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This is one of those occasions when I feel grateful that I am more than a sword’s length from any of my colleagues in the chamber, as I declare that I am a shareholder in the Bank of Scotland—of course, as a result of my 30 years of employment, which ceased nearly 20 years ago.
I start with a few facts about what is going on. The Scottish Parliament information centre tells us that a third of bank branches in Scotland closed in the past 10 years. Which? found that 78 per cent of consumers in the two lowest-income household groups rely on cash—indeed, 26 per cent of respondents in those groups said that they never use card payments—and that 80 per cent of over-65s rely on cash. Research by Reuters showed that 90 per cent of the bank branch closures in the past year occurred in areas where the median household income is below the national average.
Those statistics tell us that bank branch closures are adversely affecting the people who are least able to cope with them. Branch closure is a socially discriminatory activity, and we will all pay the price if it continues at the current rate.
ATMs are closing across the UK at a rate of 250 a month. I make a little observation about ATMs in Scotland: they should not be closing as fast. Because the Scottish banks issue their own bank notes, they can fill cash dispensers at no cost, beyond the cost of printing the money, whereas in England the banks have to pay a pound for every pound that they put in the cash dispenser. It is much cheaper to run ATMs in Scotland, so we should not see the same rate of closure. Typically, there will be £40,000 in a cash dispenser.
Banking is a simple business, although the bankers make it look difficult. Banks take money in and then they reward the people who deposit the money; they lend money out and they charge people. A transaction system sits in the middle. To make banking work, they just need to get the two sides of the equation to work.
Why did bank branches develop in the way that they did? The answer is that, typically, people deposited money in the rural branches; in the city branches, the banks lent the money out. That was the traditional banking model—in particular, for the Trustee Savings Bank—in which the banks funded the lending from their depositors. That was a safe model for banking. One of the contributing factors to the bank crash in 2008 was that banks had increasingly gone to the wholesale markets to get money and that they had moved away from keeping the two sides of banking in balance. That didnae help.
In my previous constituency—before the boundaries were changed in 2011—the Clydesdale Bank announced that it was going to shut the branch in New Deer. That community of some 600 people was outraged by the announcement. Those people got together and bought the bank branch. They then persuaded the Royal Bank of Scotland to move in and run the bank branch. It is still there today in the face of all the closures. That was largely down to a dear and now departed colleague, Councillor Norma Thomson; she was one of a range of people in the community who were involved. My point is that there is potential scope for community action and making banks responsive to the communities in which they operate.
A particular example of the risk that banks take in disconnecting themselves from communities comes from South Africa in the early 1990s. In the townships of Soweto, Khayelitsha and elsewhere, people who had informally built their houses wanted to regularise their position and engage in the formal banking system. The traditional banks would have nothing to do with those people, because of their situation. Subsequently, the people set up their own banks and deserted the traditional banks. That is what could happen to the traditional banks here—Bank of Scotland and the Royal Bank of Scotland. Today, the population of Soweto is 1.27 million people; therefore, it is not a trivial matter that those people deserted the traditional banks and took their banking fates into their own hands. The same sort of thing could happen in Scotland. Those so-called commercial decisions can ultimately be to the commercial disinterest of the organisations that are devastating so many communities—particularly those that are most affected by the closure of banks, because they are the communities that already have least in our society.