Bank Branch Closures

Part of the debate – in the House of Commons at 3:00 pm on 30th June 2016.

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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.