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.