– in the House of Commons at 6:53 pm on 28th February 2023.
It is a privilege to secure this debate. I am pleased to see the Minister in his place. I thank him, ahead of his response, for being here to discuss this vital issue, which I know is important to Members across the House—they feel strongly about it. I must also place on record my heartfelt thanks to the charities and organisations that have provided briefing material ahead of tonight’s debate, including Which?, Link and the Social Market Foundation, among many others.
Colleagues representing rural, semi-rural and urban constituencies alike will all be familiar with the worrying trend of bank closures on the UK’s high streets. In the late 1980s, over 20,000 bank branches were open across the UK. Today, just 5,000 bank branches remain—a 75% decrease since 1980. Since 2015 alone, well over 5,000 bank branches have closed. On the eve of St David’s Day and as a proud Welsh Labour MP, I am particularly stunned by the statistic that Wales has lost an astonishing 43% of its bank branches between 2015 and 2019.
I thank my hon. Friend and constituency neighbour for giving way, and I congratulate her on securing the debate. She knows my constituency well and mentions the sheer number of banks that have fallen. In my entire constituency, there is now one bank left for 58,000 constituents. Does she agree that one of the pressures is the number of charities that rely on the banking sector? If there are no local branches, it makes it so much harder for charities to undertake their work and use local bank services. There is a real problem around the banking charter that the Government need to address.
I completely agree with my hon. Friend and constituency neighbour. He will know the impact of the latest announcement of a bank closure in Talbot Green, which is used by our constituents. That is having an impact on local charities and local charity shops on our high street, because they deal in small petty cash. They do not deal in card transactions. I will come on to talk about that issue.
As I said, I secured the debate when I learnt of the latest closure in my constituency. Talbot Green, home to just under 3,000 people, will lose yet another high street bank branch, with Barclays set to close in May. Having already lost HSBC in 2021, as well as Lloyds previously, Talbot Green’s residents will be left with no dedicated high street bank whatever. Across my communities and the many communities neighbouring my constituency, the story is the same: residents are abandoned by their banks and are now forced to travel unacceptable distances to their next nearest branch. In Tonyrefail, Barclays closed in 2015 and Lloyds closed in 2016. In Church Village, Lloyds closed its doors in 2021, leaving the entire village with no dedicated bank at all. Even in Pontypridd town centre, where thankfully several high street branches remain open, the loss of the HSBC branch in 2021 is still part of a worrying trend.
Too many of my constituents are now left with no high street banking presence in their communities. Consider this example: a constituent in Tonyrefail, who does not drive and who is a member of a bank whose nearest branch is now in Pontypridd town, would now be forced to travel for over an hour each way on public transport, catching four buses in total for a return trip.
My hon. Friend is making an excellent speech that picks up on issues around the whole country. Does she agree that there is a particular problem for people who are disabled and immobile? Even when they are able to get public transport, they may find themselves in a large town centre, some distance from a bank branch and facing considerable difficulties getting to the door of that bank.
I completely agree. For someone who is disabled, elderly, otherwise vulnerable or just does not have a car, the closure of bank branches can be truly devastating. Across the country, it is a similar picture. In some parts of the UK, customers are facing an astonishing 40-mile round trip just to access their bank. That is not good enough.
We all know that face-to-face access to high street banks is a vital service for the most vulnerable in our society. For many constituents who do not use the internet regularly or, in modern-day Britain, do not have reliable enough broadband, online banking is not an option. I fully appreciate that the way consumers spend money has changed and that digital payments now dominate transactions—in part, accelerated by the pandemic. That in itself is no bad thing. Making commerce easier and more convenient for customers and businesses alike should be good for our economy and our high streets. As Labour’s shadow Digital Minister, I have seen at first hand what a digitised economy that works everyone could look like.
In addition to digital banking, what does the hon. Member think of community banking hubs, given that, in my part of Devon, Axminster lost its last bank in November and Honiton is set to lose its last bank, HSBC, this June?
I agree with the hon. Gentleman. Community banking hubs are an answer to a problem, but they are not the only solution. We are seeing a real need for a presence on the high street, because banks support so many local businesses. A community banking hub can help customers, but it will not support local businesses and local charities, which my hon. Friend Chris Elmore mentioned. That is why we desperately need some sort of presence on our high street.
Far from working for everyone, as I have mentioned, the seemingly never-ending stream of high street bank closures is leaving behind the 5 million adults who still rely on cash to a significant extent for most of their purchases. As the cost of living crisis continues to cause immense pressure for thousands of people across the country, there have been reports that cash usage has increased, not decreased, because it makes budgeting feel easier. That makes the decline of high street banks even more worrying, and risks inflicting yet more misery on vulnerable people who are already struggling.
My hon. Friend is again making an excellent point about the importance of cash purchasing. Does she agree that this is a huge issue for certain small businesses that still trade in cash? Even though, as she rightly says, the digital economy is progressing, we all know that in certain sectors of the economy cash is the only means of transaction.
I completely agree. I come from the proud market town of Pontypridd. As I will go on to talk about, for many traders it is not profitable to operate with purely card payments. They operate in very small monetary values and cash is a main aspect of their business model, so it is absolutely vital that we have that presence on our high street.
I thank Alex Davies-Jones for securing this debate, and I spoke to her beforehand. I represent a rural constituency where we have had 11 bank closures. It has been horrendous. The people of my constituency have always responded to the consultations, but they have meant nothing. Does she agree that it is incredibly stressful for the elderly, who are unaware that they are a target for online scams because they do not have the banks to fall back on? They cannot safeguard themselves and they need the local branches, or access to somewhere. This House must regulate a standard duty of physical care on those banks that will not regulate themselves.
I agree. As I have said, the high street bank is not just where customers can get money or cash out. It is a place with a trusted professional they can go to for information about the services that a bank provides. There is a real person—not someone at the end of a phone in a call centre—who they can trust and seek reliable and trusted advice from. That is a valuable resource for so many in our community.
I mentioned the digitised economy, which fundamentally relies on digital infrastructure to support it. In rural and semi-rural constituencies, which many of us represent, we require decent mobile signal and broadband, but often it is very poor. Many businesses tell me that they do not feel able to make the switch to card payments or online banking because they do not have the infrastructure to support them reliably to carry out their business.
Banks are more than just a place to withdraw cash; they are the centrepiece of our high streets, providing support for the community groups, small businesses and charities that rely on their presence. A small business in my constituency that may not feel able to accept card payments and is therefore reliant on cash will no doubt depend on its local branch for business banking and cash deposits. When branches close, it is not just consumers who will suddenly have to travel significant distances to the next nearest branch. Local businesses will travel, too, taking with them much-needed local jobs. Really good jobs are going elsewhere because of bank closures on the high street.
Such a time-consuming inconvenience is a major barrier to the growth of our local economies and high streets. It threatens the livelihood of small local businesses altogether, furthering the risk of a decline of our high streets. I am very fortunate, as we all are in Pontypridd and Taff Ely, that we have an incredible range of small and independent businesses. Many of those businesses continue to rely on cash payments; countless small businesses across my constituency have told me that they cannot justify moving to card payments because they do not feel that broadband in the area is reliable enough.
In Ponty town alone, from the traders running stalls outside on Market Street to the historic units inside Ponty market, retailers need us to retain the local bank branches that underpin so many small businesses. Without the high street banking infrastructure to support them, we risk losing our incredibly important small businesses, many of which have been trading for generations and should be there for generations to come.
Since I was elected to this place, I have been a vocal champion for our high street, for footfall and for the opportunities that are needed to regenerate Pontypridd and Taff Ely. The local businesses in the communities I represent have already suffered a serious blow under the pandemic and are now being hit further by the cost of living crisis. Closure of these crucial bank branches will only decrease footfall further.
A bustling industrial economy once nestled in the valleys of Pontypridd and Taff Ely. I passionately believe that, with the right infrastructure and the right policies, we can return to our previous heights of economic success and prosperity. I pay tribute to the work of Rhondda Cynon Taf Council and our Welsh Labour Government for their fantastic growth-focused initiatives, which will benefit the local economy in my constituency and across south Wales. For example, the Metro project and the refurbishment of YMa, our arts and culture centre, will bring added footfall to our town centres.
But that is not enough. Local organisations in my constituency, such as the Pontypridd business improvement district, are doing all they can: they do incredible work to regenerate Pontypridd town centre and the wider community. Those initiatives are extremely welcome, but without action from the UK Government to tackle the epidemic of high street bank closures, our local economy will still fundamentally be held back and our high streets will suffer as a result.
The current industry guidance from UK Finance revolves around the access to banking standard, which is designed to
“minimise the impact of bank branch closures”.
However, I strongly believe that that guidance just does not go far enough. Simply providing best practices for how a bank should go about informing customers of its intention to close a branch does little for my constituents.
Unfortunately, this hands-off approach seems consistent with the previous attitudes of this Government. In answer to written questions on the issue, they have told me:
“The decision to close a branch is a commercial issue for banks and building societies and the Government does not intervene in these decisions.”
I must say, however, that I strongly believe that the closure of a branch is not simply a commercial issue. It is, profoundly, a community issue—and it is our communities that pay the price for closures.
The Government have stated that post offices are an adequate alternative for communities whose dedicated bank branches have closed, because, under post office banking arrangements, customers’ in-person needs can be met at a post office branch. That may be true, but sadly in Pontypridd and Taff Ely we have lost multiple post office branches as well. Like high street banks, post offices are a vital piece of our community infrastructure. I have genuine concerns that, without banks and without our post offices, thousands of my constituents will suffer profoundly if we do not act.
One thing we have seen increasing in my constituency is credit unions. Have credit unions in the hon. Lady’s constituency had the opportunity, as those in mine have, to reach out and spread their wings to fill the gap?
I agree that credit unions can plug some of the gap. The Welsh Government are exploring opportunities with Banc Cambria, which would be a national bank for Wales with a presence on the high street, but until it is established and until our banks have a statutory duty to provide a service to our communities, services will be sadly lacking. Businesses, communities and constituents will suffer as a result.
I am grateful that my hon. Friend is being so generous in giving way. Is she aware that another issue for customers of some banks or building societies is that the software does not always work with post office software? If a member of the public wants to cash a cheque or take money out, it is not always possible with every single bank or building society.
I agree. If the infrastructure does not line up, that can cause problems. It can make simple transactions arbitrary and time-consuming, especially when people are having to deal with numerous other transactions during their day. Besides, there are functions that building societies and credit unions are unable to fulfil, such as those connected with mortgage issues or people’s concerns about fraud involving their accounts. People need that presence on the high street and in the community. They need these trusted individuals who can support vulnerable customers and, indeed, the ordinary customer who just has a query and wants a chat about their account.
The Minister will no doubt be aware that the Social Market Foundation and the Treasury Committee have expressed concern about the over-reliance on post offices as a stop-gap. As I have said, such stop-gaps are unsustainable, and put far too much pressure on already overworked postal staff who, despite the vital service they provide, are not trained banking specialists. We need that trusted expertise on our high streets. The Committee also found that post offices were not an adequate environment for many requirements of face-to-face banking, especially for more vulnerable customers, not least because a post office does not provide the privacy and dignity that many bank customers deserve and rightly expect.
While post offices must be commended for the role they play in providing basic banking services, shifting face-to-face banking in rural communities to post offices is clearly not the right answer for everyone. We need to focus on protecting dedicated high street bank branches instead, and in that connection I cautiously welcome the provision in the Financial Services and Markets Bill—now in the other place—for banks to potentially share face-to-face branch services, although the exact mechanism for that is yet to be determined. Independent organisations such as Link are already involved in creating those “shared services” in some parts of the UK, and I pay tribute to the work that they do to ensure that high streets can continue to thrive. However, the Bill represents a clear opportunity to enshrine this community-driven model in law, and an excellent opportunity for the Government to address the issues that I have raised tonight.
I urge the Minister to provide the House with any clarification he is able to offer on how these shared services might work in practice, as well as the criteria by which communities that are eligible for them are now selected. None the less, research by Which? suggests that since the Government introduced the Bill, a shocking 390 bank branches have closed in the UK. It is clear that immediate action is needed, and I therefore urge the Minister to set out a timetable for the shared services to be brought online.
High street banks are the lifeblood of local economies and, indeed, whole communities in constituencies such as mine. They must not be allowed to disappear completely, and they must play a central role in the regeneration and levelling up of former industrial communities such as mine. The unprecedented rate at which they are vanishing from the high street is not only holding local economies back, but making life challenging for the most vulnerable people in society who depend on easily accessible face-to-face banking.
I look forward to the Minister’s comments on the issues I have raised, especially the commissioning of shared banking services, as I am sure that thousands of my constituents will be very interested in what he has to say. The impact of bank closures on our high streets will be—indeed, already is—truly devastating. I sincerely hope that the Minister has listened to my concerns and will finally decide to take action.
Let me begin by thanking Alex Davies-Jones for securing the debate and raising an important issue that I know is of concern to many Members’ constituents. She is clearly a vocal and passionate champion for her high street, which does her credit. May I also prematurely wish her a happy St David’s Day?
Our local high streets are of the utmost importance in towns throughout the country. They are the beating hearts of communities and form an intrinsic part of the social fabric of our cities, villages and communities. I know that, in joining this debate, all Members will be thinking of their own constituencies and the many conversations that they will have had with people there about—and often standing on—their local high street. I also know from speaking to my own constituents in rural West Sussex that there are legitimate concerns about the decline of our high streets, especially among vulnerable, elderly or isolated people who rely so heavily on what the high street provides. Let me therefore say at the outset that the Government recognise the vital role that the high streets play in society, and that we are implementing policies and directing resources toward protecting them, because that is the right thing to do.
I am proud to be part of a Government that are providing long-term, enduring support. How are we doing that? We are doing so through a combination of direct funding, tax cuts and legislation. The Government have provided a comprehensive package of around £400 billion of direct support. The towns fund and the levelling-up fund are together investing £8 billion in regenerating local communities and high streets. In May 2022 we introduced the Levelling-up and Regeneration Bill, bringing in new legislation to introduce high street rental auctions that will tackle decline by bringing vacant units back into use. We sometimes refer to them as the broken teeth of our high streets, and it is welcome that these measures are being put forward. Just months later, at the 2022 autumn statement, we announced a package of business rate support worth £13.6 billion, including an increased 75% relief for retail hospitality and leisure properties. If the hon. Lady’s constituency is anything like mine, that will have been a lifeline for so many small businesses on the high street. Under this policy, businesses can claim up to £110,000 each in 2023-24. It is a tax cut worth over £2 billion for more than 200,000 local businesses.
I am here as the City Minister to respond to the hon. Lady’s specific point about the closure of local bank branches and how this impacts the high street—I accept that it does. The difficult fact is that the way people are banking is changing. Innovation has led to more online banking, which for many—not all—is more convenient and quicker than banking in branch. It liberates people and allows them to work at different times of the day or night, or perhaps to juggle childcare responsibilities, because banks were never always open. We know that anecdotally, as well as from the data. The industry body UK Finance found in 2021—that is already some time ago—that 86% of UK adults made contactless payments, 72% banked online and 57% banked on their mobile phone. That is not just young people; the latest data shows that more than 70% of people aged over 65 use online banking. We should not be dismissive of the so-called silver surfers. None of that is to deny the fact that there are significant minorities that are excluded from those figures.
In that context, local bank branches are simply receiving fewer visitors than they once did, and I think it is incumbent on all Members to recognise, as the hon. Lady did, that banks and building societies have difficult decisions to make about how best to provide services to those who need them and to support communities. Members should also recognise—this is certainly the view on this side of the House, although I respect other views on the matter—that it is not the role of the Government to intervene in these decisions; nor do we have the powers to do so.
The hon. Lady gave the example of the Barclays branch closing in Talbot Green. According to Barclays—I am not here to defend its actions in any way, but we should look at the data—91% of the people who used that branch also banked using alternative means. Only 35 customers used that bank regularly as their only way to do banking. So although bank branches are an important part of the community, we need to be careful that we do not follow the behaviour of our constituents rather than leading it or maintaining it.
I will come on to the measures that the Government are taking in the Financial Services and Markets Bill—with, I think, the broad support of the House. I am very concerned about access to cash, and we are legislating on that. I took the liberty of looking at the hon. Lady’s constituency, and according to Link there are 97 cash machines there, more than three quarters of which are free to use. Those are probably the ones that we all care about most on behalf of our constituents. That is a substantial number, offering people at least the ability to access cash.
Jim Shannon mentioned credit unions. The Government support the credit union sector in order to have a greater diversity of provision. The Smart Money Cymru and Dragonsavers credit union both serve the constituents of Pontypridd, and I salute them. This Government will do whatever we can to improve the viability of the credit union model and ensure that we have appropriate, proportionate regulation that promotes the growth of credit unions and the mutual sector more generally.
Some 99% of personal banking customers and 95% of business banking customers—this is measured by the relationship with the banks with which they do business—can do their banking, although not all of it, at one of the more than 11,500 post office branches across the country. While I understand that that will not always be the perfect answer, that is a substantial lifeline for banking services. It also puts a substantial amount of revenue into the Post Office business, and if we do not make a success of it, we might be sitting here on another evening having another debate about the loss of post offices in our communities.
The Minister may be interested to know that the issue in my constituency was with the Nationwide building society, with many of its members unable to use the post office, which affected thousands of people.
I thank the hon. Member, as I thank all hon. Members for their contributions to the debate. The issue we are debating is why we have urged all banks seeking to close branches to examine the Financial Conduct Authority’s guidance to ensure that, when they do make closures, they carefully consider the impact. I hope that those procedures have been followed in the case of the hon. Member for Pontypridd, and I encourage her to contact the FCA if she is concerned. Where firms fall short of expectations, the FCA can and will ask for closures to be paused.
We are taking strong steps on access to cash. We must not impede innovation. People and businesses are embracing the benefits of new services. Some small micro-services are benefiting, and some female entrepreneurs are setting up businesses without the overhead of having to have access to cash. Many people do like to tap and go, so that flexibility is important. As I mentioned earlier—the hon. Lady was also kind enough to mention it—the Financial Services and Markets Bill will protect access to cash, both withdrawals and deposits, because that gives businesses the confidence to take cash safe in the knowledge that they can deposit it, hopefully not too far away. It will be the first time since the ancient Celts first started minting coins in this realm that there will be a statutory right to access to cash.
I must not digress, but I recently visited the Royal Mint in Wales—
I congratulate the hon. Lady and pay tribute to all those who work so hard to deliver such fantastic products.
To conclude, this Government are alive to and care about the changes that are happening to our high street. We want a financial services sector that serves all. We understand the challenges that these changes can bring. We welcome innovation, we want to support our economy, and we want to support our local high streets.
Question put and agreed to.