, before serving notice on the local community in question.

Another problem with the protocol is that there is no firm definition of adequate replacement services; it is left up to the bank to assess and even define those. Leaving the elderly and disabled with no choice but to take a 90-minute bus trip is not an adequate replacement service by any stretch of the imagination. It is clear that when banks make their decisions, they do not take into account the public interest or the likely damage that a closure will cause. I cannot see how the access to banking protocol is anything other than a woolly and inadequate attempt to protect the bank’s name.

The Government have not assessed banks’ compliance with the commitments in the protocol, I assume because their conclusion would be that there is no mechanism in place to police whether banks have fulfilled the commitments that they made in relation to closing down a branch. If a bank says that it is closing a branch but will work out an arrangement with the post office so that customers can bank there, or will move its ATM so that customers can still use it, are those promises worth anything if there is no way to enforce them? The access to banking protocol is merely being used as a Trojan horse on both sides. Banks can claim they have followed the protocol, no matter how meaningless it is, and that therefore their hands are clean and they do not need to do any more.

On that basis, it really is time the Government got a grip of this quiet scandal and tragedy that is taking place across our country and really hurting a lot of local communities. I commend my hon. Friend the Member for City of Chester for bringing this debate to the House.

Photo of Chris Davies Chris Davies Conservative, Brecon and Radnorshire 3:00 pm, 30th June 2016

I am pleased that this important issue has been brought before us today. I congratulate my hon. Friend James Heappey and the hon. Members for City of Chester (Christian Matheson) and for Ceredigion (Mr Williams) on securing it, and I thank the Backbench Business Committee for allocating the time.

I am pleased we are debating this issue, because it has blighted my area for many years. My constituency is one of the most, if not the most, rural in the UK. It includes the smallest town in Britain, and there are numerous beautiful small Welsh villages scattered around the countryside.

Brecon and Radnorshire is also the land of small business owners, with farmers, shopkeepers and individual traders all relying on having good banking services available to keep their businesses going. I myself ran a small business before coming into the House, so I understand the need for good local banking services.

Not only is Brecon and Radnorshire the land of small business owners, but we have a large population of elderly people. Although many right hon. and hon. Members may try to claim this crown, I would put the beautiful Brecon Beacons and the glorious Radnorshire hills down as the best place to retire to, not only in Britain but in the world. I am pleased that so many people have chosen to retire to my constituency, but many, if not all, of them need access to reliable banking services to meet their financial needs, as many of them do not use the internet.

As we have heard, we have to recognise that branch closures are not a new problem. Branch networks have been contracting for a number of years and for a number of reasons. In recent months, I have had many meetings with regional and local bank branch managers and bank representatives, who tell me that the rise—and indeed the rise again—of technology is diminishing the need for local branch services, as people look to bank online or on their phone, rather than in the branch itself.

Furthermore, industry issues have compounded the problem, with cost-cutting exercises, mergers and footfall numbers all leading to more bank losses around the UK. I am led to understand that that trend will not end any time soon, which is not something my constituents, or indeed others, want to hear.

The problem is especially acute in rural areas such as mine. It can take someone 40 minutes or more to drive from their farm or village to the nearest town to visit a branch. When a branch closes, it will often have been the last remaining branch in the town, as we saw in the towns of Llanwrtyd Wells and Rhayader only recently. The drive to the bank then becomes even longer and even more difficult.

Rural businesses also rely on the services they receive in a branch. Small local businesses in the high streets of Brecon and Radnorshire still make cash and cheque transactions in abundance, and only local branches can offer those services. I appreciate that many banks may wish to suggest post offices as an alternative, but as several hon. Members may attest, post offices, too, have closed in the most rural areas.

Some bank branches face reduced opening hours. A consultation is going on in my constituency on the branches at Builth Wells and Hay-on-Wye. I know we are meant to steer clear of anything like Project Fear, especially at the moment, but it seems to me that reduced hours are simply a precursor to closure.

At present, however, it is those areas where banks are closing entirely that are of greatest concern to me. In my constituency, Crickhowell, Ystradgynlais and many other towns have faced closures in the recent past. Some services have moved to post offices, but many post offices have moved into petrol garages. A number of constituents have raised concerns about banking in petrol garages and many similar places. Many are worried about issues of discretion and privacy with regard to their financial matters, and I agree that that is a real concern.

Although I say all this, I do understand partly where the banks are coming from. I understand that the model has to be viable in order to operate. There would be no sense in allowing customers access to their bank accounts via a branch but having to lower interest rates on their accounts into minus figures in order to pay for it. This charge—for that is what it would be, in effect—makes no sense and would be less palatable to customers than closure.

So what can the banks do? In my area, where we have lost a bank from a permanent site, a mobile bank provides the opportunity of a solution. Some banks already provide these services in other Members’ constituencies, but not in mine. Where they have been rolled out in other constituencies, they have, on most occasions, proved to be a great success. Mobile banks provide the access that customers and businesses need to their banking services, while giving the banks the flexibility of setting up in a suitable location without the need to pay the rents and bills that they have in a fixed branch. To that end, I have recently written to the banks to request that they bring these services to my constituency to stem the tide of closures and provide the services that local people are crying out for. Several have responded, and I thank them for that, but thus far few have been willing to commit to this provision. One of the main reasons for the lack of commitment is the cost of providing services in a mobile bank. I would therefore be interested to hear from the Minister what more we can do to support the banks in promoting mobile services for the most rural areas to give local people and businesses the support they need in their banking provision.

In the banking protocols, banks are required to consider the local populace’s access to good broadband when considering where to close a branch. In my constituency, like those of many hon. Members here, we have some of the worst connection speeds going—something on which I join many hon. Members in constantly bending the ear of the Minister for Culture and the Digital Economy. Given the number of bank closures in my own and other hon. Members’ constituencies, I wonder how much consideration the banks are giving to broadband access. Perhaps we shall have to wait and see what conclusion Professor Griggs reaches on this issue in his upcoming review; we are all watching very closely.

While this is not necessarily fully in keeping with the theme of this debate, it is important to mention what happens when banks leave towns with regard to empty shop fronts and the knock-on effects on our high streets. When a branch leaves a town, footfall to that town clearly falls—it is proved to fall, and it is falling. This has knock-on consequences for local businesses, as many branch customers will pop into town after going to the bank and spend in our local shops, boosting our local economy. When banks leave, they not only remove that additional footfall but leave an empty shop front, which means lower rents for landlords. Each of these knock-on effects harms our local economies. Banks should be required to take such issues into account when considering a branch closure.

I would like the Government to resolve to do all they can to support local bank branches in order to keep them from closure and keep bank services as close to home as possible.

Photo of Susan Elan Jones Susan Elan Jones Labour, Clwyd South 3:08 pm, 30th June 2016

It is a great pleasure to take part in this debate and to follow Chris Davies, my next-door-but-one neighbour although 65 or 70 miles away. I congratulate my hon. Friend Christian Matheson and the hon. Members for Wells (James Heappey) and for Ceredigion (Mr Williams) on securing the debate.

I would like to begin with a totally nonsensical hypothesis, because I feel that after last week’s Brexit vote there is probably no hypothesis that is too nonsensical to contemplate. Let me suggest that a law was passed in this place which decreed that no community with fewer than 15,000 people should be allowed to have a retail outlet—not a single shop. People in communities of 15,000 people or fewer would complain and say that that was ludicrous. The people responsible for the law would then say, “We have thought of a workable compromise. Perhaps there could be a little vending machine with milk, bread, chocolate bars and fruit—let’s call it an ATM, for the sake of convenience. One might have to pay a little more for the privilege, but let us do that and then people in communities of 15,000 or fewer will nod their heads in gratitude and acknowledge that that is what the world is like now.”

Of course, that is absolute nonsense. We are not necessarily talking about a world where shops in small or medium-sized communities are closing, but that is exactly what is happening in the ecology of our banking sector. The survey reported by Reuters showed that HSBC, RBS, Barclays and Lloyds Banking Group are among the banks that have cut 600 branches between April 2015 and April 2016. Indeed, the hon. Member for Wells has said that 333 branches have been cut just this year.

My constituency provides an exact example of the crisis we face. The constituency of Clwyd South, which covers 240 square miles, has lost eight bank branches since 2010. The town of Corwen, Llangollen and north Wales’s largest village, Rhosllannerchrugog, which has almost 10,000 inhabitants, as well as the industrial village of Cefn Mawr and the towns of Chirk and Ruabon, have all lost bank branches—the last two just this April. In fact, my 240-square-mile constituency has precisely one bank left, in the town of Llangollen. The eight banks that have closed were run by either HSBC or NatWest, and it is only Barclays that has a single bank branch left. That is the scale of the crisis, and it is causing many practical difficulties.

Colleagues have raised the issues affecting many elderly people. When I contacted HSBC at the start of the year about the plight of elderly people as a result of bank branch closures in Chirk and Ruabon, I was intrigued by the response I received from Jonathan Byrne, regional director of the HSBC central region:

“I’m disappointed that the closure of these branches will affect elderly customers within your community. We are conscious of the impact a branch closure can have on our customers, in particular the elderly and those with mobility issues.”

Oh dear, is that the best they can do? I posed questions to him in writing about the bank branches that were closing: how many people used them; how much was held on their accounts; and if a bank branch had to close, would it be possible for us to keep one open? But, silly me, I had not realised that all that information was totally “commercially sensitive.” I was not asking for a list of how much everybody in the area had in their bank accounts, although I dare say that some of us might have found that quite interesting to read. I just wanted to know how much was being held in the accounts and how many people used the bank branches. This is a great crisis that affects—in particular but not exclusively—rural areas and small towns. As colleagues have said, its effect on businesses is a massive problem.

It is possible to open individual personal accounts with the Post Office, but, where there are post offices, there are huge variations in the financial services that they provide. We need to remember that. As the hon. Member for Wells and my hon. Friend the Member for City of Chester have said, business banking services vary hugely from branch to branch as well. I think we need a big sort-out. If we do not have something of the sort—call it a protocol or call it something else—we will be in an even greater crisis.

I turn to the points that several hon. Members and hon. Friends have made about ATMs. The way in which we are pricing people out—often, but not always, in poorer and more remote communities—is nonsense. It is nonsense that anyone should have to pay money to receive money from their bank account. That needs serious looking at.

The beautiful town of Corwen is in my constituency. You are nodding, Mr Deputy Speaker; I think you have been there. I am not sure whether you have been on the steam train—the heritage railway—that runs through tremendous places in the Dee Valley area of outstanding natural beauty. What a shame it would be if you arrived there one Saturday morning and found that the ATM had run out of money. That would reduce your enjoyment of that beautiful area, as it does that of so many other people when it happens. This affects not only tourists, important though they are, but people who live miles and miles away from the next ATM. It is not that we have more snow, ice or bad weather than anywhere else, but in the winter there are problems in that regard.

Many of us are trying to propose solutions to these problems. My hon. Friend the Member for City of Chester mentioned a good idea about community bank hubs in various areas, and he offered Chester as a pilot area. I suggest that it might be nice to have a pilot across the border as well, and then we could compare notes. I would like to offer a suggestion about how we use mobile banks. The idea that a mobile bank will come into a community for an hour a week is not good enough. We are not talking about an ice cream van; we are talking about basic access to finance. Some banks—I believe HSBC is one—do not even provide mobile banks. When mobile banks operate in my area, they tend to be run by NatWest. They do not provide the full range of banking services that ordinary bank branches have.

The Government should look at whether there should be statutory requirements covering access to finance in our communities. I am not suggesting that every bank that has ever closed its doors should reopen or that banks should all have to provide mobile services, so that we might have three mobile banks standing next to each other on the high street twice a week. I am suggesting that we think about what we consider to be a basic, minimum service for banking. Perhaps we should look at some of the supermarkets and stores that now offer banking and ask how we can bring them into the equation.

One thing I know is that we cannot allow the current situation to continue. In my constituency, eight banks have closed in six years and only one bank is left. The same thing is happening the length and breadth of our country. It is not fair on rural communities and it is not fair on small towns. It is not even fair when it happens in urban, built-up areas. I urge the Minister and the shadow Chancellor to consider these matters as they respond, because they are crucial for all our communities.

Photo of Gareth Thomas Gareth Thomas Party Chair, Co-operative Party 3:18 pm, 30th June 2016

It would be naive to suggest that the world of banking has not changed with the rise of apps and internet banking. However, this debate is important, not least because the continuing closure of bank branches is emblematic of insufficient access to affordable credit, both for individuals—particularly those who, for whatever reason, are in challenging financial circumstances—and for small and medium-sized businesses that struggle to access the capital they need to expand. In that context, it is a pleasure to follow my hon. Friend Susan Elan Jones, who made several particularly good points about the specific challenges that bank branch closures cause for people and businesses in rural areas.

I will, if I may, dwell on a number of areas. My right hon. Friend Mr Lammy mentioned the difference mutuals make. He is right to suggest that the mutuals sector is smaller than it once was, but building societies such as the Nationwide, the Skipton, the Yorkshire, the Coventry and so on still play an important role in the communities they serve. They are much slower to close branches, which is an important symbol of their determination to do the right thing by their communities. They are helped in that by the fact that they do not have shareholders putting pressure on them always to maximise profits.

In that spirit, I encourage the Minister to dwell in her winding-up speech on what she and her Treasury colleagues might do to encourage the expansion of the mutuals sector. That sector covers not just the traditional building societies, but organisations that are part of the responsible finance movement—the community development finance institutions—of which I know she is aware.

I am thinking of the excellent work done by responsible finance institutions, such as Fair Finance, to encourage lending for individuals who cannot get loans from traditional institutions. I am also thinking of the work done by CDFIs focused on businesses, such as Greater London Enterprise, which are much more willing to provide loans to organisations set up by individuals in London which cannot access traditional sources of finance.

The responsible finance sector lends some £250 million annually to small and medium-sized enterprises, social enterprises and individuals unable to access mainstream finance. I give the Government credit for the fact that, under their regional growth fund, many community development finance institutions—or whatever we want to call them—have been able to access small additional funds to enable them to expand a little. I wonder whether it is not now time for the Treasury to be a bit more ambitious for the responsible finance sector and to look at what more it can do significantly to expand its capacity to lend more, particularly to small and medium-sized enterprises.

I ask the Minister to reflect on the way in which credit unions might be expanded. My hon. Friend Christian Matheson—I commend him and the hon. Members for Ceredigion (Mr Williams) and for Wells (James Heappey) for securing this debate—mentioned the significance of credit unions. They are expanding fast, but they are still a relatively small sector within the financial services world.

The previous Government initiated a project to consider whether credit unions’ back-office functions could be significantly improved. I wonder whether it is not now time to look at how the Government can help to improve the front end of the credit union world. What can be done to encourage better marketing of credit unions? I wonder whether it is possible for the major credit unions in London to come together, perhaps with a bit of Government support, to offer a common platform of services across London. As a result of a bit more marketing support, credit unions would get more attention than they do at the moment.

Similarly, I wonder whether there should be a duty on public services actively to encourage their employees to consider the promotion of credit unions to their staff. I find it unbelievable that some public service bodies, such as Transport for London, still do not have an arrangement to enable staff to pay money directly from their wages so that they can be members of a credit union, if they want to. Many NHS hospitals do that, as do some Departments. I ask the Minister to reflect on whether the gentle prod of a letter from her, sent around the civil service and devolved institutions, could be a positive step forward in encouraging the better promotion of credit unions.

I commend the hon. Member for Wells for taking the time to look at the Community Reinvestment Act from the United States. That Act should serve as a model for further UK debate about financial services regulation and what can be done to ensure that those who take money from us in the form of savings accounts and so on also put proper financial services back into our communities.

The Community Reinvestment Act arose from US civil rights activists’ concerns that banks were redlining areas where black people lived and were not providing financial services for those communities. There are similar concerns about under-served communities in the UK. I do not think that anyone is suggesting that that is happening on racial lines, by any means; rather, there are significant areas of deprivation that are not being served properly by major financial services institutions.

I think of the Thamesmead estate of about 50,000 homes in south London. There is no major bank on the estate—the nearest is a 30 to 40 minute car or bus journey away—and, needless to say, the high interest credit providers are extremely active there. Again, that is a worry, as it can increase the cycle of indebtedness. Volunteers on the estate are making efforts to encourage access to credit unions, but there should be more support from the Government to put pressure on the big financial institutions either to lend to those communities themselves or to work with other organisations such as community banks, responsible finance providers and credit unions to offer a more comprehensive service on site. Such pressure is extremely important.

To give the Government credit, they have required the British Banking Association to publish data on the level of lending in particular communities. That is welcome. But I wonder whether the Minister has had the chance to review the quality of those data, and consult those who actively look at what banking data reveal, to see whether there are more detailed requirements for better data from banking institutions. Certainly, I have had representations from the Community Investment Coalition suggesting that banks are not yet providing detail of the right granularity to enable effective conclusions to be drawn about where lending is appropriate. Will the Minister look at that?

Lastly, I commend the work of the think-tank Demos, which in 2015 published the case for a network of independent local banks across the UK. It noted in particular that the 2014 Breedon report, commissioned by the Government, showed a lending gap for small and medium-sized businesses of between £26 billion and almost £60 billion. Given the current level of uncertainty that all of us in the House are all too conscious of, doing more to make it easier for businesses and entrepreneurs with great ideas to get access to the finance they need to expand is clearly hugely important.

The work by Demos also revealed the significant differences in the rates of lending to small and medium-sized enterprises, with rejection rates for bank loans for SMEs highest in Wales, Yorkshire and the Humber, the north-east and the north-west. That suggests there is a strong case if not for regional banks then for putting more effort into securing new types of banking institutions with a stronger reach in those areas in particular. Many community banks, responsible finance banks and so on, which are already in existence, could be scaled up in those areas, but again that would require Government commitment to move in that direction. I gently encourage the Minister to look upon that idea with enthusiasm going forward.

Photo of Ronnie Cowan Ronnie Cowan Scottish National Party, Inverclyde 3:31 pm, 30th June 2016

I am grateful for the opportunity to speak on a subject of particular importance to my constituents in Inverclyde. As Members are aware, there has been a steady decline in the number of bank branches over the past 20 years. Between 1997 and 2014, almost 4,000 bank branches closed across the UK. Worryingly, this rate of decline shows no sign of decreasing, with figures obtained by the BBC indicating that a further 600 branches closed between April 2015 and April 2016. Proportionately, Scotland, Wales and the south-west of England are the hardest hit by closures.

Unfortunately, Inverclyde has not been immune from the effects of this decline and in recent years there have been a number of prominent branch closures in my constituency. My constituents have clearly expressed their opinion about these closures. They feel frustrated and dissatisfied. They feel that their views about an important community service have not been respected.

Photo of Margaret Ferrier Margaret Ferrier Shadow SNP Spokesperson (Scotland Office)

I have been contacted by several of my constituents who are concerned about the branch closure of the Royal Bank of Scotland, which is just across the road from my constituency office in Cambuslang, and about the Clydesdale bank in Blantyre. They rely on over-the-counter services and no reasonable alternatives are being put forward. Does my hon. Friend agree that banks have a responsibility to these people, many of whom have been customers for many decades?

Photo of Ronnie Cowan Ronnie Cowan Scottish National Party, Inverclyde

I certainly agree. When the Gourock branch shut in my constituency, the Royal Bank of Scotland gave me four alternatives within travelling distance, one of which is in Dunoon. Those with local knowledge will be aware that 5.72 miles from Gourock might seem fine, but it is not possible to drive there because it is across a body of water! A ferry journey there and back would be required. That is a good instance of where the geography of the area has not been taken into consideration.

When the Port Glasgow branch of RBS closed in 2012, my constituents were told that it was not a problem as they would still have access to the branches in the neighbouring towns of Kilmacolm and Greenock. When RBS took the decision last year to close the Kilmacolm branch, my constituents were told that that was not a problem as they would still have access to the Greenock branch. How long will it be until RBS tells my constituents that it is closing the Greenock branch, but that that is not a problem because there is a branch in Glasgow?

RBS made a promise that they would never close the “last bank in town”, but since 2014 that is precisely what they have done—165 times. Kilmacolm is now one such place without a bank. Instead, it is serviced by a mobile banking van of the kind we might see travelling around rural communities such as Mull or Iona. In January, RBS invited me to Kilmacolm to see how the new system and the mobile banking van worked in practice. I watched constituents lining up on the pavement in the pouring rain waiting to be served. They stood outside in the open, often with large sums of cash in their bags. When customers eventually reached the front of the queue, they had little or no privacy in which to carry out their personal banking. The procedure was even worse for elderly people and those with a disability, since the van’s narrow, steep and slippery stairs restricted accessibility. For example, a person in a wheelchair can expect to be served outside in the open, as it is physically impossible for them to enter the vehicle.

There was anger and frustration among customers using the service. Their most pressing concern was about the security of undertaking their personal banking in this way. The van was set up just metres from the empty shop unit that had once contained the permanent branch, which only compounded the agitation of customers as they stood in the rain waiting to be served. I have since revisited the van several times, and it is obvious that it is not an acceptable substitute for a bank branch permanently based in a community.

Gourock has also been hit by recent bank closures. Earlier this month, the Bank of Scotland closed the only remaining bank in the town. I appreciate that the way people bank is evolving and moving into the digital world—I wrote IT banking systems in a previous life—but it is important that all people within society be catered for, and that is not happening. The Bank of Scotland report into the Gourock branch closure showed that 44% of its customers were aged 55 or over, and undoubtedly some will not have been comfortable with online banking. That figure alone should have been sufficient to keep a branch open as a service to the community.

I know that banks undertake consultations and implement transitional arrangements, but are increased profits an acceptable excuse for providing a reduced service to the community? Perhaps a balance can be found, but I fear that branch closures are already undermining the service required by my constituents. Banks have an obligation to communities and play a key role in local economies. My constituency is fighting a war of attrition against economic stagnation and a declining population. High street bank closures are only making it harder for us to overcome those difficulties.

I shall end with a direct appeal to the major banks. I understand their need to evolve and adapt, but the closures have come too fast and lasted too long. It is time for that to end. I hope that the banks will give serious consideration to the concerns raised in the Chamber today.

Photo of Albert Owen Albert Owen Labour, Ynys Môn 3:37 pm, 30th June 2016

I congratulate my hon. Friend Christian Matheson and the hon. Members for Wells (James Heappey) and for Ceredigion (Mr Williams) on sponsoring this debate and the Backbench Business Committee on allowing it.

As has been said, the high street banks are the hub of our communities. Not long ago, as my hon. Friend the Member for City of Chester said, they used to boast that they were the local banks. That is not the case for those who live in north-west Wales. As indicated by other Members, Wales has seen one of the largest number of bank closures across the UK. These are the very same banks that the taxpayers of local communities helped to bail out only a few years ago. We took the responsibility, as a nation, to secure the banking system, but all we have seen is closure, closure and closure.

These closures have been implemented by stealth. There is a trend: first, we see a reduction in services—appointments only in centralised branches—and then hours reductions, when already those hours are not what communities want. If someone works from 9 to 5 and has to commute, their bank will not be open when they leave their home or when they return to their local community. The banks have not adopted the flexible working hours that businesses elsewhere have arranged. Then there comes closure. More often than not, when a bank writes to its customers, after deciding to close a branch, it will call it the most difficult decision it has had to make.

No. The difficult decision would be to work with the local community and keep the bank open. Closure is an easy option for many banks. They have been encouraging people to use online services. My local branch still pulls me up and says, “Would you like to use online banking?” That is not encouraging over-the-counter services; it is encouraging people to move away from their local banks. I do not buy what the banks say about the difficulty of closing branches. It is an easy option for them. Many have overheads that they want to reduce to make maximum profit for shareholders, and that is what is behind many of the closures.

I accept that IT services in the finance industries are evolving and that younger people are happy to use an app. As I said in an intervention, I carry my iPad and my cheque book with me wherever I go, but my ability to use those services is limited in rural parts of my constituency where I do not get a signal. Once, the bank got in touch with me to ask whether I had made a certain withdrawal and it took me hours to pick up the message because of the lack of a signal. I went to the branch to discuss it and got excellent service, but quite often people are not given the choice of going into the bank branch.

Banks have been closing in villages in my constituency for decades. Some have been replaced by a hole in the wall in another shop—the Spar or the post office—but the post office closure programme has compounded the problem in many constituencies, with mass closures of post offices across the country. Although many have extended hours, they are not there to suit small businesses and individuals.

In my constituency, the problem is not limited to villages and areas of low population; it is found in the principal towns as well. The five principal towns on Anglesey have all experienced reductions in banking services. Those services are vital to tourists: they come to the area and want to get money, but the hole in the wall may not be working; or they have an inquiry that they cannot deal with through their local branch. People visiting my constituency and other parts of the UK who want to go in and have a face-to-face talk about their financial circumstances are unable to do so.

The Government here in the UK, the Government in Wales and local authorities across the United Kingdom are working hard to regenerate town centres, yet many of the high street bank branches in principal buildings in those town centres are closed. It is difficult for regeneration schemes to counteract closures on the scale that we have seen. There is no joined-up thinking here. The present Government have rightly talked about how valuable high streets are, but the banking industry is not pulling its weight, even though we, the taxpayers, bailed out some of the banks.

The Holyhead bank branch has reduced hours and people have to go to Llangefni, 15 miles away, for an appointment. Fifteen miles may not sound like a great distance, but people who do not have private transport may have to take two or three buses to get there and make the journey within those reduced hours. Peripheral areas of north Anglesey have been hit hard by bank closures. Again, it is difficult for people to get to alternative branches and they usually have to make an appointment.

Market towns have been built on trade; the banks have played an important part in their development and infrastructure has in part been built around the market and the banks. Such towns have been ignored for too long. I know the banks are private institutions, but they have community responsibilities. They are letting down their customers, in particular those in rural areas.

Other speakers have talked about regulation and the many inquiries that have been set up, but I am making practical points about individuals in the 21st century who want to access services face to face. The social value of banks and financial services in local communities is important. We have heard about elderly people wanting to come in to a branch and talk to someone; let us not ignore them. We have a growing older population in our country and we and the banks need to look after them. The banks have a social responsibility.

This debate is timely and I appreciate that we are having it because it affects each and every constituency. It is time the House of Commons started to tell the banks that they have to be responsible to the communities they serve. Those communities, their customers and the taxpayers helped to bail out the banks when they were in trouble. Communities are now in trouble. We are asking the banks to pull their finger out and act responsibly.

Photo of Mark Williams Mark Williams Liberal Democrat, Ceredigion 3:44 pm, 30th June 2016

I congratulate Christian Matheson on shepherding me and James Heappey to the Backbench Business Committee to secure the debate. I thank the Committee for allowing us the opportunity to have this debate, which is important. It is always a pleasure to follow Albert Owen. We agree on most things rural; our constituencies are not dissimilar. I was touched when Susan Elan Jones described that nonsensical hypothesis and the threshold of 15,000 people, and I instantly started to think about my constituency. No community there would reach that level, except the town of Aberystwyth and that would be seasonal—it would depend on a lot of students. I say that to illustrate the challenge of rurality.

The debate has been very good. We have heard about the cities and what I call semi-rural constituencies. I am going to talk about my constituency, which is particularly rural. It is 1,795 sq km, it has 147 villages and hamlets and 700 family farms—one large community. The hon. Member for Wells described Glastonbury, without the 200,000 visitors, as a smallish town with 10,000 people. A town of 10,000 people in my constituency would be a metropolis. The scenario is very different, but the people there have the same entitlements and same needs and they are still being let down by the attitude and practices of the commercial banks. That has been the message in almost every contribution that has been made.

In 2011 I spoke in a debate in this place about bank closures. The number of branches had halved, from 20,000 in 1988 to about 9,300 then, and that figure has dropped further since. We can have a debate about the reliability of statistics. That is perhaps something on which the banks themselves should reflect, but the University of Nottingham report—Mr Lammy alluded to this—said that

“the rate of closure has slowed more recently” and that seems to be the case only because of

“the much reduced stock of branches”.

Hardly a positive sign.

The decline is certainly not abating in rural areas. Over the past year, more than 600 bank branches have closed and now 1,200 communities have lost all their banks, putting our high streets and market towns in jeopardy. That is something the banks said would not happen—they said the last bank in the town would stay one way or another.

None of us can deny that there has been a shift in how many people access banking services. For many, that has led to more options and more flexibility from mobile and online banking. According to the British Bankers Association, mobile banking apps have become the No. 1 way that people bank, with 22 million downloads of banking apps, and that is forecast to increase hugely over the next few years. Like the hon. Member for Ynys Môn, I have a cheque book. I will keep it going as long as I can, or as long as the banks allow me.

Many businesses will bank either through call centres or distance banking relationship managers. I always think the description “relationship manager” is slightly inconsistent. The notion is that constituents of mine in west Wales will have a relationship manager in Swansea or Bristol—look at a map; it is a long way away. There is a disconnect between them and as a result local businesses suffer and sometimes the advice that is given can be problematic. The requirement is for local managers who understand the business in the area. That is hugely important and can make a huge difference to the small and medium-sized businesses that they are there to serve.

The issue of broadband and mobile coverage is hugely important. My constituency is in the bottom 10 in the UK in terms of broadband speeds and actual coverage. Next Wednesday, I have a debate in Westminster Hall, for those who are interested in that matter in a Welsh context. That is hugely significant for the debate we are having as is the issue of physical access to a bank. I live six miles from the great metropolis of Aberystwyth. I have the luxury of a car; I own one. I have the luxury of a train and a bus.

Photo of Mark Williams Mark Williams Liberal Democrat, Ceredigion

I do not own the bus or the train, I hasten to add. I have that luxury, but most of my constituency does not.

Two weeks ago, HSBC notified me—it sent me a letter—rather than consulted me of the fact that the Aberaeron HSBC would be shutting in September. They did not ask my opinion beforehand when they came to see me and the local councillor, Elizabeth Evans, to discuss the branch closure. This is a significant community and a tourist community—not on the scale of Glastonbury, but a significant community on the west Wales coastline. Local businesses need the bank—it is essential—in order to cash their takings. The closure is simply another nail in the coffin for that vibrant community.

In respect of the protocol, this is an instance of putting the cart before the horse. We were told that arrangements would be put in place before the closures happened, but we left that meeting still very unsure about whether the town of Aberaeron would have any cashpoint provision. In case HSBC is listening, if it is still intent on moving the bank to a local store there is a challenge: the pressure is on to provide us with at least a cashpoint machine in the town.

There have been two cashpoints in Aberaeron in the past. The hon. Member for Clwyd South mentioned the railway in her community. People can arrive there anticipating their railway trip for the weekend and find that they have no money and no means of accessing money. That happened in Aberaeron when the two cashpoints dried up. Visitors as well as locals found that they had no access to money in that community, raising the spectre of a long drive elsewhere.

With the continuing loss of bank branches, the importance of post offices has grown substantially, with more post office branches now providing banking facilities. We are told that 99% of the population live within three miles of a post office branch, with over 11,500 branches nationwide. All of those branches handle automated transactions, offering “cash-in and cash-out” banking services. Although the services provided by the Post Office are welcome and the initiator of this great idea should be commended—it is important and is providing more than a stop-gap—by the Post Office’s own admission, post office branches

“cannot offer the high value, complex and regulated financial services previously offered to the bank’s customers.”

Where can a customer receive financial advice or take out a loan in an area that has no local bank branches and a post office branch is the only access to banking? These are things that neither post office branches nor internet banking services can provide in the way that I think is still required—in a personalised and focused manner.

One of the successes of the previous Government was that the post office network was retained after years of decline, with a commitment to keep 11,500 post offices. However, that has not necessarily stopped closure. What has happened is that the word “closure” has been replaced with the idea of “movement to somewhere else”. If high street bank branches close and post offices follow, rural communities will be hardest hit. With relatively limited public transport making it harder to travel far and with rural areas having the weakest broadband speeds, our rural population is being financially left behind. As we have heard, there are age and demographic issues because not all people are capable of accessing the internet even if it is available.

When banks move into post offices and post offices move into shops, we need to recognise that those places were not designed with bank transactions in mind. There is considerable concern about privacy and security, which will be particularly off-putting for local businesses and elderly residents who rely on face-to-face transactions. Another positive move was the access to banking protocol, but I can only concur with the eloquent and passionate remarks of the right hon. Member for Tottenham on that issue. The protocol was good as far as it went, but it did not go far enough. It has not been monitored and I think it has been breached. I look forward to the review when it happens. When the protocol was announced, my former colleague, Vince Cable, said that

“banks have a duty to ensure that all their users and especially vulnerable customers, small businesses and those in rural communities can continue to access over the counter banking services.”

That is extremely important, and we look to the Minister for reassurance that a renewed protocol to address those concerns will be robust and will be enacted.

As well as the Aberaeron branch, we have lost a number of others. The roll call is significant. We have lost banks in Llandysul, New Quay and Tregaron. Tregaron is a particularly notable example, because following the closure of the Barclays branch there, customers face a 22-mile round trip to the nearest branch in Lampeter. It is not good enough for a bank to put a poster in a window, or on a boarded-up window, telling people that their nearest branch is X miles away. That closure has hampered local businesses, and local residents have felt the loss of face-to-face services. New Quay/Cei Newydd, in my constituency, has lost its last branch, although the town has a huge population in the summer because of all the visitors.

I could go on, but I will not do so. Others want to speak, and we want to hear from the Front Benches, including, of course, the Minister. Let me end by saying that rural communities are going through very challenging times. There is a characterisation of the high street in a small market town, involving banks, post offices, shops and readily available public transport—buses that stop and take people to their destinations. I do not want to be a Luddite; I do not condemn the march towards a digital economy, with services that can be accessed online and business that can be conducted by means of a call centre rather than face to face; but there is a universality in that, which does not currently apply to all rural areas. Perhaps it will in the future, given technological advances. Perhaps we will all be content to sit in our homes, not talking to each other and playing on computers. But we are not there yet.

Rural areas are being left behind. Broadband, and broadband speeds, are not equitable across the country. A generation of people, and certain businesses, depend and rely on physical banking. I sincerely hope that, if the way forward is the access to banking protocol review, the realities of rurality—the reality of the 20% of us who live in rural areas—will be considered.

The hon. Member for Wells ended his speech by using the phrase “fair play”. In Welsh the phrase is “Chwarae Teg”, and we demand that too.

Photo of George Kerevan George Kerevan Scottish National Party, East Lothian 3:57 pm, 30th June 2016

I thank Christian Matheson for securing the debate. I believe there is evidence of banking in Chester as far back as 355 BC, when I assume the service was better than it is now.

There is the how of bank branch closures and then there is the why; let me, very briefly, say something about the how. As every Member has pointed out—I can attest to this in my own constituency—there is a gross lack of proper consultation, to the point of arrogance on the part of the banks. My own example from East Lothian is the town of Prestonpans. My population base in East Lothian is expanding, and Prestonpans is a growing town that will soon contain 10,000 people. However, RBS is about to close the last branch of the last bank in the town. RBS has form. In 2010, it promised that if a branch was the last bank in town, it would not close that branch. In the past two years, 165 “last in town” branches run by RBS in Scotland and the north of England have closed, so that promise has gone by the board.

The lack of consultation is terrible. I found out about the Prestonpans closure by reading about it in the newspaper. Under the bank protocol, all stakeholders are supposed to be approached, but they are not. That contrasts dramatically with the example of Openreach. Yesterday a number of Members, some of whom are in the Chamber today, had a meeting with its chief executive, Clive Selley. We can make numerous complaints about Openreach and access to broadband, but at least the chief executive of Openreach will sit down with MPs and talk about the situation in individual villages containing only 50 people. Is it possible to get the chief executives of banks to talk to us directly? No, and that is particularly true of RBS. I commend the campaign to reverse the position that has been conducted by the whole community of Prestonpans, by me, by the local Member of the Scottish Parliament and by local councillors. We are still waiting to have a discussion with Mr Ross McEwan. We are not going to give up until he sits down and talks to us.

There is a solution, which I commend to the Minister. The Financial Conduct Authority has a responsibility because it oversees bank conduct on behalf of the consumer. The banks are reassessing the BBA protocol on bank closure, which has been discussed several times in Members’ contributions. The protocol is as weak as dishwater, but even that is not being adhered to. It is time for the FCA to step in and hold discussions with the BBA in the course of a re-evaluation of the protocol, and whatever comes out of that, the authority should be prepared to step in and enforce the protocol, rather than having it as something that is simply non-statutory and ignored by the banks.

Why the closures? Of course technology and market demands are changing, but we must not let the banks off over this. We have the most centralised, monopolised retail banking system in the western world. It has made a fortune over the past 20 or 30 years. That banking system grew by mergers, and as the banks grew and merged, they did not modernise and integrate their IT services, which is why every major bank has a whole legacy of computing systems that are all incompatible and falling apart, meaning that their cost base is huge. What are they doing about it? They are closing branches, firing staff and squeezing customer services in order to get the money to resolve something they should have invested in over the past 20 or 30 years. Do not tell me that this is a wonderful move by the banks and that they are closing branches because we are all moving to use the internet. This is the banks trying to find money to address a problem they should have dealt with earlier.

I will give one specific example involving RBS. It has been told to sell off 300 branches of Williams & Glyn, but it has suddenly discovered that the Williams & Glyn computer system is so dreadful that it will not be able to make the sale. RBS has now spent at least £1.2 billion—I suspect the true figure is about £1.5 billion and rising—to put a new IT system into Williams & Glyn so that it can be sold. As RBS is so strapped for cash, it has to make new savings this year of £800 million to help to fund the new IT system for Williams & Glyn. The bank in Prestonpans and all the other RBS branches that are affected are being closed not because of the wonderful new nirvana of us all moving to internet banking, but because, yet again, bad management has led to a need to squeeze costs to deal with a problem that should have been solved before. We should not let the bank off the hook.

We need some solutions. Why not have a universal banking obligation? After all, the Government have agreed to a universal broadband obligation, which helps rural areas in particular—such places are also where the bank branches are closing—so why not have a universal banking obligation? It could be linked to particular licences for the big retail banks, particularly for more complex products. It could also be linked to particular rural areas. We need a degree of regulation because otherwise the banks will just laugh at us.

We need to expand the market for local banking services, especially for SMEs. The new bank capital regulations mean that banks have to keep quality assets that they can realise if they ever have to resolve a liquidity problem, but the Bank of England and the Prudential Regulation Authority have rather left it up to the big banks to model their own capital asset requirements and the quality of their assets. The big banks do that by deeming small business loans as some of their most risky assets. Therefore, they have to lay aside a lot of capital if they want to expand SME loans, but they do not want to do that, so SME loans are not expanding.

The Bank of England and the PRA should step in because all the evidence shows that small business loans are, in the main, very safe. At the tail end, there is perhaps a high risk, but most of those loans are secure. The banks are again using their interpretation of regulations to undermine what we all want, which is more lending to SMEs. If the Bank of England and the PRA intervene and force the big banks to change their assessment of their risk-weighted assets, we would get more SME lending. We would also get smaller challenger banks coming into the market and setting up in our smaller towns precisely to get that SME business. We should not let the banks get away with the notion that this is all inevitable.

Finally, I want to give this message to Mr Ross McEwan: myself and the people of Prestonpans are ready to meet you at any time.

Photo of Chris Evans Chris Evans Labour/Co-operative, Islwyn 4:05 pm, 30th June 2016

It is a pleasure to follow George Kerevan. I hope that Mr Ross McEwan meets him really soon because I can see the hon. Gentleman’s passion on this issue. I pay tribute to my hon. Friend Christian Matheson. I know how deeply he feels about this issue and how he has been campaigning for this debate through the Backbench Business Committee. I am pleased that his campaigning has come to fruition. It would be remiss of me not to mention James Heappey.

We found out today that Mr Williams is lucky enough to have access to a train, a bus and a car. He represents a beautiful part of Wales and I always like hearing him talk about places in his constituency because that reminds me of my childhood holidays and good memories come flooding back. I also pay tribute to my hon. Friend Albert Owen, who has again shown his passion and devotion to his island constituency. His fantastic speech was one of the best that we have heard in the Chamber for a long time and I thank him for it. It would also be remiss of me not to mention another Welsh colleague, my hon. Friend the Member for Clwyd West

Photo of Chris Evans Chris Evans Labour/Co-operative, Islwyn

I promised my hon. Friend before I stood up to speak that I would not say “Clwyd West”, but I knew I would get it wrong. My hon. Friend Susan Elan Jones has been a good friend for a number of years. Like my hon. Friend the Member for Ynys Môn, she cares about these issues. I thank her for her passion and for the strength that she has shown, especially this week, given the difficult circumstances.

Sadly, the debate has come at a bad time for me. Only last night I received the terrible news that yet another bank—Lloyds in Newbridge, a town in my constituency—is to close in October. That follows the closure earlier this month of HSBC in Risca, another town in my constituency. Sadly, such closures are not unique to my constituency. They are widespread throughout the whole country, and some sections of society are experiencing a considerable loss. The BBC reported in May that between April 2015 and April 2016, more than 600 bank branches were closed across the UK. More have closed since, including that HSBC branch in Risca, and soon there will be that closure in Newbridge and others across south-east Wales.

Local residents are being given the usual reason by their bank, namely that more customers are turning towards online banking and footfall at branches is falling. It is hard to deny that online and telephone banking are on the rise. Although I use bank branches from time to time, my own daily banking needs are usually met over the phone or through an app. This trend is underlined by Barclays, which says that on average its customers use mobile banking more than 28 times a month, but visit their local branch less than twice in that time. The banks say that it therefore makes commercial sense to close branches that are expensive and not being utilised enough to justify their cost. When I worked in banking in the early part of the 21st century, I noticed that footfall was going down, but the banks were not really very nice places because we would have a customer’s arm up behind their back trying to sell them as much as we could as soon as they walked through the door.

If we look only at statistics and reduce customers to numbers on a graph or spreadsheet, saying that they are only one of a minority who do not use online or telephone banking, we ignore the cost and the burden that closures place on the individuals who are left out. When we dig a little deeper to see who exactly loses out the most from the closure of a bank branch, it is almost always the most vulnerable in the community. I have spoken in the House about the perils of payday lending, legal loan sharks and doorstep lenders. If someone needs a loan, they will trust the person at the door if there is no bank at the end of the road to meet their borrowing needs. That is the danger. When a bank closes a branch, that person, who is usually unbanked, becomes even more vulnerable than they already are.

I have to make an example of HSBC and the branch closure in Risca. When I launched an online petition, which was signed by hundreds of residents, some of the comments truly summed up the problem with branch closures. One constituent said:

“My parents use this bank. If this branch closes they will not have a branch within a 5-mile radius. The nearest branch will be at least 30 minutes away by bus. Both of them are in their 70s and cannot use internet banking as they have no internet connection nor computer. They are hard of hearing, so telephone banking is also out of the question. How are customers like them supposed to deal with any issues if they cannot speak to someone face to face?”

HSBC’s closure of Risca’s branch was bungled, and the same goes for branches all over the country. The first I heard about it was in an email on a Friday night. I was told, “Do not say anything, because we have not told the customers or the businesses. Keep it to yourself.” I wrote to the bank and asked for an exact closure date and when it was going to be announced, but I was met with silence. It was only when I put it in the press and set up the petition that HSBC wanted to talk to me. Even then, it was like pulling teeth.

I asked to speak to the chief executive—like the hon. Member for East Lothian did with RBS—and I was given a regional director who popped by in Risca for the day. Guess what I found when I walked into the HSBC? Did I find a branch on its last legs? Did I find a lack of staff? No, people were queuing out the door to use the services. The average age of the people was 70s or 80s and they were complaining that the branch was going to close, yet the representative was in the office telling me that no one was using the service. Who am I supposed to believe?

Another thing that I have to say about HSBC is that when it did finally put out a press release, it told me that footfall had dropped by 70% in Risca. That was very good, and I accept that, but when branches were closed in the constituency of my hon. Friend Chris Bryant in Porth and Tonypandy and in the constituency of my hon. Friend Chris Elmore, the bank said exactly the same thing: footfall had fallen 70% as well. I am sorry, but I do not believe that figure.

Photo of James Heappey James Heappey Conservative, Wells

The hon. Gentleman makes an excellent point. The difficulty is the ambiguity over the definition of “regular users” that the banks try to use in their impact statements. I am not absolutely sure what it is, even though I spent some time researching for today. There needs to be a clear definition of what a regular user is so that the number in an impact statement can be interrogated.

Photo of Chris Evans Chris Evans Labour/Co-operative, Islwyn

I totally agree. When I go to a bank that is about to close, I want to know the exact figure. I want to know what the footfall is even if that means just clicking the numbers as people walk through the door. At least then there would be some raw data that could be used to justify a branch being closed.

There is also a social impact. Risca once had several banks and building societies, including branches of Lloyds, HSBC and Barclays. Lloyds and HSBC have now closed, leaving the town with one remaining bank, which is fortunate because people still have the option of moving to Barclays if they want to continue to bank locally. What happens if, as in so many communities up and down the country, Risca or Newbridge lose their last remaining bank as the long trend of bank branch closures continues, as predicted by fintech companies?

I say to my hon. Friends the Members for Ynys Môn and for Clwyd South and the hon. Member for Ceredigion that I am lucky in Islwyn because we have good transport links. We have a trunk road that goes right through the constituency, the bus service is good, and there is a new train service. People can get from town to town. However, Ceredigion, which is a huge constituency that I know quite well, Anglesey and Clwyd South all have country lanes and one-track roads. How can people get from one branch to another? It is a major outing for many people.

Before a bank closes, it is imperative that a full assessment is carried out of the impact that the closure will have on the local community and that local stakeholders are consulted. Steps have been taken. In March 2015, banks published their access to banking protocol, which laid out their commitment to ensure financial inclusion and to undertake an impact assessment through community engagement when a branch closure was planned. I look forward to the publication of the independent review led by Professor Russel Griggs of how banks have implemented the protocol. In my anecdotal experience, however, they have not. They have been found absolutely wanting.

It is very clear that some banks provide a better service than others. For example, I compare the closure of Barclays in Newbridge with the way that HSBC was closed in Risca. When I see something good, I say so. The way that Barclays managed that closure was far better than what happened at Risca. Barclays had the raw data, there was a point of contact, it spoke to all the customers, and I pay tribute to its community relations manager, Jonathan Brenchley, who was fantastic all the way through that process. The great thing about him is that if customers have a problem, they can pick up the phone to him and he will deal with it. It is an example that many other banks should look into.

In May 2013 Barclays launched its Digital Eagles programme, which is designed to support and educate customers to help them feel comfortable with using digital channels not only for their banking, but in all aspects of their lives. So far it has trained over 16,000 Digital Eagles across the country and has held 5,200 learning sessions. The expansion of such programmes among other banks would be a very important step towards ensuring that nobody was left behind as banking changes.

However, switching to online or telephone banking alone will not be enough to ensure that nobody is badly affected by branch closures. The parents of my constituent, who have no computer or internet, should not be expected to buy a computer, and their hearing problems make telephone banking an obstacle. If they are to keep their independence as more bank branches close, banks must move towards a model whereby the bank will go to the customer if the customer cannot get to the bank physically, digitally or otherwise.

I pay tribute to NatWest for its service, which is akin to a mobile library. Its van turns up once a week in hard-to-reach communities so that people can do their banking there. A promising solution might be a vast expansion of mobile banks which, although they are not perfect, could at least dampen the impact of bank closures. Customers who seek the kind of banking and financial advice they would otherwise receive at a branch should have the option to request one-to-one meetings with bank staff, either at home or in a nearby public space, such as a library.

It is important to remember that among the biggest customers of local bank branches are small businesses, with regular trips to their local branches to make deposits. The closure of branches means that they have to go further and further and waste precious time when they could be chasing sales and business. If time is money, they are certainly losing out. As in the case of personal banking, I believe banks must change their approach so that they are the ones to come to the customer. In January 2016 Barclays introduced a Barclays Collect service, which will travel directly to business and corporate customers to collect deposits directly from their door. I welcome that news. Barclays plans to roll out the scheme more widely next month. I hope the scheme is successful and that other banks follow suit.

We have to consider other options, and credit unions must be part of the mix. Earlier my hon. Friend Mr Thomas said that in the new banking world credit unions must play a role. They will bring people to banking. I know that the Minister has been a champion of credit unions in the past. They bring people to banking, but very often they are the victims of their own success. Because they are voluntary organisations, when they get huge they get even more difficult to manage, as people do not have the necessary skills and experience.

Credit unions do not know where to go as they get bigger. I think building societies have a role and should offer back-up to credit unions, as should post office credit unions. There is much work to be done in credit unions, but there needs to be a next step for them, such as the opportunity to become a community bank, a post office-style credit union, or even a building society. I urge the Minister to look into this. Legislation is needed to enable huge credit unions run by voluntary staff to become the new banks or smaller community banks or building societies. I hope she and her officials will give some thought to that.

We need to start thinking about the social impact when a bank closes. The premises usually remain vacant or become a pub, for example, which is a waste.

Photo of Mike Wood Mike Wood Conservative, Dudley South

In my constituency, rather like in the hon. Gentleman’s, Lloyds Banking Group announced two further bank closures yesterday. He is speaking movingly about the impact of bank closures on our communities, but that impact also extends to the staff. Does he agree that banks need to do far more to redeploy staff, and, where redeployment cannot take place, to make sure that retraining and support are in place so that staff are treated fairly?

Photo of Chris Evans Chris Evans Labour/Co-operative, Islwyn

As a former employee of Lloyds TSB, as it was in those days, I have every sympathy with any member of a bank’s staff who is made redundant.

To go back to my earlier point, I hope the Minister will think about a piece of social legislation that says that banks should offer members of staff to credit unions, to give those organisations the expertise and professionalism they need to manage once they get bigger. There is a real space there for some action.

Banking is changing, but banks have to change with the times; they have to reach out to the customer and to find new ways of delivering their services. I come from a banking background, and I know that things are not perfect, but today’s debate has given me hope that all of us in the House want the best deal we can get for our constituents and for the customers of banks.

Photo of Gavin Newlands Gavin Newlands Scottish National Party, Paisley and Renfrewshire North 4:21 pm, 30th June 2016

I am delighted to take part in today’s debate on bank branch closures, because the first campaign I got involved with as the new MP for Paisley and Renfrewshire North was an attempt to stop the closure of a much used local bank. I thank the hon. Members who secured the debate, and I thank the Backbench Business Committee for scheduling it.

The campaign I mentioned was initiated when we heard that the Bank of Scotland branch on Glasgow Road in Paisley was being closed, meaning that customers would be forced to use internet banking or to travel to the nearest bank, which was in the town centre. Not only was the bank used by local businesses on Glasgow Road, but, much more importantly, it provided a vital service for the residents of Ralston and Whitehaugh, the majority of whom are of pensionable age—unlike one famous resident, my hon. Friend Mhairi Black, who is significantly younger. The decision caused a lot of anger and concern in the local community, and I am sure I am not the only Member who has been frustrated when a bank has offered solutions such as using online banking or travelling often significant distances to access branch services.

Following the decision to close the branch, I met bank bosses in London and in my constituency, where I organised representatives of local residents associations and community councils, as well as the local MSP, to come and put their case to the bank. However, we were left incredibly frustrated when it would not respond to or accept the case that was made about the difficulties of online banking. When I spoke to constituents affected by the decision, I heard at first hand that many customers do not have the knowledge or hardware to use online banking. These decisions disproportionately affect the elderly and those with mobility problems, but banks never fully take that into account when making these decisions.

I also represent Bridge of Weir, a rural area that faces the closure of its local bank. If the bank does close, that will have a huge impact on residents. Not only is the village poorly served by public transport, but online banking is even less of a viable option owing to the poor broadband service in the village. Access to an effective broadband service is surely a must if banks are to cite online banking as an alternative to local branch services. All too often, however, banks are closed in rural villages that have a poor broadband service, something alluded to by Chris Davies.

I am pleased to say that Bridge of Weir, along with Houston, Crosslee and Craigends, recently finished in the top 10 of Virgin Media’s Supercharging Local Communities initiative, meaning that Virgin’s network will be extended to those communities in the next year or so. However, the bank’s decision was made before the Virgin announcement.

The UK Government have a poor record on broadband roll-out. By contrast, the Scottish Government have invested £400 million to deliver superfast broadband to 95% of properties across Scotland by the end of next year. In addition, the SNP Scottish Government were recently elected on a manifesto pledge to ensure that 100% of premises have access to superfast broadband by 2021. If the UK Government are committed to helping more people to access online banking, I would encourage them to follow in the footsteps of the Scottish Government and to be more proactive in rolling out superfast broadband.

Any impact or equality assessment completed following a decision to close a local bank would surely highlight the negative consequences for particular groups. That is why I get so frustrated and angry when a decision is made to close a branch that is providing a vital service to a local community. Putting to one side the support that the taxpayer has provided to these banks, they have a responsibility towards our communities and we should not allow them to make reckless decisions that will have a negative impact on particular sections of our communities. We were unsuccessful in persuading the Bank of Scotland to reverse a decision to close the Glasgow branch. This obviously disappointed the local community, but we are aware that our campaign is only one example, as many other local communities from across the UK attempt, often in vain, to prevent banks from being closed in their areas.

The truth of the matter is that local banks closing is not a new thing—it is not a process that began following the 2008 global financial crisis. The bank branch network has been declining for the past 30 years. In 1988, there were over 20,000 branches in local communities across the UK; by 2012, this number had fallen by 57% and we had only 8,800 branches serving our local areas. Worryingly, in many of these cases it is the last bank in a town or village that is being closed down. In the first three quarters of 2015, UK banks closed 650 branches, of which 177 were the last bank in town. This is entirely unacceptable. Unfortunately, all the major banks are guilty of letting their customers down on this issue.

One of the aspects that I find most distressing about the closures I spoke of—I know this frustration is shared by many hon. Members—is the fact that the decision to close was made without prior consultation being undertaken. The banking industry has to start listening to its customers. It is not good enough for the big banks to make a decision and then be dragged to a table and forced to consult the local community in what is ultimately a charade. The big banks should open up dialogue at the very first stage and allow the community to engage in the process before any such decision has been reached.

Local banks are vitally important to local people and affect each and every one of us. We all take our roles as constituency MPs extremely seriously, and I am sure that we would all support local groups who are campaigning against a bank closure. The wave of bank closures affecting communities across the country is an issue that should unite the House. The consequences for communities following a bank closure are clear. The number of banks being closed is growing by the month, and the Government should be concerned about this. The UK has only a third as many bank branches per person as other European countries. This disappointing—or shameful—comparison should encourage the UK Government to take action, and to do so soon before it is too late. I am very concerned that village and rural economies will be severely affected by a lack of local banking options, and that as a result of bank branch closures, businesses are more likely to close, a regeneration agenda is much more unlikely, and start-up finance for local businesses becomes more difficult to obtain.

Communities rely on their local bank branches. They are just as important as local doctors, dentists, and supermarkets. They are vital for constituents who live in urban areas and a lifeline for those who live in more rural settings. We have to protect our local banking services. We must ask the banks to think again and reverse their closure programme. If they will not, I would ask the Government to use their considerable influence and to intervene to ensure that no more towns and villages are left without a bank.

Photo of Kirsten Oswald Kirsten Oswald Shadow SNP Spokesperson (Armed Forces and Veterans) 4:28 pm, 30th June 2016

I congratulate the hon. Members for City of Chester (Christian Matheson), for Wells (James Heappey) and for Ceredigion (Mr Williams) on securing this debate via the Backbench Business Committee.

Like many speakers in the debate, my constituency is currently experiencing a new wave of bank closures. Fortunately, none of the three closures proposed in East Renfrewshire is the last bank in a town or village; unfortunately, that is because such closures have already happened in the villages of Neilston and Eaglesham. However, these closures will make yet another area reliant on just one branch, covering a large residential area, and providing access to the services of only one banking group. Regrettably, once again, the publicly owned RBS is leading the way in closures, on this occasion proposing the closure of branches in Barrhead and Netherlee.

The wave of closures described by the hon. Member for Wells continues the process of concentrating branches in close proximity to each other, leaving large swathes of our urban areas, and many of our most rural communities, without direct access to a bank network—a concern highlighted by the hon. Members for Ynys Môn (Albert Owen) and for Ceredigion. Even the British Bankers Association recognises that the most digitally savvy customer sometimes needs access to a branch for specific types of transactions, but such access is becoming very difficult for many.

There has been a long-running debate, and a useful discussion today, about how best to ensure access to banking services, including the possibility of enforced or encouraged sharing of branches. The industry has resisted that, arguing that we should rely on competition, with the market rewarding banks that provide a good branch network. I share the dismay of Mr Lammy at the utter failure of RBS to honour its own promise never to close the last bank in town. That certainly demonstrates the limits of this approach. What are we to do when a clear statement of intent is revealed as nothing more than a cynical marketing slogan?

The sector’s reliance on digital technology is understandable, and the number of customers who have downloaded a banking app is impressive, but what if someone lives in one of those areas where access to broadband is still difficult or the mobile network is stuck in the 1990s? Many Members are concerned about that, and my hon. Friend Gavin Newlands and the hon. Member for Wells spoke eloquently about it. Are we really going to stick to the position of having no regulatory influence to ensure that those businesses benefit from participation in the banking sector? We need to ensure that banking truly is accessible.

Even with the technological limitations of the time, the financial sector managed for many years to deliver accessible services, with a wide range of institutions, including building societies, savings banks and credit unions, such as the excellent East Renfrewshire credit union, emerging to spread financial services to all sectors of society. It is simply not acceptable, given our much more advanced technology, that we are leaving people behind and unable to make full use of the services that the rest of us enjoy.

The industry boasts of its investment in branch networks. However, the notice of a proposed TSB closure highlights £250 million of investment in branches and the digital offering. I wonder how much of that was invested in reshaping the branch network rather than in consulting bank users. We need to challenge the industry over whether it is doing enough to listen, to reflect the change in services and to use new technology to reshape its network. I echo the concerns of my hon. Friends the Members for East Lothian (George Kerevan) and for Paisley and Renfrewshire North about the failures of consultation on bank closures.

My perception is of an industry with many branches that continue to operate from traditional, large, solid buildings, designed when banks processed large volumes of cash and paper. Too often, it seems that the industry views the only alternative as shutting up shop and withdrawing services to a similar building a few miles away. The hon. Member for City of Chester made a valuable point about the impact on local high streets and small businesses. The tale told by my hon. Friend Ronnie Cowan about the mobile bank is testament to a lack of interest in community need.

The British Banking Association talks of investment in refurbishing the network, but I see no reference to the four big banks investing in new locations for services in the community, either by downsizing branches instead of complete withdrawal, or by creating new branches. We are used to seeing the banks spend vast sums of money on corporate headquarters in London, Edinburgh and elsewhere, but are we really seeing investment to ensure that there is a modern branch network?

Like the hon. Member for Ceredigion, I am pleased to see banks working with post offices to provide coverage in areas from which they have withdrawn. As we have heard, however, the post office service is not a full substitute, with lack of privacy a particular issue. The apparent willingness to share services with the post office gives rise to questions about the industry’s failure to reach agreement on shared branches. Is that really such an insurmountable obstacle, or is the banking industry simply stuck in old ways?

Members may recall the talk of challenger banks helping to tackle the problem of access to branch banking. That seems to have amounted to little, with most challenger banks opting for specialist markets or, as in the case of Metro bank, with branches in only a small part of the country. There is a branch of Virgin Money in my constituency, in a location it inherited from Northern Rock. Given that it is in one of the best-served communities for banking services, it adds little to the spread of banking availability.

There are currently four branches of TSB in my constituency, one of which is proposed for closure. Some talk of TSB as a challenger bank, but Mr Thomas has noted that communities came together on a mutual basis to ensure that they could access banking services, and it was those communities that built up the original TSB network. The dismantling of that success story under the Thatcher Government was a result of an obsession with the market and contempt for co-operative and mutual effort.

I welcome the continued operation of the Airdrie Savings bank, which resisted the Conservative Government, stuck by its founding principles and continues to serve the community it has served for nearly 200 years. The next time Conservative Members are tempted by the view that the market is the solution to all problems, they may remember how well placed the Airdrie Savings bank is and think again. Having listened to him today, I am certain that the hon. Member for Wells will agree with me.

Much of the debate has been about an issue that Chris Davies raised: the importance of the branch network to older people and those who are, perhaps as a result of disability, unable to use digital services. Hon. Members have described how such individuals are disadvantaged by the withdrawal of a personal service. As my hon. Friend Margaret Ferrier described, such a service can be particularly important in dealing with the unscrupulous individuals who attempt banking scams on a daily basis.

One of my constituents, a lady in her 90s, was recently targeted in a telephone scam that involved her branch. A caller persuaded her that her branch was being investigated and she should move her money, so she visited her branch and moved money to an account number that she was given by the caller. When he got greedy and called back asking her to move more money, the branch staff, to their credit, realised that something was wrong and persuaded her to allow them to alert the police. In such a case, even if the money is recovered, the customer will have been put through torture for weeks waiting to see what the outcome will be.

That demonstrates the importance of a branch network and well trained and motivated staff who look out for their customers. That is what people would call real customer service from a bank. Surely, by now, we must realise that the “greed is good” approach to banking that has taken root in the UK is damaging. It damages our economy, as the crash of 2008 clearly demonstrated. As Susan Elan Jones so eloquently said, it also damages our communities as more and more people lose access to a real banking service in return for the use of ATMs or an over-the-counter-only service at the post office.

The bank branch network still receives almost 300 million visitors a year, and it provides a vital service. Is it not time banks thought again about how they can build on those visits and encourage more visits, particularly by those who need the most help to manage their money? The big four banks seem to be entirely focused on managing the decline of the bank network. A study by the University of Nottingham highlighted an issue that the right hon. Member for Tottenham raised about the damaging effects of that on communities. The report stated:

“As mainstream financial institutions continue to pull out of economically distressed areas as part of wider strategies of adjustment, so they are replaced by more predatory forms of financial institution.”

If the banks will not address all these issues on their own, the Government must take action to avoid the abandonment of our communities. I look forward to the Minister outlining exactly what the Government’s plans are to defend the bank network from further decline.

Photo of John Martin McDonnell John Martin McDonnell Shadow Chancellor of the Exchequer 4:37 pm, 30th June 2016

I have taken a personal interest in the closure of banks over the years, so I thank the Backbench Business Committee for allocating time for this debate. I also congratulate my hon. Friend Christian Matheson and the hon. Members for Wells (James Heappey) and for Ceredigion (Mr Williams) on securing it.

The closure of bank branches and the accessibility of banking are issues of cross-party concern, because local banks play a vital role in our communities, both in large cities and in rural areas. This is a question of access to banking and financial inclusion. Bank branch closures inevitably cut that access and cause financial exclusion. As constituency MPs, we want to know that in our local communities, individuals and businesses can access the personal finance or business banking services that they require. From today’s exceedingly interesting debate, we have discovered that people and businesses increasingly cannot access those services.

My hon. Friend the Member for City of Chester explained that banking is changing—the use of apps and so on can be more convenient—but that the closures are restricting access to banking facilities for individuals and communities. He emphasised that, as the Reuters report states, these closures are hitting hard in low-income areas, and that the cutting is going too fast and too far. I agree with him, and I welcome his creative proposal for local banking hubs. He has thrown down the gauntlet for a pilot in his constituency, as have other hon. Friends; they are clearly bidding for the process. That is a creative way forward. I agree that until banks respond in some way, they should stop advertising themselves as some sort of local friend.

The hon. Member for Wells made an interesting speech. May I ask him to pass on my congratulations to the residents of Glastonbury on their creative demonstration of the black horse funeral? I thought that it was an extremely effective way of highlighting what has happened in the area, whether it affects the sale of crystals, joss sticks or anything else.

It was very helpful that the hon. Gentleman raised the issue of the protocols not actually working or doing what they are supposed to do. It would be interesting to look at Congress’s Community Reinvestment Act because it includes the safety net that many hon. Members have suggested as a possible future solution. He emphasised the issue for small businesses, and highlighted the work done by one of the most effective lobbying organisations in this country, the Federation of Small Businesses. I have to say that I agree with him that if there is a transfer of services to the post office, banks must surrender full functionality if post offices are to be effective. As he said, it is a case of “Either stay or go, but pass on that facility.”

Understandably, my right hon. Friend Mr Lammy is not in his place at the moment. I know that he is busy on other matters—as are many others. He highlighted the fact that even the bank he bought his first suit to get a job in has been closed. Interestingly, he emphasised the situation in his constituency, where the riots took place. I know the sterling work he has done to try to regenerate the high street and get businesses and shops back to the area—only to have some of that work undermined by the closure of the local bank. He also emphasised the issue of how footfall is calculated, which was highlighted by several hon. Members.

Chris Davies emphasised this issue with regard to rural services, and identified the fact that mobile services can prove effective as a solution in some areas. He also drew attention to what happens, as many of us have experienced, when a bank pulls out—the empty shopfronts and the degeneration of the high street overall. As he said, the post office is an alternative, but interestingly enough, the post office has also closed in his area, as it has in many others.

My hon. Friend Susan Elan Jones proposed the introduction of a novel piece of legislation. I found that fascinating, and we must come back to it another time. She, too, made a bid for a community banking hub. She spoke about the role of mobile banks, but emphasised that they are effective only if they visit frequently and are open for long enough.

My hon. Friend Mr Thomas has done sterling work over the years in arguing for the development of co-operative banking and credit unions. He drew attention to the lack of affordable credit overall and to the role of the responsible finance movement, which has done excellent work. Credit unions are critical to our society now, particularly in areas that are experiencing deprivation. He also argued for co-operation, and gave the example of how back-room facilities could be co-ordinated to support the development of credit unions. He commended the 2015 Demos report—I urge hon. Members to read it—which looked at the case for a network of local independent banks across the UK, particularly in relation to their role in lending to SMEs.

Ronnie Cowan drew attention to the issue of mobile banks, but also to their drawbacks: they are not very accessible for some people, and are not the ideal solution. He emphasised the impact that the withdrawal of local bank services can have on the local economy.

In his usual eloquent way, my hon. Friend Albert Owen demonstrated the unfairness of the situation. The national banks have received significant sums of taxpayers’ money to support them, but by carrying out such closures, they are not acting responsibly.

The hon. Member for Ceredigion drew attention to what it is like to live in a rural area when a bank closes, given the impact that that can have, and to the issue of physical access. As he said, there are cashpoints, but what happens when they dry up and what impact does that have on the local economy? He also gave the example of New Quay to show how local businesses can be hampered. Like many hon. Members, he called for fair play in this matter.

George Kerevan demonstrated that, as several hon. Members have said, there is a lack of consultation when there is a closure. He emphasised the RBS case, and described the “arrogance” of the banks. I agree with that description, which many of us have experienced. It looks as though RBS is funding its £1.2 billion computer system by closing local banks. I agree that we now need to explore the idea of a universal banking obligation, so that we can address those issues. I am sure that Mr Ross McEwan has heard about the need for an urgent meeting.

My hon. Friend Chris Evans comes from the banking industry himself and knows what it is like. He emphasised a key issue that we are all experiencing now, which is just how vulnerable people are to loan sharks and doorstep lenders when a local bank closes, and the danger that poses. He quite passionately described his campaign on HSBC, the petition he launched and the bungled way in which banks handle closures, by not listening to people. He also called for the next step to be taken for credit unions. I agree with his call for Government assistance to help credit unions take that step up to become local community banks; they have great potential for that.

Gavin Newlands again described his local campaign and how it was ignored by the bank. Kirsten Oswald gave examples of the wave of closures that are taking place. As she said, the challenger banks have been identified as a solution, but are no real solution, with few results in many areas. Her example of the Airdrie Savings bank shows us how banks can be stable and provide a service over generations.

We have heard a lot today about the protocol designed to protect local banking provision. It clearly is not working effectively. Advocates from Move Your Money have urged improvements to the protocol, including forcing banks to have transparent data on branch closure locations and dates, to allow greater scrutiny of their impact. Move Your Money also wants rigorous public interest assessments before the closure of a branch, so that closure decisions are genuinely influenced by community need and likely impact, and a requirement for banks meaningfully to consult local communities in advance of closures rather than simply informing them of the decision after it has been taken. I would welcome the Minister’s views on those ideas, as I know she has taken a personal interest in the matter for some time.

What role is the Competition and Markets Authority playing in addressing the lack of competition as bank branches close? The retail banking review is meant to be addressing that issue. The Federation of Small Businesses has said that it expects

“the publication of the CMA’s final report to include specific remedies for the problems caused by bank branch closures.”

I welcome that intervention by the FSB and hope the Minister will say something about the role of the CMA’s review in addressing the issue.

I thank all Members for their contributions. This is an urgent matter that needs addressing in many of our constituencies. I look forward to the publication of the review and hope to hear the Government commit to taking serious steps to address the decline in bank branch numbers and in access to banking overall.

Photo of Harriett Baldwin Harriett Baldwin The Economic Secretary to the Treasury 4:47 pm, 30th June 2016

It is a great pleasure to be able to respond on the Government’s behalf to this really excellent debate. I congratulate the hon. Members for City of Chester (Christian Matheson) and for Ceredigion (Mr Williams) and my hon. Friend James Heappey on securing it, and thank them for giving me the opportunity to update the House on what is going on in this area. I also thank the Backbench Business Committee for scheduling such an interesting debate on a Thursday afternoon. I also thank John McDonnell. It is a great honour for me to have the shadow Chancellor respond to the debate. He only lost one member of his team during it, so congratulations to him.

I need to start with a confession. I am a rural Member of Parliament. I spend four days a week up here in London. If I think about it, I actually cannot remember when I last went into a bank branch. I have been to the cashpoint, here and in my constituency, but I also ask myself when, these days, do I even use cash? The only place seems to be in the House of Commons Tea Room. I understand contactless is coming there soon, so where will we all be then?

Customer behaviour is clearly changing. The number of times that we all use a branch in any given year has dropped almost 30%. The most recent data that I have from the BBA show that branch transactions have fallen to 270 million branch customer contacts in 2016. If my maths is right, that is an average of four per year.

Photo of Kirsten Oswald Kirsten Oswald Shadow SNP Spokesperson (Armed Forces and Veterans)

Does the Minister accept that some of the downturn in customer bank transactions is because bank branches have closed?

Photo of Harriett Baldwin Harriett Baldwin The Economic Secretary to the Treasury

The hon. Lady is right to ask that question, but if customers were surging into branches and transacting valuable business, the banks would not be being as radical as they are.

Photo of Harriett Baldwin Harriett Baldwin The Economic Secretary to the Treasury

A lot of Members will want to intervene. I have a lot of ground to cover and only seven minutes in which to cover it, so I will give way only very briefly.

Photo of Albert Owen Albert Owen Labour, Ynys Môn

I am very grateful. I encourage the Minister to go to her local banks and talk to the staff. Their opinions have not really been voiced here today. They are the frontline of the banking industry and quite often we do not hear from them. It is because of reduced hours that she and I have limited time to go into our banks, but I do go in every Friday morning.

Photo of Harriett Baldwin Harriett Baldwin The Economic Secretary to the Treasury

The hon. Gentleman is right to pay tribute to the wonderful staff up and down the land who staff our bank branches. The older members of our communities really value that interaction. It can be very important in protecting them against some of the online fraud, which, we have to acknowledge, targets older customers.

It is clear from the points raised today, and from the regular discussions I have with Members, that we are all in agreement that bank branches are an important part of the solution when it comes to access to finance for our local communities. It is one of my top priorities as Economic Secretary to ensure that financial services work for everyone and that they are on the side of people who want to work hard, do the right thing and get on in life. Having a good branch network is part of that. The role of banks in society is essential. I am glad that that has been acknowledged today.

In the interests of time, I want to just highlight some of the issues raised in the debate. First, in the past year we have made significant progress on access to banking services by improving access to the basic bank account. Many more banks now offer that. We have also reduced the practice of charging for failed payments, which was unacceptable. The industry has moved forward on that. I pay tribute to Stella Creasy. She has not participated in this debate, but she made such an impact in terms of bringing payday lending under the regulation of the FCA and the progress we are making on that. There has been much discussion about the access to banking protocol.

Photo of Chris Evans Chris Evans Labour/Co-operative, Islwyn

Does the Minister know of my interest in real-time credit scoring? Has she had a chance to look at that?

Photo of Harriett Baldwin Harriett Baldwin The Economic Secretary to the Treasury

The hon. Gentleman knows that that is worth a whole Adjournment debate in itself, so I will talk about the access to banking protocol instead.

The protocol means that when a bank decides to close a branch it must think carefully about the consequences of doing so, particularly when it is the last bank in town. We have heard today—this debate is timely—that Professor Russel Griggs has been appointed by the BBA to review how it has been working in its first year. All the points raised by Members will be excellent submissions to that review. I hope he will take the opportunity to meet hon. Members to hear at first-hand the feedback on the independent review of the protocol. I would like practical recommendations to come out of the review on how we can move forward. I think we all recognise there will be an ongoing review by banks on how they can best use their branches.

Photo of Gareth Thomas Gareth Thomas Party Chair, Co-operative Party

The Minister has a reputation for being one of the most reasonable of her colleagues on the Government Front Bench. Is she willing to receive a deputation from the people in the credit union and the responsible finance industry to see what else might be possible to help them to grow?

Photo of Harriett Baldwin Harriett Baldwin The Economic Secretary to the Treasury

I am glad to confirm that all the occupants of the Government Front Bench are entirely reasonable and sane. I regularly meet members of the credit union industry. The hon. Gentleman’s point brings me on to credit unions specifically.

We think that credit unions are very much worth backing. As the hon. Gentleman will know, we have put a great deal of money into improving their technology. One of the challenges they have is scale: the smallness of some credit unions means that they need a communal IT platform. We have subsidised that to the tune of £38 million. I also want to highlight to the House that we have, in the past few days, launched a consultation—people may have missed it, with all the other news that has been coming out—on how the Help to Save product will work. I encourage credit unions to come forward with proposals on how they could be a part of this really important saving product.

Many Members have alluded to the important role that the post office network can play in solving this problem. As we know, this Government, like the last one, have committed to subsidising the network and making it viable. I dispute what Albert Owen said about the network having fallen from 11,900. The figure has stayed above 11,500—just over 11,600, I think—so there has been a small decline, but not the precipitous decline we saw when Labour was in government. Post offices are an important part of the solution. For example, the network’s opening hours have increased by nearly 200,000 as a result of the modernisation process.

Members have mentioned the importance of mobile phone signals, digital connectivity and our commitment on universal access. Those things are also an important part of the solution. Moreover, we currently have a record number of free-to-use ATMs in this country—about 45,000—and there is a commitment from the LINK network to continue expanding their number, particularly into harder-to-reach communities.

We have heard powerful and passionate contributions from Mr Lammy, my hon. Friend Chris Davies and the hon. Members for Clwyd South (Susan Elan Jones) and for Harrow West (Mr Thomas), the last of whom talked about the affordable credit sector and the help we are giving to the mutuals sector. We have also talked about lending to small and medium-sized enterprises and the importance of the community finance network, which I know from my own constituency is very important. There are also now other platforms through which small businesses can access finance, such as peer-to-peer platforms and so on.

I do not have time to make all my points, but my door is open. We all aspire to ensure that as we go through this evolution we maintain good access to finance for everybody. Healthy competition is also important. The new starter banks—five have got a banking licence in this Parliament so far—are an important part of the solution, as too is the way firms are adapting branches to use technology to provide more services. I have run out of time—I want to hand over to the hon. Member for City of Chester to conclude—but this has been a very important and well-timed debate.

Photo of Chris Matheson Chris Matheson Labour, City of Chester 4:57 pm, 30th June 2016

I am grateful to you, Madam Deputy Speaker, the Minister and the House. In these crazy, turbulent times, we have found some unity. Members on both sides of the House, from England, Scotland and Wales and from rural and—as my right hon. Friend Mr Lammy demonstrated—urban constituencies agree that this problem must be addressed.

We have heard solutions proposed, including the mutuals idea from my hon. Friend Mr Thomas, and some excellent and practical points from the shadow Chancellor. I get the impression that the Minister is willing to listen. She says that her door is open. I hope it will be and that she will put pressure on the banks’ chief executives to respond. I also hope that she will have access to those chief executives, even if George Kerevan and others do not. This matter spans many different areas of government: support for small businesses, community cohesion, social isolation, crime prevention, broadband and internet access and, above all, the alleviation of poverty. These issues will not go away. I am most grateful to hon. Members for their contributions, but action is also required.

Question put and agreed to.

Resolved,

That this House
is concerned about continued bank branch closures and the damage that this causes to local communities, small businesses and the welfare of senior citizens;
and calls upon the Government to help maintain access to local banking.