We now come to the first Select Committee statement. Pete Wishart, Chair of the Scottish Affairs Committee, will speak on this subject for up to 10 minutes, during which no interventions may be taken. At the conclusion of his statement, I will call Members to put questions on the subject of the statement and call Pete Wishart to respond to them in turn.
I am eternally grateful to you, Madam Deputy Speaker, as I am to the Backbench Business Committee for giving us the time for this statement. It is on the third report of the Scottish Affairs Committee and is the result of our short inquiry into Royal Bank of Scotland branch closures in Scotland.
In our inquiry, we took evidence from representative groups and organisations, and we invited members of the public affected by the closures to get in touch. We had two evidence sessions involving senior executives from RBS, with the RBS chief executive officer, Ross McEwan, joining us in our second session. We also took the opportunity to hear from the Lending Standards Board, which oversees the voluntary code of practice on branch closures. We are of course grateful to all who took the time to help us with this report.
In our evidence, we were told that rural communities would be particularly affected by the closures. Scottish Rural Action told us that
“it can take people a really long time, having to use several modes of transport and at great expense, to travel to the next nearest bank, sometimes involving ferries as well as public transport.”
We were told that people with mobility issues and caring responsibilities would also be particularly badly affected, and we received accounts from individuals concerned about the impact on their elderly relatives. The consumer group Which?—it was very helpful to us in this inquiry—noted:
“Bank branch closures disproportionately impact vulnerable consumers, particularly those in rural areas, those without access to good broadband, and those on lower incomes.”
We heard from business groups, which told us that it would be much
“more difficult to run a business in much of Scotland—including many deprived communities and tourism hotspots”.
My constituents are dependent on such hotspots. In its evidence, the Federation of Small Businesses said that closures often created additional costs for business owners, making it more difficult to manage cash flow, with productivity in the wider local community suffering as a consequence.
We concluded that the closure of these branches would be a devastating blow to the affected communities, removing vital services that are relied on by businesses and disproportionately affecting vulnerable customers. We were not convinced that RBS fully appreciated the damage that these closures will do to the communities and businesses that rely on these branches.
RBS told us in its evidence that these closures were driven by changes in customer behaviour. It said that it is closing branches in response to the increasing numbers of its customers accessing services online and via mobile devices. While there is absolutely no doubt whatsoever that customer behaviour is evolving, with more people now using digital services, our inquiry found a real demand for a local branch as a feature of local communities.
We also explored whether RBS was in fact trying to lead customer behaviour by incentivising customers to transfer to digital accounts and force them on to other platforms by this programme of closures. RBS was keen to assure the Committee that no targets were set and that there were no incentives for digital take-up. However, we did see such reports in the press, including a screenshot of a document appearing to show that targets were set in its centres, and we asked RBS to clarify that. In its response, it told us that
“colleagues have goals to serve our customers well”,
and that the screenshot was a
“standard performance document”,
in which staff are
“expected to agree objectives with their line manager...as well as ways of measuring against these goals”.
I will leave it to the House to assess whether public behaviour is being met or being led by RBS.
We did find, quite curiously, that these closures are not motivated by any savings to the bank. RBS will save only some £9.5 million. That is a significant sum, but absolutely nothing against a cost base of £4 billion. It is actually a smaller figure than RBS spent on sponsoring rugby, which came in at £11 million a year. That prompts this question: why is RBS antagonising its customer base with this unpopular closure programme for what, to it, is merely a pittance of a saving, but with all the subsequent reputational costs? That might have something to do with Unite the union’s view that this is intended to improve the value of the bank’s shares and for
“ripening it up to go back into the private sector”.
This week, of course, we find that RBS shares are to be marketed, at a significant cost to the taxpayer who acquired them at almost double the value when the banks were recapitalised in 2008.
That brings us to the majority shareholder: you, Madam Deputy Speaker, me and all the taxpayers of the United Kingdom, who still own over 70% of the stock of RBS. The Government are the steward of this public interest, but they have showed no interest whatsoever in exercising any influence as our guarantor in this closure programme. The stock response from the Government was to say that they do not get involved in commercial decisions. We were profoundly disappointed that no Minister showed us the courtesy of coming to our Committee and being prepared to be challenged by the Committee on that assertion. Perhaps we could explore further with Ministers what influence may have been exerted. It remains baffling that, as the main shareholder, the Government have expressed no view whatsoever about these bank closures.
We repeatedly asked RBS what would happen if the Government sought to make their displeasure known and perhaps asked it to reconsider its closure programme, but we never secured a satisfactory response to that question. What Ross McEwan told us was that he had received no representations from the UK Government on the subject of branch closures. We say in our report:
“If RBS does not act on our recommendation to halt the closures we recommend that the Government use any influence that its majority shareholding provides to apply pressure on RBS to reconsider the closure programme.”
We did, however, make some headway in securing concessions from RBS. After our first evidence session, RBS announced a reprieve for 10 branches until the end of 2018. It also offered a variety of other concessions, such as giving the buildings it owns over to community use and assistance with digital services for high-use, regular customers. The reprieved branches were primarily the last bank in town and those more than nine miles from the next nearest RBS branch.
When this reprieve was announced, RBS said:
“Should any of these branches see sustainable transactional increases and viable new income over this period, then the bank will reconsider the closure of the relevant branch as part of a full independent review.”
RBS provided little information about how such reviews would be conducted, and the company originally charged with leading this work is now unable to do so. There remains a great deal of uncertainty about how these branches will be evaluated and on what basis decisions about their future will be taken. We therefore have serious concerns that these branches are being set up to fail. In our report, we say that
“RBS should postpone the review of these branches until 6 months after the independent reviewer has been appointed”.
Lastly, the whole process of consultation has been spectacularly woeful. There is currently no requirement under the access to banking standard for banks to consult customers or staff ahead of a decision to close a branch. Given the public response we have seen to this report, there is great interest in local communities about being consulted ahead of branch closures. We therefore recommend that the Lending Standards Board consult on amending the access to banking standard to require banks to consult their customers, to assess the impact of closures on customers and communities, before final decisions on branch closures are taken.
Branches are now being closed and vital community assets are being lost. We say, even at this stage, that we should see what we can do to keep these branches open. If RBS truly wants to meet the needs of its customer base, it should respond to this overwhelming evidence and halt its closure programme. Given the recent profits reported by RBS, this is a cost it could easily afford to bear.
I welcome unreservedly the hon. Gentleman’s Committee’s report. I am pleased to tell the House that earlier today RBS announced its decision, after much discussion, that the Bannockburn branch will now remain open at least until the end of the year. That is something, at least. He has rightly pointed out that there is no financial gain for the Royal Bank of Scotland in closing any of these branches, so does he agree that the Lending Standards Board should immediately publish all its workings in relation to the closure of these RBS branches?
I am grateful to the hon. Gentleman for his remarks, and I am pleased and satisfied to hear that his Bannockburn branch will be among the 10 that will remain open at least until the end of the year. He is absolutely right to say that there are major issues with the Lending Standards Board when it comes to the consultation, and we were less than satisfied with its explanation why it could not give us any of the information on the closures that had been supplied to it by RBS. There was a full discussion about those issues, and even at this stage, we will try further to secure that information for the hon. Gentleman.
I am grateful to the Scottish Affairs Committee for undertaking this work on what is an extremely important issue, and I welcome the hon. Gentleman’s proposals, which mirror many of those in the last Labour manifesto. Much has been made by the Government of the availability of post offices as an alternative when the last branch in town closes. Did the Committee assess whether that would be a suitable alternative for the communities in Scotland that will be particularly badly hit by the RBS proposals?
We did take evidence from the Post Office during the inquiry, to assess whether that would be possible in the way that the hon. Gentleman has described. We are not satisfied that this would provide any real alternative. I cite the example of my constituency, which is experiencing severe post office branch cuts. However, there will be transactions, and we managed to secure from the RBS a further commitment to ensure that relevant staff training would be given to sub-postmasters and sub-postmistresses to improve their skills to deal with the increased number of people who will be coming to them for their services.
I thank the Chairman of the Select Committee for his statement. I was proud to work with him on the report. Does he agree that the real concern is the terms of the review for the branches being given a reprieve? The closure date is still the same, yet the period for the review is shorter. We do not know who will carry out the review or what its terms will be. As he said, it seems that those branches are simply being set up to fail.
The hon. Gentleman is an assiduous member of the Scottish Affairs Committee, and I am grateful for his contribution. He is absolutely right, and he will recall some of the conversations we had with RBS about the reprieved branches and the dissatisfaction expressed by all of us on the Committee that there is no independent reviewer in place. He will recall that, as part of our recommendations, we said that those branches should be reprieved for a further six-month period until such a reviewer is in place. Also, we have to know the criteria by which those branches are being assessed. What we have secured from RBS at this stage is clearly insufficient to ensure that a proper assessment will be made.
I, too, would like to extend my thanks to my hon. Friend and to the Scottish Affairs Committee for this excellent report. Does he agree that the report absolutely lays bare the fact that RBS has ridden roughshod over our communities and that the lack of consultation by RBS throughout this entire process is clear? The access to banking standard requires banks to make an assessment of the impact of branch closures, but that is simply not possible if banks such as RBS do not consult their customers directly before making decisions on closures. Does he further agree that, with the UK Government now selling RBS shares below market value and with RBS paying £16 million in bonuses last year and recently announcing record profits of £752 million, the sense of anger and betrayal felt by my constituents in Kilwinning, Kilbirnie and Saltcoats is completely justifiable?
My hon. Friend’s questions are all absolutely spot on, and they are all related. On the question of consultations, we had real issues with how the Lending Standards Board was going about this. Our report found that there is clearly a sense that the voluntary code is not working satisfactorily and that the Government should at least examine the possibility of putting statutory regulations in place so that communities can be consulted in advance about branch closures. I hope that that is something the Minister will be able to take that away from all this. I will say no more about the selling of RBS shares, other than what I said in my statement, because that is not part of the report, although we note the massive profits made by RBS in the first quarter of this year and the comparatively paltry £91 million that has been saved by these branch closures, as well as the impact of the huge reputational cost to the bank.
I congratulate my neighbour, Pete Wishart, on this report. I also welcome the extension of the life of the Alloa branch in my constituency, which was announced earlier this morning. Will he join me and other colleagues across the House in seeking further clarification on the criteria for these branch closures? When other Members and I met RBS representatives earlier this week, there seemed to be no differentiation between the criteria being applied to urban branches and those applied to rural ones. That is a major concern for north and south Perthshire.
I am grateful to my neighbour for making that point. I note that that branch in his constituency has secured a reprieve, along with the branch in Comrie, which is just down the road from my constituency. He is right to suggest that this is a critical test for RBS. This is one of the concessions that we were able to extract from the bank, and we welcomed its announcement of the reprieves, but it must demonstrate that these branches are not simply being set up to fail. We need to ensure that, when it talks about an increase in transactions and business, it is able to assess that properly. The Committee will have an ongoing monitoring role to ensure that this situation is properly monitored, and we will report back to the House in due course.
I join others who have congratulated the Scottish Faither of the Hoose on his 17 years of service. That is a record that none of the rest of us will be able to achieve, because Scotland will be independent before any other Scottish MPs have served 17 years. Does he share my concern that these closures are taking place in the context of an overall diminishing of our high streets? We are seeing the jobcentre closure programme, for example, and the risks that some post offices are facing, alongside other bank closure programmes and the closure of some high street stores. The Government, as the majority stakeholder, have a responsibility not only for the banking services but for the overall wellbeing of our high streets.
I will offer no opinion on the longevity of other hon. Members in this House, but I very much agree with my hon. Friend about what seems to be a loss of town centre and village amenity and fixed assets. The response to the bank closure programme that we saw not only in my constituency but in that of Luke Graham and in some urban centres—indeed, in constituencies right across Scotland—demonstrates how much value communities place on these assets. The jobcentre closures will probably have more impact on urban centres than on constituencies such as mine, but this is certainly an issue for the Government. As part of their reflections on our report, perhaps they could take a look at what is generally happening in our high streets, towns and villages across Scotland.
I congratulate the hon. Gentleman and his Committee on this report, which I fully endorse. Moray has had no branch closures in this round of cuts, but we have suffered a reduction in mobile banking provision, particularly in Lossiemouth, which has lost one of its visits each week to allow the mobile bank to provide a service to other areas that have lost their branches. I notice that it was referenced in paragraph 75 of the report that the quality and availability of mobile banking was a concern. What more can we do to encourage RBS to improve its mobile banking service, given that it is currently letting people down in Lossiemouth and in other areas of Moray?
I am grateful to the hon. Gentleman for his diligent recollection of section 75 of the report. We had an extended conversation with RBS about the availability of its mobile banking system. Our constituents are already beginning to detect real issues because the mobile banks are now expected to serve areas impacted by branch closures. RBS was determined to assure us that effective and efficient timetables would be drawn up, but the evidence thus far is that it has not been able to produce them. Again, as part of our rolling brief to keep this under review, we will keep a clear eye on what is happening. Mobile banks provide a real point of contact where customers can access banking services, and they are an important feature of the new delivery of services.
I thank the Chair of the Select Committee for his thorough account of what I think was an excellent report, save for the disappointing lack of input from the UK Government. Does he agree that it will be difficult for the reprieved branches to meet any meaningful increase in use, owing to restricted opening times, to a lack of a full range of services and to targets for customers to be moved online?
The hon. Gentleman is absolutely right. I note the amount of questions that have been asked about the reprieved branches and the real interest in that as an example of what can be done. RBS owes it to the House to demonstrate that it is looking at the matter responsibly and not just setting up those branches to fail. They should be given every opportunity to demonstrate their effectiveness and their ability to pick up footfall and customers. If RBS is listening to this statement—I am sure that it is—I hope that it will have heard the real concerns of Members right across the House about the 10 reprieved branches and that it will do everything possible to assist them to meet whatever criteria will be set for keeping them open. The important thing is that we get an independent reviewer in place and that we can assess those criteria.
A key finding of our Select Committee’s very good report, and one which reflects the comments of other hon. Members today, is that RBS’s impact assessments did not provide sufficient information on individual branches, such as whether customers have sufficiently reliable access to broadband, how practical it was for them to travel to the next branch or what alternative services were available in the area. Does my hon. Friend agree that the Lending Standards Board’s limited interpretation of impact is woefully inadequate, allowing RBS to avoid its responsibilities to our communities, and that the board must now listen to the communities affected by bank closures and widen the criteria that it uses?
I am grateful to my hon. Friend, who is a diligent member of the Select Committee. As we said in the report, we have to be careful about the Lending Standards Board’s role, because it is a self-regulatory body with a voluntary code of practice. We ask the Government to consider that if the situation is not working, which seems to be case because we have dissatisfied communities who feel that they have not had their voices heard in the consultation about branch closures, the Government should start to consider a statutory code of practice and allow a consultation to be held prior to a branch closure, not afterwards, as is currently the case.
I commend my hon. Friend and his Select Committee on an excellent report. In my constituency, Stepps is due to lose its branch, and my dealings with RBS so far indicate that it probably knows more about Steps the band than Stepps the community. Disappointingly, the campaign has had no impact at all. Will my hon. Friend join me in calling upon the Government to support the Access to Banking Services Bill, which was introduced by my hon. Friend Ben Lake, that would support rural branches and community hubs in particular?
I will. It is a very fine Bill, and I hope that the Minister has cognisance of the many recommendations in it. Something needs to be done about the consultations on branch closures. There clearly are issues with the Lending Standards Board’s role in all this, and it needs to be closely considered, even just in a consultation-type exercise. I look forward to the Bill introduced by our hon. Friend Ben Lake making steady progress through the House.