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Banks (Branch Closures)

– in the Scottish Parliament on 5th June 2013.

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Photo of John Scott John Scott Conservative

The final item of business today is a members’ business debate on motion S4M-05922, in the name of John Mason, on bank branch closures. The debate will be concluded without any question being put. I invite members who wish to speak in the debate to press their request-to-speak button now—or as soon as possible—and those who are leaving the chamber to do so as quietly as possible.

Motion debated,

That the Parliament expresses deep disappointment in the Royal Bank of Scotland’s (RBS) latest decision to close a number of branches across Scotland, including Gourock and one of its two remaining branches in Glasgow Shettleston; considers that these proposals go against the wishes of many RBS customers, particularly those in poorer areas who may not have easy access to internet and mobile banking, and finds a sense of irony in RBS’ decision to turn its back on customers who it considers bailed it out after it found itself in serious financial difficulties.

Photo of John Mason John Mason Scottish National Party

I thank all the members who have given me the opportunity to have the debate today.

Some time ago, the Royal Bank of Scotland announced that it was closing its Bridgeton branch in my Glasgow Shettleston constituency. It closed the branch earlier this year. To an extent, we accepted that that was inevitable. Cuts were being made across the board in society and in the banks, so perhaps we did not put up much of a fight.

However, in the very same week that RBS closed the branch, it announced that it would also close the Shettleston branch—no consultation, no asking for opinions, just a decision that had already been made. I was furious about that. That would leave only one branch of the Royal Bank of Scotland in my constituency of some 70,000 people. To be fair, RBS agreed to meet me. It told me how wonderful the one remaining branch would be—it even had a machine there that would give out £5 notes. That is really wonderful, is it not?

Around the same time, I attended a meeting of Sandyhills community council and quickly picked up that it was not just me who was seriously upset; the community as a whole was furious about the decision. We therefore agreed to put together a petition and collected more than 1,000 signatures from local residents and others who came into the area, often specifically to use that branch. It is not just the bank’s customers—individuals and businesses—who suffer in such a situation; the danger is that footfall will drop for all the other shops in the area and that it will cause problems for a number of other businesses, including, in this case, the credit union, which is very close by.

Members may be aware that Labour and the Scottish National Party do not always have the closest of relationships in the east end of Glasgow; in fact, we do virtually nothing together unless we are absolutely forced to. However, on this occasion, given the strength of feeling in the community council and among the wider public, I felt that we had to try to bring everyone together. There is nothing like having a common enemy such as RBS to draw normally antagonistic politicians together.

The campaign has been led by Sandyhills community council and supported by Shettleston and Tollcross Credit Union, Margaret Curran MP, the ex-MSP Frank McAveety, local councillors and me. The role of community councils can be important in relation to such issues. They are non-party political and cover a smaller distinct area than even city councillors do. I admit that I have had clashes with community councils in my time, but the campaign has been an example of how they can be a real asset to a local community.

On a cross-party basis, with the credit union and the community council, we went to Gogarburn to hand in our petition. Again, to be fair, RBS accepted it and was reasonably polite, but it was not exactly enthusiastic.

What are the bank’s arguments for closing the branch? One argument is that there are fewer customers than there used to be. Of course I can accept that numbers may be down a little, but people who go into that branch—as I do, and as other members may have done—often have to queue to get served. It is a busy branch.

Another argument is that more customers are using online banking. I am afraid that that argument upsets me somewhat. We know that fewer people are online in poorer areas; in fact, Glasgow Housing Association has found that only 10 per cent of social housing tenants have regular access to online facilities. Across the parties, we have been concerned that the bank has sought to move down the online route, which will clearly disadvantage many of our constituents. The Department for Work and Pensions is another example of an organisation going down that route. Many people want to speak face to face to their local politician or their bank—they do not want to do things online. That may well come in the future, but we are a long way away from a majority of our constituents being comfortable with going online for a range of services.

In the Parliament, we debate finances—whether they are Government finances, organisations’ finances or individuals’ finances—often enough, and on many occasions we do not agree with one another. However, I think that there is broad agreement on some issues, such as the need to improve financial education in our schools and, beyond young people, in the wider community. Debt has been a huge problem right across society, and we all need to learn from mistakes that have been made in the past.

Photo of Neil Findlay Neil Findlay Labour

I absolutely agree with John Mason about the need to improve financial education in schools, but it is RBS that very often does that education in schools.

Photo of John Mason John Mason Scottish National Party

Absolutely. That is ironic. To be fair, I have visited St Anne’s primary school, where the local RBS staff did a perfectly good job in encouraging the kids. I make it clear that the local staff are absolutely fine—I am sure that that is true in virtually every RBS branch. Today, I want to challenge the top decision makers today.

To close a bank branch in an area such as Shettleston goes completely against the financial education agenda that we are trying to achieve of helping people to manage their finances better.

We might ask whether all the banks are closing such branches, and the answer is no. In the past week, I read an article in The Herald about Santander, which specifically said that it was not closing branches. If that bank does not need to close branches, I do not understand why RBS, which is much more deeply embedded in our communities, needs to do so. One more thing that really infuriates me about all of this is that we—the public—actually own RBS. It is not just any other bank but one that has been bailed out by the public purse. One might just think that it owes some extra duty to the public in return. That point is not lost on my constituents.

What is RBS’s response? It has offered us a further meeting to explain why it is closing the branch, but there is no offer of a meeting to discuss whether it should close the branch. I realise that the Government has limited influence on the situation, but I would be grateful for any reassurance that the Government sees this as an important issue and will raise it with RBS on behalf of not just my constituents but vulnerable constituents across Scotland.

Can we see any signs of improvement in RBS’s attitude? Its report for 2012 runs to many hundreds of pages, from which I have selected just one or two. To be fair to RBS, it accepts that it has got it wrong in the past. However, I am concerned about where it seems to think that it is now. For example, on page 8, under the heading “Our customers”, RBS states:

“Successful companies put their customers first. If they do not serve customers well they have no purpose. Without satisfied customers there is no return for shareholders, no jobs for employees, no sales for suppliers and no taxes to support public services. Most of us at RBS get up every day with the aim of serving our customers well.”

I am afraid that most of us in Shettleston are not convinced that the decision makers in RBS are getting up every day with the aim of serving their customers well.

Photo of Neil Findlay Neil Findlay Labour

I apologise, because I will have to leave when I finish my speech.

I thank John Mason very much for bringing the debate to the chamber. Many of us, like Mr Mason, have a direct constituency interest in the issue. Indeed, given the volume of banking closures that are on the cards, I think that hardly a town or village in Scotland will be unaffected.

Mr Mason’s motion specifically identifies RBS. In its current incarnation, it is a bank that is 81 per cent nationalised—it is 81 per cent owned by us as taxpayers. However, it is a bank that acts like the most arrogant capitalist and that still pays eye-watering bonuses to executives—£600 million last year—while imposing a measly 2 per cent increase for staff pay.

Sums from the Klondike were paid to those at the top at a time when they had overseen an information technology disaster that meant that customers could not access their own cash. Many of the same executives took decisions that resulted in a £390 million fine for fixing the London interbank offered rate—LIBOR—and for miss-selling. It was not the branch staff in Edinburgh, Livingston, Bathgate or Glasgow who caused that—it was the people at the top. If what they received was not a reward for failure, I do not know what it is. Of course, it will be the workers in the branches who will suffer the consequences, as will the communities affected—they will lose their jobs and their branches respectively.

In May, Sir Philip Hampton, the chairman of the bank, announced to the RBS annual general meeting—like a starving man over a dripping roast—that the worst was over and that the bank was ready for privatisation. Members must forgive me for not jumping up and down with delight. Where is the logic in nationalising the debt when the bank is in trouble and privatising the profit when it goes back into the black? That is economic madness.

Of course, it is not just RBS that is up to those tricks. Lloyds Banking Group is getting rid of 1,300 staff across the United Kingdom, many of them in Scotland. It is estimated that 40,000 jobs will go over the next five years in the group’s learning, pensions, insurance and IT departments. In addition, IT jobs are being offshored on the back of a claim that there is an IT skills shortage. As with RBS, Lloyds branch after Lloyds branch will close: in Aberdeen, Dundee, Edinburgh, Aberfeldy, Barrhead, Alloa, Bathgate, Carluke and Cowdenbeath—the list goes on and on.

The banking crisis led me to believe that the banks would mend their ways, but on this evidence no one can believe that to be the case. I thank John Mason for securing the debate, but I am sure that, unfortunately, many members will be deliberating and campaigning on the issues that he has raised as the closure programme comes to a village or town near them.

Photo of Richard Lyle Richard Lyle Scottish National Party

I congratulate John Mason on bringing the issue of bank closures to the chamber today. It is an issue that will have an impact on the lives of many people in Scotland.

As an ex-employee of RBS, I refer members to my entry in the register of members’ interests. I receive a pension from RBS. I worked for RBS for 10 years as a regional manager, and my whole division was made redundant by the bank in early 2000-01.

I welcome the points that John Mason outlined in his speech, and I agree that Parliament should be disappointed by the closures, particularly because the people who will be most affected—the public—were the very ones who saved RBS when the financial crisis happened.

John Mason also mentioned that those in poorer areas may not have easy access to internet and mobile banking. I highlight that point, as I recall that we recently debated a motion in the name of Christina McKelvie regarding the current attitude described in “Voices from the frontline ... Digital by default”, a report that ties in well with what we are discussing today. Furthermore, a case study by the Carnegie Trust showed broadband uptake to be as low as 90 per cent in some cases, further highlighting the need for a much valued local branch.

On a more general point, “A Strategy for the Financial Services Industry in Scotland” cited the following figures, stating that the financial services sector

“accounts for 9.3% of Scottish jobs, employing 108,000 directly and almost 90,000 more in a range of related industries. Including other effects, this amounts to more than 220,000 jobs in Scotland”.

The closure of local branches in areas such as Gourock and Shettleston cannot possibly be a good thing. We tell people these days to shop locally and buy locally. What about banking locally? Without local branches, people will not have the opportunity to go to a local bank and discuss their banking issues with a friendly face. I remember the RBS television advert a number a years ago, which promised no bank closures.

Bank closures result in further questions of exclusion: people will need to pay for transport to the nearest bank branch to discuss their banking issues; people who cannot afford broadband cannot bank online; and people who—like me until recently—have a dinosaur mobile phone cannot bank on the go. It is a question less of want than of necessity. Banking locally is key to every community. I therefore hope that the worrying trend that RBS has set halts and that there are no future closures anywhere in Scotland.

I end by thanking John Mason for bringing the important motion before us today. Bank closures should be stopped. I do not agree entirely with all Neil Findlay’s comments, but I agree that banks should be working for local people. We own RBS and it should be working for us.

Photo of Drew Smith Drew Smith Labour

I thank Mr Mason for bringing the debate to the chamber this afternoon. I do not recognise any of the antagonism that he describes in relation to politics in the east end of Glasgow, but I am grateful to him for ensuring that the matter is debated in the Scottish Parliament.

It has not escaped members’ notice that the Royal Bank of Scotland is more than 80 per cent owned by the taxpayer. Unfortunately, it does not appear that that fact has led to the bank becoming any more responsive to the real needs of its customers or indeed to those of the people whom Mr Mason and I represent in the east end of Glasgow.

The rationale for the closure of the Shettleston branch on 20 June 2013 is that a declining number of customers wish to make use of a physical branch located in their community. Many of us are increasingly using home broadband internet connections, smartphones and other means to access online applications for banking services. However, when my colleague and local Shettleston MP Margaret Curran met RBS representatives—and I know that John Mason, too, will have raised this issue—she quoted the footfall figures that were collected and which demonstrate that people use the branch at the rate of almost one a minute. It hardly sounds as if the service that RBS is offering from the cash counters is moribund; indeed, John Mason has described the queues that he has encountered at the branch.

There are good reasons why people rely on the branch, and the options that RBS seems to think will replace the service for local people are not likely to be useful for many people in the east end of the city. I would have thought that a bank would seek to know its customers and their circumstances as well as possible, but perhaps RBS’s lack of understanding on this issue partly explains the troubles in which it has recently found itself. It is well known that in Glasgow digital inclusion is in fact a story of exclusion. Many RBS customers in Shettleston will not be switching to an iPhone or app but they will be quite right if they decide to switch bank.

Likewise, at a time when there is so much debate about how we ensure that the many people who do not have access to a bank account can access benefit payments as a result of welfare reform changes, RBS’s decision will make things worse. Richard Lyle was absolutely correct to highlight our recent debate on Citizens Advice Scotland’s report on the subject; indeed, I suggest that the managers at RBS seek advice from CAS on the impact of the changes on communities such as Shettleston so that they understand just how difficult the decision will make the job of ensuring that people have access to bank accounts.

I also note the concerns expressed by Sandyhills community council and particularly the credit union, which have thrown the issues into pretty stark relief. Given all the prevailing reasons for encouraging credit unions, I have to say that I find it incredibly worrying when a credit union says that such an unthinking decision will seriously affect its ability to provide services to local people.

I commend the community council, the credit union and all of the area’s political representatives both from Mr Mason’s party and my own, and I echo the call for RBS to change its mind. If it will not listen to its customers in Shettleston, perhaps it will try listening to its 70,000 shareholders in the area.

Photo of Stuart McMillan Stuart McMillan Scottish National Party

I, too, congratulate my colleague John Mason on securing this important debate. I should put it on record that I have an RBS account.

Store, factory and bank closures are always a matter of concern because they affect people’s livelihoods as well as their local communities. That said, although the bank closures that we are discussing will certainly have a negative impact not only on Glasgow Shettleston but on Gourock, the closure itself will by no means destroy Gourock’s fabric. Moreover, the motion focuses on RBS closures but it is important to note that other institutions are closing branches. For example, the Nationwide Building Society has closed a branch of the Dunfermline Building Society in Alexandria in the west of Scotland.

A key element of a successful town centre can be the presence of a number of large high-street branded stores. That can bring comfort to localities, but I have to say that Gourock bucks this trend because, although there are larger chain operations such as the Post Office and a couple of bakers, many of the shops in the town are actually small independent traders. That augurs well for the future because the town already has a sense of resilience and pride. When I talk to people in the town about the bank closure, the message I get is that the people of Gourock will deal with this sad news and move on.

Nevertheless, the decision to close the branch is disappointing. When I contacted RBS, I was told that the reason for the closure was, as has already been pointed out, that the number of people using the branch has fallen by nearly 30 per cent over the past few years. It is right that any business that experiences a drop in numbers needs to ask itself what it should do. However, before it gets to the position of closing, I suggest that it asks itself what more it can do to make its business busier and more relevant to its customers, former customers and potential new customers.

I am not aware that any of those things has taken place in this instance. However, I am sure that after today’s debate I will receive some correspondence from RBS, in which it will tell me what it tried to do before it decided to close the Gourock branch.

I welcome the agreement made with the Post Office to allow RBS customers to access their accounts, withdraw money and check their balances after the closure. However, that is too little, too late. Furthermore, given the westwards population shift that has been taking place in Inverclyde for many years, not to mention the development work that will take place in Gourock, I suggest that there was an opportunity to promote the branch more widely, as a means to keep it open.

I accept that the way that people bank these days is different from that of, say, 10, 20 or 30 years ago. Much more is done online—I have an online account. However, many people like me do not want to do everything online, and many people who are IT illiterate will suffer from the closures.

Many people commute daily from Gourock to work outside Inverclyde. Gourock is a gateway to Argyll for tourism and a tourism location itself. I genuinely cannot see how an RBS branch cannot exist in the town. Maybe a more imaginative opening-time structure would have meant that the branch could have been kept open. Maybe more promotion of the branch would have kept it open. Maybe—just maybe—the constant battering that the RBS has taken as a consequence of past reckless decisions is a sign of a lack of confidence in the institution.

I know that the RBS is working hard to get back to a healthy financial position. However, I ask its management to remember that it was not its branches that took the bank to the brink. It was not the communities in our constituencies and regions that took it to the brink. It was others who were clearly out of touch with the high street.

I am sure that a RBS representative will be listening to or watching today’s debate. I genuinely ask them to think again about this decision. RBS should stick by the people who stuck by it in its hour of need: the taxpayers.

Photo of Fergus Ewing Fergus Ewing Scottish National Party

I thank John Mason for lodging his motion. I am aware that he raised the issue with John Swinney in March. I understand the concerns about the impact of branch closures in communities throughout Scotland that have been raised by John Mason and all the colleagues who have taken part in the debate.

Banks play a key role in our society and local economies; members have underscored many ways in which they do so. We rely on banks in order to conduct our daily lives. The Scottish Government is absolutely clear that customers must be at the heart of what banks do and the decisions that they make. We have been very explicit about that in our banking strategy, about which I will say more later.

I want to emphasise a point that John Mason made very clearly. My experience of meeting bank staff—recently, I had the pleasure of meeting staff in a branch in Inverness—is that they are unfailingly courteous, helpful, positive and devoted to doing their very best in their work. I make that point quite deliberately, because although all of us here are debating problems that have arisen, we all recognise that ordinary bank staff, who are at the front line and are the face of the bank, do an excellent job for this country. Perhaps sometimes the brunt of criticisms and public disquiet about decisions that are taken by banks’ leadership falls on front-line staff, who have had nothing whatever to do with the decisions. It behoves me, as minister, to thank all the bank staff who do a great job around the country, and who are committed to helping ordinary customers, whether they are individuals or businesses.

It was mentioned by Stuart McMillan that following the financial crisis that the banks have been facing, they have to address their long-term financial sustainability. There is no two ways about that; that task needs to be tackled. We must accept the reality that that task needs to be done. It is not an easy task or one that anyone wished would be necessary, but necessary it is and it involves reducing costs and making difficult decisions. That has been alluded to by some members in the debate.

I am acutely aware of John Mason’s point that not everybody has access to the internet and mobile banking. It is undoubtedly true that some people prefer to bank in a branch. Other people are perhaps not comfortable with or are unable to use the internet either because of unwillingness to break the habits of a lifetime or through age and physical impairments or difficulties that make it impossible to use those facilities. Nonetheless, it must be recognised that banking is changing dramatically.

In preparation for the debate, I asked the Royal Bank of Scotland for information about how it is changing. As John Mason said, internet banking is now such that 50 per cent of the bank’s customers bank online. However, that is not the case in Mr Mason’s constituency, as he said. Therefore, the point that he made about local facilities is relevant. More than 1 billion transactions were carried out on mobile apps, and RBS Group’s customer services handled more than 2 million phone calls in 2012. Increasingly, banks are looking at different ways of serving the public. We are now used to ATMs; branches, mobile banks and points of presence in railway stations and so on may become more popular as people seek convenient solutions in busy lives.

The nature and practice of banking are changing, and there is less demand for the traditional format of banking services that—if I may say so—the Deputy Presiding Officer and I grew up with, when none of those other forms of banking were possible. When the world changes, the nature of policy solutions must change accordingly.

Nevertheless, we recognise the concerns that Mr Mason has expressed and which will be felt by some of his constituents. Therefore, I asked the Royal Bank of Scotland to respond specifically to the issues about the location of the branch in Shettleston that has closed. The bank has advised me that there are several alternative Royal Bank of Scotland branches within 3 miles of the Shettleston branch. Mr Mason also referred to a post office that is located relatively nearby, and Mr McMillan said that there is a post office in Gourock that is fairly close to the Gourock branch that has closed.

I appreciate that those alternatives will not suit everybody and will still leave constituents of Mr McMillan, Mr Mason and other members inconvenienced. The problems are, therefore, not to be dismissed. They are real concerns and I recognise them. Therefore, I would be happy to raise any individual case or specific difficulties that have been caused in Shettleston and Gourock directly with RBS, if either member wishes me to do so.

Mr Mason asked me to say what engagement we have had with the Royal Bank of Scotland. I met RBS on 8 January, the First Minister met RBS on 9 January, Angela Constance met RBS on 7 February, John Swinney and the First Minister met RBS on 13 February, John Swinney met RBS on 28 March, and the First Minister met Ross McEwan, the chief executive officer for UK retail, on both 18 April and 14 May 2013. At those meetings, a huge number of things were discussed, including an undertaking by the Royal Bank of Scotland to invest £26 million in its branches over the next three years. That refurbishment will bring a lot of work to tradesmen throughout the country. I appreciate and acknowledge that as a good thing. In total, the bank is investing £175 million in improving services, branch refurbishments, ATMs and cash-and-deposit machines, and it is investing £50 million in information technology. It is also investing £450 million in IT hardware in its Edinburgh data centres.

I appreciate that none of those things will address—perhaps in any way—the problems that Mr Mason has raised; nonetheless, they are part of the wider picture and it is appropriate to mention them for that reason.

I am grateful to members for highlighting one of the issues that affect banking matters in Scotland. It is right that they do so; it is right that they stand up for constituents who are inconvenienced. However, we must not only recognise the difficulties that face the banks; we must also recognise that they are doing good things in the country. We must be willing to acknowledge that and thank them for doing that.

One member mentioned bonuses. It is my opinion that bonuses are perfectly legitimate when they reward success. However, in the absence of success, the award of bonuses to top directors and a tiny minority of senior employees of financial and other institutions causes extreme public disquiet perhaps more than anything else.

Meeting closed at 17:40.