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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.