[Mr Graham Brady in the Chair] — Rural Bank Closures

Part of the debate – in Westminster Hall at 10:11 am on 21st February 2012.

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Photo of Chris Ruane Chris Ruane Opposition Whip (Commons) 10:11 am, 21st February 2012

I want to carry on where Glyn Davies left off and talk about the public reputation of banks in the UK—in fact in the whole world. Banks today are not in a good place. Earlier, I mentioned the quote, “The time for remorse is now over”. The banker who said that totally misjudged the mood of the nation. Having been through the expenses scandal, we as MPs recognise this situation. We know that we have to build bridges with the public, and the banks and the media must do the same. Of all three sectors, the banks are showing the least remorse and seem less anxious to make good their reputation with the public. They must look again at the balance between profit and social responsibility. Banks are about profit, but as they make that profit from people and from communities, they bear certain responsibilities, which we have not witnessed their fulfilling since the banking crisis. They have the opportunity to learn their lesson and to make amends with local communities, especially in rural areas. It sticks in people’s guts when they hear about billions of pounds being set aside for bonuses while branches are being closed. Such action does not sit well with the British public. Banks should perhaps take some of those bonuses and reinvest them in rural and poor communities across the UK.

The local presence of a bank in a high street or a village is very important. It is about making a commitment to a community. In the past—I will not go too far back—local bank managers were trusted pillars of the community. They were down at the golf club, picking up the local knowledge. They knew who was a sound investment and who was not, so when they were sat across from someone who wanted money, they were able to give the appropriate advice. That cannot be done by proxy from a city 20 or 30 miles away, or from a town 10 or 15 miles away. Understanding the vibes of an area and keeping a finger on its pulse needs to be done in the community; local knowledge and local presence are very important and lead to sound lending. Banks were also involved in the wider community; they were in the business groups and the town centre forums, using their expertise and knowledge to help local people.

There has been a lot of bank kicking today; I have done it a bit myself, but let me mention some examples of good social responsibility that I have come across over the years. About 10 years ago, I wrote to all the banks in my constituency and said, “What is your corporate responsibility agenda? What do you give back to the community?” I had an excellent response from Barclays’ Wendy O’Raheilly, who was based in Cardiff. She said that she would drive 200 miles there and 200 miles back to tell me about it. She told me that at that time, Barclays was the second biggest corporate donor in the country, donating some £52 million. Sue Jones, Barclays’ local person based in Rhyl, attends every Rhyl in Bloom meeting. She bring 70 Barclays personnel from all over the UK to help out in community initiatives. There are clearly some good banks. HSBC has received a kicking here today, but its local person, James Smith, attends all our town centre forum meetings. I wrote to the HSBC chief executive for the whole of Europe, Brian Robertson, to tell him what a great employee he had. He then got on the phone to James Smith, saying how pleased he was to receive such a letter. Some banks take their social responsibility seriously; other banks need to do more. The Britannia building society is now getting active in my local community in Rhyl.

In the interests of transparency, the banks need to advertise what they are doing. They need to tell us the criteria for closing down rural banks. We need to know what is best practice and how we can push the worst practice upwards towards best practice. Some banks inform MPs of their branch closures. Do they inform the town council, the county council or the community council? How far in advance do they do that? Do they produce the criteria for closures so that communities can argue against them, or is it all done and dusted before the dialogue is started?

My hon. Friend Mr Thomas made the excellent suggestion of holding a summit with the banks. I hope that the Minister and the shadow Minister, my hon. Friend Toby Perkins, will hold such a summit and invite rural MPs from across the House. Actually, why keep it to rural MPs? Perhaps all MPs who are experienced in bank closures should be invited.

We need historical perspective: how many branches have been closed by each bank; what percentage are they of the total number and were those branches in rural, urban or poor communities? That will give us a picture and allow us to say to a bank, “Yes, we can hold you up as best example and you, as worst example.” We need a ranking of banks. Which are the banks that have social responsibility and which are the ones that do not? I am not sure whether there is an all-party parliamentary group on banking. If there is, I have been inspired to join it after today’s debate. Perhaps it would have a role to play. Perhaps we should be tabling parliamentary questions on the matter. Are such closures being recorded by Government? Part of this Government want a hands-off approach towards the private sector because they want to let it get on with its business, but these are big issues affecting our communities. Access to finance can help decide whether communities in rural or poor areas flourish or die. I fully back that idea of a summit, and hope that it is taken up by the Minister, the shadow Minister, the all-party parliamentary group and MPs.

What can be done with these closures? We can look at what the Labour Government did with the post offices; we had to close them in some rural communities and it was a painful process. Can the private sector learn from the public sector? In our closure programme, we looked at where a post office was and where the next one was. We studied the radius around the post office under threat. Everything was done mathematically and systematically. Should the banking sector get together and co-operate? They could cut their costs if they said, “We won’t close a bank here if you don’t close a bank there.” Is there synergy to be had among the banks in the banking sector? Is there enough co-operation? I understand that it is difficult because they are all after the same pot; they are all after profit. If they have social responsibility, they should consider more co-operation.

Mobile banks have been mentioned today. We discussed and implemented such a strategy when we closed the post offices. We had post office mobile vans going around the country. Could there be any co-operation between the post office mobile vans and mobile banks? Such a scheme will cost money, but it might be a sound investment for the banks, not only economically but socially, because their reputation would improve.

Is there room and opportunity for the banks to co-operate with the credit unions, which have already been mentioned in this debate? If banks are pulling out of an area, could they co-operate with credit unions—again, giving them a bit of a subsidy—to move into the areas that they are moving out of? Is more co-operation possible with static post offices, rather than just with mobile post offices? Money is being collected and deposited in those post offices. Are there any synergies between the banks and the post office network?

There have been a lot of good suggestions today from Members of all parties; I think that the debate has been consensual and further progress can be made; and I thank Roger Williams for securing this debate, which has been well attended. Indeed, the hon. Gentleman took lots of interventions; he was very generous in doing so, especially with me. And some good has come of the debate.