I absolutely agree with the hon. Gentleman. It is absolutely critical that people have access to the best possible advice, especially now, where none of us really knows what situation we will be facing in a month or two months, never mind next week. It is critical that there is access to information and advice, and that that is easily accessible for all our communities across the country, wherever they happen to be.
Losing the last bank in town will increase the financial exclusion of our older and less mobile residents. Being able to go to the high street to do their finances is an important part of staying independent for many people. It is a lifeline. It is fair to say that banking habits have changed and the Loanhead branch, like most, is certainly less busy than it historically was. The figures in the bank’s own closing branch review found a 4% drop in counter transactions from personal customers over one year and an 8% drop when businesses are included. To me, that appears to be a fairly manageable figure, especially when we consider the town is set to expand significantly in the coming years.
It is also true that the majority of the population will be able to do much more of their business online. I am not denying that, but we do not always want to do business online, and certainly there are a number of people in our communities who cannot do their business online. Most of us appreciate being able to check balances and do transactions whenever we want, although we do not necessarily like it when the IT breaks down or we stumble over the pass codes. Even with that change in behaviour, a significant number of bank customers completely rely on the local branch; they do not even have a digital option.
The bank’s review found that 76% of customers sometimes use other branches, internet or telephone banking. That leaves almost a quarter of their customers who never use those other methods and are solely reliant on the branch. Many of them are in older age groups—44% of customers were over 55, 26% over 65 and 13% over 75. It is quite clearly the older population who will face the worst disruption from the proposed changes. According to Age Scotland, 67% of people over 75 do not use the internet at all. Many older people expressed frustration with phone banking and lack of trust in digital options, and said that the cost of accessing the technology is in itself inhibitive. In some areas, fast enough connections are not even available.
I know that work has been done to improve banking services in our post offices and I welcome that. The post office network is a fantastic resource for our communities and it does whatever it can to pick up the pieces when a bank abandons a town. We are particularly lucky in Loanhead to have a very accommodating postmaster, who I have no doubt at all will do everything in their power to ease the transition for customers seeking another local place to perform day-to-day transactions, but the post office network is under pressure too. As great a job as it does, it does not have the resources, financial expertise or facilities needed to deliver the full range of bank services when the bank leaves town, nor should it be expected to do so.
Concerns were expressed to the Treasury Committee last year about the way the agreement with banks was operating, and that the Post Office would be put under added pressure, as it did not make a profit from those services. More than half of adults were unaware that they could even use it and said when asked that they would prefer to deal directly with their bank. There is a long way to go before that gap can be filled. We must protect for the future both the post offices and the branch networks. That is not just for the vulnerable, although that is a good enough reason to call a halt to this ruthless cull of face-to-face banking. Those who predict the relentless rise of automation sometimes forget another key factor—human nature. Digital banking has convenience on its side but will never replace the human interaction. It was predicted that e-readers, such as the Kindle, would kill off printed books. That did not happen. We see vinyl record sales booming for the younger generation, despite the ridiculous price tags and the simplicity of streaming. Digital and physical formats are finding a happy co-existence in the modern world; they complement each other, as they both have advantages and disadvantages.
The same goes for banking. There are many individuals who sometimes use a branch and sometimes use other means. We need both branch and online banking to thrive in a flexible, inclusive, modern society and we lose them at our peril. When IT goes wrong, as it does, we all return to the bricks and mortar of a branch. We need to protect those branches so that they are there for the future. The Treasury Committee in the previous Parliament warned that
“if no action is taken, the UK risks inadvertently becoming a cashless society. For a large portion of society, including some of the most vulnerable, this would have stark consequences.”
We have seen a rapid drop in free ATMs, as the reduced interchange fee made the business model less viable. Latest figures from LINK, the UK’s largest cash machine network, revealed that 1,300 ATMs were lost between the end of January and the beginning of July 2018. The consumer organisation Which? predicted that free cash machines would become a thing of the past, after it emerged that 1,700 ATMs switched to charging in the first three months of the year alone. We are being pushed towards a cashless society that we are not prepared for and do not want. That is not solely through consumer demand but financial incentives to go cashless, the creation of a cashless deserts and the continued running down of the branch network.
We are asking people to wash their hands a lot more these days, but it is no longer good enough for the UK Government to wash their hands of this serious issue. Like the politics of austerity, the decision to let things slide is a choice, not necessity. The current access to banking standard does not go far enough to protect customers from branch losses, and the alternatives just do not plug the gap. They will show customers how to sign into mobile banking or where to get a bus to the next town, but the loss of a branch is already a done deal.
Where the financial services markets fail, we need the Government to step up to the plate. We could introduce a public service obligation to protect the last branch in town, for example, and ensure that people have a right to a physical bank branch. The Treasury Committee agreed, saying that
It suggested they could
“make changes to competition law to allow banks to share facilities”.
I would be keen to see that. For the Government to keep brushing this off as a commercial decision is to neglect their responsibility. There are options to intervene; in fact, they have a duty to do so, for the wellbeing of millions of citizens.