I beg to move,
That leave be given to bring in a Bill to place a duty on major high street banks to provide banking services in post offices;
to make associated provision about access to post office services, including for elderly and vulnerable people;
and for connected purposes.
I should declare at the outset that, prior to my election, in a former life, I was once a sub-postmaster.
Since 1988, some 14,000 bank branches have closed on our high streets, and next year there will be fewer than 6,000 left. Shareholder return is all that drives them. Shutting branches and getting rid of cost has happened for over 20 years. Where has the care gone for our communities that matter the most? Not everyone can go online when the bank branch shuts. What if they are elderly, vulnerable, do not drive or live on a poor bus route to visit the nearest alternative? I want to be a champion for our high streets and for our elderly and vulnerable, because they matter and it is about time we did something about this.
My Banking Services (Post Offices) Bill is about common sense. It will strengthen the current banking framework to ensure that local communities always have access to the banking services they need to function on the high street. That will be facilitated by the introduction of a mandated agreement to provide a minimum level of banking service through a suitable alternative, ensuring that customers are able to access vital banking services in their local area.
That is necessary because this trend is increasing. Between 2010 and 2018, about 5,000 bank and building society branches in England closed, at a rate of almost two every day, with four times more closed in deprived communities than in wealthy areas. Sadly, it is likely that those figures will continue to rise. The pandemic has already accelerated bank closures, with more closure programmes announced.
Inevitably, banks will promote digital banking as the way forward in a post-covid-19 world. However, those who cannot use online banking, whether that is due to personal choice or other issues that make it hard to use digital services, must not be forgotten. It is understandable that banks need to make decisions that keep their businesses operational, but where is the corporate social responsibility? Who was it that rescued the banks during the banking crisis? It was UK taxpayers—the very ones who now suffer when the banks close.
We should further worry because, as banks continue to pull out of economically distressed areas, they are often replaced with more predatory forms of financial institutions, leaving vulnerable people at further risk. If people cannot access banking services, how many will turn to payday lenders? We know that vulnerable people are twice as likely to have used high-cost credit because of the lack of alternatives.
What are those alternatives? The totally inconvenient solution where the next nearest branch is miles away, or online services. That is not good enough. It may be a cheaper option to the banks, but it comes at a greater cost to the most vulnerable in society, who cannot always travel or use digital or phone services, and do not have the support they need to adapt when this type of change occurs. What about our local residents, the small businesses that rely on the banks, or the employees who face losing their jobs—many do, year after year—when banks close and leave town? We have a duty to find an alternative. The Bill will provide the safety net, that insurance policy, and a real alternative to the harsh reality that many face when banks make the decision to close a branch. It will safeguard that other authorised financial institutions will always provide the facilities needed and ensure that no one is left behind.
The reality is that the Government do not need to think too long or hard about where to start. They are the only shareholder in the organisation that can solve the crisis: our post offices. They are loved up and down the country, and in many of our towns and villages they are the beating heart of our local communities. Sub-postmasters provide an invaluable service. The network is 11,500 strong and its dedication was brought to the fore during the pandemic. As much as 90% of the post office network remained open during the lockdown, providing essential services to their communities. The facts speak for themselves: 99%—yes, 99%—of UK residents are situated within three miles of their local post office.
Post offices already provide an important social good. They support members of society by providing banking services in otherwise unserved locations. Indeed, a survey of 500 sub-postmasters found that they act as an informal and unpaid support mechanism for about 300,000 vulnerable people across the UK, and 88% already guide vulnerable customers through banking, bill payments and transactions almost every day of the week. The Government have the answer: invest further in our post office network, expand its footprint and reach, and let it be the vital provider of banking services.
Why do we need the Bill? Because we want this to be legally binding. We do not want what happened in 2019 to happen again. We want safety and security for communities up and down the land. In 2019, Barclays announced that it was to pull out of offering cash withdrawals from the post office network. There was public uproar, which made it reverse that decision, and rightly so, considering the impact that it would have had on the people who rely on that service. The problem is: what is to stop it happening again— Barclays and others walking away, leaving their communities high and dry? Imagine the impact of your bank branch being closed and, just when you think that the post office can cover your basic banking provision, a couple of years down the line that service is withdrawn too.
There needs to be a formal guarantee and certainty that that cannot ever happen again. Banks need to be formally regulated to offer a range of services through the post office network. The Financial Conduct Authority must regulate the arrangements between banks and post offices so that minimum guaranteed services are compulsory. It must not be up to the banks to be able to walk away and leave communities without any provision. We do not want a fragile agreement—not some sort of lovers’ embrace, as we have now. We want it bound in law to protect these vital services for our communities. We know that the post office network already generates more than 400 million customer visits to neighbouring businesses, which equates to more than £1 billion to local economies. That further shows the importance of post offices to people up and down the length and breadth of the UK.
Strengthening the banking framework could also help the Government deal with issues relating to access to cash, as it would provide a secure way for local communities to access the cash they need. The UK is not ready to go cashless. Annual volumes of cash withdrawals have grown by 46%, to nearly £8 billion, since the start of the banking framework. More than 5 million adults would struggle to go cashless. Indeed, we already withdraw up to £1,500 a year.
Put simply, cash is vitally important in society, and it must be for many years to come. This Bill is the answer. Banking services must always be guaranteed on the high street. They must not be put at risk. This Bill is supported by the Post Office, the National Federation of SubPostmasters and many other Back-Bench MPs. It provides the safety and the reassurance that our communities need, with proper mandated legislation that ensures our day-to-day banking is always provided by the post office branch network.
Question put and agreed to.
That Duncan Baker, Sir David Evennett, Sir Graham Brady, Sir John Hayes, Jeremy Hunt, Alan Brown, Marion Fellows, Esther McVey, Robert Halfon, Mr Steve Baker, Kevin Hollinrake and George Freeman present the Bill.
Duncan Baker accordingly presented the Bill.
Bill read the First time; to be read a Second time tomorrow, and to be printed (Bill 265).