Wendy Morton (Aldridge-Brownhills) (Con) I beg to move, That this
House has considered the matter of high street bank closures and
banking hubs. I thank you for being in the Chair, Mr Davies, and
Members from both sides of the House for joining us in this debate.
The numbers may be low, but I think that is because it is a
Thursday, and we have just had the coronation. I know that this is
an important matter, as it has been raised across the House for
some time....Request free trial
(Aldridge-Brownhills)
(Con)
I beg to move,
That this House has considered the matter of high street bank
closures and banking hubs.
I thank you for being in the Chair, Mr Davies, and Members from
both sides of the House for joining us in this debate. The
numbers may be low, but I think that is because it is a Thursday,
and we have just had the coronation. I know that this is an
important matter, as it has been raised across the House for some
time.
Banks are an important part of the fabric of our high streets and
communities, providing access to cash, a vast range of banking
services and, importantly, advice. At a time when we are all
concerned about cyber-security, scams and fraud, this is
particularly relevant. I appreciate that, like many businesses
and commercial entities, banks are understandably facing changes
in customer transaction patterns, requirements and behaviour.
Some of these started before the covid-19 pandemic, but much has
changed since that time, when the pandemic necessitated us all to
live our lives very differently, not least in terms of
technology.
Despite that, banks still provide an essential service—one that I
believe neither a call centre nor a phone app will ever be able
to fully replicate for all customers. When I heard in March this
year that NatWest in Aldridge was due to close at the end of
July, I was quite alarmed and disappointed. That will leave not
only Aldridge but the entire constituency with just one bank—the
HSBC. Surely that cannot be right. The issue does not just affect
the Aldridge-Brownhills constituency or the west midlands; we are
seeing a worrying pattern and up and down the country. The stats
for 2023 alone show that 114 HSBC branches, 95 Barclays branches,
52 NatWest branches and 23 Lloyds branches have closed or are
scheduled to close. That is 352 closures altogether. I know there
are other bank branches closing on top of that, including TSB and
more.
This topic is of interest to colleagues on both sides of the
House, as I have said. That is clear from the number of
parliamentary questions about it that have been submitted to the
Treasury, which I am sure the Minister is aware of. On the day I
raised this matter in the Chamber with the Leader of the House
and requested a debate, I was not alone. I maintain that MPs
should be champions of their communities, which is why I am
standing here today bringing this matter to the attention of
Ministers. Why am I doing it? Because every time a bank closes,
our constituents—often the most vulnerable in our communities,
who need a little bit of extra help —lose a service.
Our high streets, the very streets we seek to regenerate, risk
seeing a reduction in footfall. Our businesses, charities and
local organisations find it all so much harder to do business and
transactions. I want to share a couple of examples. A local
charity explained to me at the weekend how they always had an
informal arrangement with their local bank so that when they did
major fundraising collections in the village, they could go early
to that branch and the staff would take the collection buckets
and count out the change for them—hopefully there were some notes
in there too, not just loose change. That is a service we cannot
always expect a small local post office to offer.
A local business, Taylors Auto on Northgate, set the scene very
well when on the closure of Lloyds last year they said that they
have been running the business for 12 years, trading there for
years and been customers for all that time. Without the bank in
Aldridge they would have to go to Lichfield or Walsall. So many
businesses in my constituency are family-run small and
medium-sized enterprises. They are part of the community as well
as the business network. My local residents are also affected.
The number of elderly people in my constituency is above the
national average: 26.7% of people are over 65 in the Aldridge
Central ward, compared with the UK average of 18%. Although IT is
familiar to many, it is by no means accessible to all. That can
be because of a lack of tech skills, or a lack of access to a
smartphone, a laptop, a computer or even the internet.
I will make two further points. First, if IT must be the only
option, access to IT must be affordable and available. As many
know, the cost of an internet connection has increased because of
inflationary pressure. Secondly, personal independence must be
maintained. Not everyone wants, or is able, to ask their children
or their partner to help them every time they want to pay a bill.
This is about dignity. Unless Members generate greater awareness
of these issues, I fear that we will simply see these invaluable
services continue to disappear quietly from our streets. When
they are gone, they are gone.
Experts warn that in-person banking will not exist in a matter of
years. While researching this topic, I discovered that 5,391
branches were lost between January 2015 and January 2023—an
average of 54 branches a month. Do the maths: at that rate, there
will no longer be in-person banking anywhere by 2027.
The recent announcement of the closure of NatWest’s Aldridge
branch, which came so soon after the closure of Barclays and
Lloyds branches, will be our fourth loss in just three years.
That highlights the speed of loss. In-person banking offers
clarity on payments and trustworthy advice, as well as
convenience and accessibility to people’s own money. Surely that
is a freedom that we should all have.
Alongside the end of in-person banking on the high street, we are
also witnessing the decline of ATMs, especially those that are
free to use. Before the pandemic, the magazine Which? produced a
worrying report setting out that one in 10 free cashpoints across
the country closed or switched to a fee-paying machine during a
17-month period. The rate in poorer communities was higher than
in the least deprived areas of the country. Some 979 free-to-use
machines in the poorest communities were lost. That will
inevitably force those most reliant on cash, who can least afford
to pay for withdrawals, facing charges or being forced to travel
to access their money for free; surely, that cannot be right. By
its very nature, cash is transactional. We must ensure that
people and businesses of all sizes that depend on their ability
to freely deposit and withdraw cash at a time of their
convenience can continue to do so.
Businesses such as Pat Collins Funfairs, which is a long-standing
family business from my constituency, have raised this issue of
access to cash with me. It is by no means the exception. In 2021,
a Treasury consultation proposed ensuring “reasonable access” for
withdrawal and deposit facilities for personal customers, and
deposit facilities for small and medium-sized enterprise
customers. I ask my good friend, the Minister—I know that he has
not been in post long—whether that commitment remains. If so, how
is it that we are allowing such a decline in access to cash and
banking to happen?
It is time to incentivise and attract people back to the high
street, so that we can continue to support local businesses and
communities and ensure that our town centres survive and thrive
throughout the 21st century. We hear that shared banking hubs and
post offices must play a greater role. I agree, but we must put
this into some sort of perspective and be proactive. Banking hubs
offer a counter service where customers of all major banks and
building societies can carry out regular transactions throughout
the working week. The hubs also provide dedicated rooms where
customers can see community bankers from their own banks to
discuss more complicated banking issues. That seems like a
sensible and straight- forward approach.
However, according to Link, even with the closures in my
constituency, which I have already addressed, Aldridge-Brownhills
requires no additional services and certainly has not been
recommended for a hub. In fact, the vast majority of Link’s
investigations when banks are due to close conclude with “no
additional services recommended”. Will my hon. Friend the
Minister tell us why we have to wait until a community has lost
everything before we take action? Surely that is too late and we
need to get ahead of the game. I think that NatWest is still part
of the Royal Bank of Scotland, in which I think the Government
may still have a stake. If they do, I gently urge the Government
to take another look at the issue of hubs for communities.
I turn to the role of post offices. We have some good post
offices across Aldridge-Brownhills. Banking framework 3,
announced in February, is to be welcomed. It will allow the
customers of 30 branches across the country to carry on making
cash payments and withdrawals in a post office, and it will allow
small businesses to deposit cash until 2026. But the question is,
what happens then? Again, the framework relies on access to post
offices. In Aldridge, the post office sits outwith the main
shopping centre. It is not on the high street or in the precinct;
it requires the crossing of a two-lane carriageway, and there is
no dedicated car park. That is not a good enough alternative to
the bank. Citizens Advice reports that we are losing two post
offices a week on average—we lost one in Walsall Wood, in my
constituency, just this year.
It is important that we support both post offices and banking
hubs as part of the solution when discussing the future of
in-person banking on the high street and access to banking
services and cash. In his response to a written question earlier
this year, the Economic Secretary to the Treasury stated:
“the government believes that everyone, wherever they live,
should have appropriate access to banking services.”
I agree. Can we ensure that that happens? It is also important to
recognise that what might be an appropriate situation or solution
in one place is not necessarily the right solution everywhere.
There needs to be a much more tailored and localised approach.
Perhaps that is something that the Government can work on with
local councils, but they must not just pass the burden on to
local councils—they must give them the resource to do it.
I appreciate that decisions on opening and closing branches and
the provision of in-person services are a commercial matter for
banks and building societies—absolutely, I do. But I press the
Minister to take a more holistic, future-proofing approach that
acknowledges the bigger role that our banks have always played at
the heart of our communities. It is time to work in particular
with the Department for Levelling Up, Housing and Communities,
which holds the policy pen on high streets and regeneration, and
to look at the social and not just the economic impact of bank
closures. Driving footfall into our town centres and local high
streets is the key to the ongoing rejuvenation of commercial and
retail areas and to the regeneration and success of thriving
communities. As I said, we must also consider working with local
authorities on where we can provide hub services.
I met with NatWest this morning, and I will continue to work with
it. NatWest is reaching out to customers across
Aldridge-Brownhills. I impress upon the bank the importance of
the needs of my constituents, businesses, organisations and
charities. We had an incredibly productive meeting, but the bank
is still closing. I welcome the fact that NatWest is holding a
community outreach event next week for local residents. The
announcement of the closure of Aldridge NatWest within a matter
of months highlights exactly why we need to look at the bigger
picture now, before it is too late.
3.14pm
(Barnsley East) (Lab)
It is a pleasure to serve under your chairship, Mr Davies. I
thank the right hon. Member for Aldridge-Brownhills () for securing this important
debate. Between 2012 and 2022, Yorkshire and the Humber saw a 43%
decrease in the number of bank and building society branches.
Earlier this month, the Barclays branch in Hoyland announced its
closure, which is of great concern to many local people. It
follows a string of other branch closures in Barnsley, such as
Yorkshire Bank in Wombwell, and will leave my constituency of
Barnsley East with no bank branches at all, four having closed in
recent years.
Physical branch closures are often justified by the rise in
online banking, which has undoubtedly been a great convenience
for many. However, closures risk financially excluding
communities, and it is regrettable that people are no longer able
to choose whether to bank online or in person. More than 3
million people aged 55 and above have still never been online,
with those aged 75 and over most likely to be excluded.
Furthermore, Age UK found that four in 10 over-65s with bank
accounts—amounting to more than 4 million people—do not manage
their money online.
While there has been a shift towards online banking, connectivity
should not be assumed across the country. Rural areas are less
likely to have reliable digital infrastructure, which therefore
impacts their ability to access online banking. Although Labour
is calling for mandatory, well-advertised broadband social
tariffs for those who need them, they have not yet come about. As
the cost of living continues to rise, many people find using cash
easier for budgeting purposes, but it is not just access to
physical money that people are seeking. It has been found that
more people report wanting to speak to a real person as they
become increasingly worried about their stretched finances.
There is some provision in place to establish shared banking
hubs, which will offer people access to cash services. These hubs
have the potential to help many suffering with bank closures, but
there are still some issues to be resolved with this system. A
routine trip to the bank often turns into footfall for local
businesses, helping them to keep their doors open and our
struggling high streets to stay alive. I hope that banks will
take local needs into consideration—particularly those in rural
areas where public transport is not as frequent or
reliable—before continuing with further closures, and recognise
the impact that removing branches can have on different groups in
the community.
3.17pm
(Carshalton and Wallington)
(Con)
It is a pleasure to serve under your chairmanship, Mr Davies. I
congratulate my right hon. Friend the Member for
Aldridge-Brownhills () on securing today’s debate
and on an excellent opening speech, which set the scene as to why
community banking is still so important. It is also a pleasure to
follow the hon. Member for Barnsley East ().
The matter we are discussing is indeed very important. A lot has
been said about rurality and access in more rural areas, but even
in suburban towns such as Carshalton and Wallington, just outside
London, this is proving to be a difficult issue. The main high
street in Carshalton no longer has any banking facilities left
whatsoever. There is a post office, but all the high street banks
have left; I think Barclays was the last to leave, and that was
quite a few years ago. The high street in Wallington lost Halifax
a few years ago, and it has just been announced that Barclays is
closing its branch on the high street as well. Of course, people
can vote with their feet and switch to another bank that has a
high street presence; Wallington does still have a NatWest, a
Nationwide, a TSB, an HSBC and a Santander. However, the worry is
that the Barclays branch will not be the last closure, and that
many if not all of them will eventually close. As my right hon.
Friend the Member for Aldridge-Brownhills said, at this rate of
change, the next few years could see the end of high street banks
altogether. We have seen it in other parts of the London Borough
of Sutton, too: Cheam village, for example, has no high street
banks left, having lost four over the course of the past
decade.
In my short contribution today, the question I want to touch on
is what is left behind when banks decide to close? Of course, the
nature of banking is changing, and I respect that tough business
decisions need to be made around the future model. However, as
the hon. Member for Barnsley East mentioned, it is a huge issue
that many people, for a number of reasons, are excluded from
digital participation in online banking, and the same is true of
those who rely on cash transactions, be they small businesses,
charities or individuals. It is important that there is a
left-behind service for them.
I thank Barclays for being very constructive in engaging with me
since its decision to close. It has agreed to set up a Barclays
van for customers, which will be in the car park of Dobbies
Garden Centre—no relation to the house elf—twice a week every
fortnight, on Tuesdays and Saturdays, I believe. It has also
agreed to retain a single member of its staff so that it has a
presence in another location on Wallington high street five days
a week. That is very welcome news. I welcome the fact that
Barclays realises that it needs to leave something behind, but
that is sadly not always the case when other banks decide to
close. They simply point to ATMs or the post office in the area,
but as my right hon. Friend the Member for Aldridge-Brownhills
pointed out, access to cash and ATMs—particularly free ATMs—is
also in decline.
There is a big problem with an over-reliance on the Post Office,
which is not without its own problems. The post office in
Wallington often has massive queues stretching up the road,
particularly on a Saturday, and its opening hours are a lot more
restricted than those of a bank. Over-relying on the Post Office
to provide a banking service to people once a branch decides to
close is wrong; we need to take a more holistic view.
I absolutely support the idea of banking hubs. It is a great idea
to have representatives from all major high street banks in one
place. It is a way for the banks to save money on rent for
buildings that are not being used as well as they could be, so it
is a good deal for banks and customers. However, I worry that
they are often considered only when everything is lost. They can
take a long time to set up from scratch, so potentially
absolutely nothing will be in place for years. Will the Minister
outline whether the Treasury will consider using its convening
power and its influence to persuade banks to work more
collaboratively and holistically to look at community need and
plan in advance for these things to happen? We should not wait
for every high street bank to close and then try to set up
something from scratch. That is probably the best way
forward.
We all understand and appreciate that the nature of banking is
changing, but for so many—not least those who are digitally
excluded—having that in-person service is not only desirable but
vital. I hope the Minister will outline what work the Treasury is
doing and will continue to do to ensure banking remains fair and
accessible for everyone.
3.22pm
(East Renfrewshire)
(SNP)
It is a pleasure to serve under your chairship, Mr Davies. The
right hon. Member for Aldridge-Brownhills () set out the case very well
for why bank closures are a problem and why they cause such
concern in our constituencies. It feels like I have stood here
innumerable times deploring the loss of another local bank in one
of the towns in East Renfrewshire. I really related to the
comments of the hon. Member for Barnsley East (): bank closures are
highly frustrating and cause such difficulties and challenges for
people in our communities.
Sometimes, the way the banks deal with closures adds to the
frustration. Some have reduced the number of hours they are open
to provide a service, and they tell us in all seriousness that
the reason they are closing is that fewer people are attending
the bank. Well, of course fewer people are attending the bank if
there are fewer hours available for them to do so. The reduction
in the availability of service is a challenge and a
self-perpetuating issue.
The hon. Lady’s comments about rural areas were absolutely right.
This is an issue for people in rural areas—some of my
constituents feel that very strongly—but we also heard about
issues in more suburban areas. The suburban communities of East
Renfrewshire are scunnered; they are fed up to the back teeth of
banks disappearing from their high streets and leaving behind big
gaps in the local shopping areas. That is particularly an issue
for groups in our communities such as disabled people and the
elderly, and for local businesses. Our local high streets face
not only the challenge of bringing in customers but the
additional challenge of the closure. A bank is a destination in
and of itself, but people who go to banks may then visit local
businesses—that will not happen if the banks are not there. Bank
closures leave a gaping hole behind, which is unattractive, and
the service that local businesses may also wish to avail
themselves of is no longer available, so this is not just a
one-dimensional issue for our high streets. I do not think that
the banks are paying due care and attention to that.
Local residents are also aggravated by the correspondence they
receive from banks that are going to close. Without asking in
advance what they think about it, the closure is presented as a
fait accompli—whether the community likes it or not, and
regardless of its views, the local bank is closing, and people
are unable to scrutinise the facts and figures. The bank also
tells them not to worry because they can go to another bank that
is 5 miles away. Well, it might be 5 miles away for a crow, but
that is entirely irrelevant for a human being who has to catch
two buses, with a half-hour wait between the two, to get from A
to B, or if people do not have time to make the journey because
they have other commitments. Such messaging from banks is
profoundly unhelpful and insults the intelligence of their
customers. The banks seem to be assuming that everybody is
standing outside the closing bank, ready to make the journey, but
some of the people affected may live in a town that has already
lost its bank, which means that they will have to travel even
further. It is understandable that people feel vexed.
The right hon. Member for Aldridge-Brownhills pointed out that
when a bank is gone, it is gone—it is not coming back—and that is
one of the reasons why people are so concerned. There are many
other reasons why in-person banking is valuable, including the
opportunity it gives people to have a conversation about their
money. We all value such conversations, which can advise us on
how to stop fraud attempts, particularly those targeted at
elderly and vulnerable people. Obviously, if there is no bank
branch, such discussions cannot take place.
The ability to access cash is a huge issue in my community and
others. If there are fewer free-to-use ATMs and fewer banks, we
are taking away the opportunity for people to choose how they
transact things in their day-to-day lives. Again, that is a
bigger problem for those who have the least cash and for those
who are most marginalised in our communities.
The hon. Member for Carshalton and Wallington () is right to worry that
banks might just be disappearing from our high streets
altogether. Technology is great—I absolutely accept that a lot of
the banking technology is really helpful—but it is not always
what is necessary. We need to appreciate that both approaches are
necessary. Technology and the ability to access it are valuable,
but face-to-face services also need to be made available, whether
for reasons of accessibility or because the relevant technology
is not available. Such services also help us put criminal
elements in perspective. The fewer the number of bank branches,
the more opportunities for online and digital frauds. I have
spent a lot of time recently looking at push payment frauds, and
it seems to me that there would be fewer of them if people had
access to someone they could speak to about their banking on a
day-to-day basis.
Are banks doing what we need them to do? I am not sure that they
are doing so. There is a very unfortunate assumption that
communities will just cope with banks disappearing from their
high streets. When I moved to the home I have now lived in for
about 15 years, there were numerous bank branches on my local
high street, but that is not the case any more. People in towns
all over East Renfrewshire will feel the same way. The banks have
just disappeared—they have walked off the pitch. The promises we
heard about never closing the last bank in town are laughable. My
constituents would think that that was ludicrous, which is a
shame, because they and our town centres need bank services.
Our post offices do a brilliant job. I have stood here before and
waxed lyrical about the brilliant post offices in East
Renfrewshire. They are fantastic. I know it is a strange thing to
suggest, but people should come to our local post offices. They
are great, but they have their own job to do. They have a long
and varied list of things they can do, but they are not banks, so
although they are doing a great job, there are still gaps. The
banking hub in Cambuslang is certainly a model to look at, and I
am encouraged by others following that. But whatever the model,
people on our local high streets and communities, particularly
those who are most marginalised, must be able to access cash and
banking services. I do not think that it is an unreasonable
expectation that we should have that in our local communities,
and I very much look forward to hearing what others have to say
today.
This conversation will become all the more pressing in the next
couple of years, as banks continue to close apace and people
begin to really wonder what the banks are for, who they are
providing a service to, and how we ensure that we have access to
cash and banking facilities, which is what people need.
3.30pm
(Motherwell and Wishaw)
(SNP)
It is a real pleasure to serve under your chairmanship, Mr
Davies. I think that I am about to reiterate a lot of what has
already been said, but I think it is worth saying again. I
congratulate the right hon. Member for Aldridge-Brownhills
() on securing this really
important debate. Before I start, I should declare an interest: I
am the chair of the all-party parliamentary group on post
offices. I do not think that I technically have to declare that,
but I do know a fair bit about post offices as a result.
Scotland has been hit harder by bank closures than anywhere else
in the UK. Scotland is geographically bigger than any region of
England or any other nation in the UK, and consequently it has a
very spread-out population. Because of that spread, bank closures
can be more damaging to us, which is why it is shocking that last
year’s Scottish Affairs Committee report found that Scotland has
also lost a greater share of bank branches than any other country
in the UK. That is diminishing the ability of people to access
cash and other banking services. Since 2015, 53% of Scotland’s
bank branches have closed, which is the highest percentage loss
of all the nations in the UK. In 2009, 56% of transactions were
in cash, but today’s cash payments represent only 17% of
transactions. Despite that drop, cash remains the second most
frequently used form of payment, second only to debit cards.
We talk a lot about services and access to cash. Does the hon.
Lady agree that for people who are on a fixed budget and for whom
managing money is difficult, having cash makes that very tricky
job just that little bit easier? They can see what they have in
their purse, wallet or pocket in front of them. That is why I
think—and I hope she agrees—that that is another reason why the
banking service and access to cash and advice, particularly at a
time of cost of living challenges, are even more important.
I absolutely agree with the right hon. Member. If someone is
poor, they cannot afford to run up bank charges. They cannot
afford to be overdrawn. I am old enough to remember my mother
having pots of money—some was used for this, and some was used
for that, but if it was not there, we could not spend it. It is a
better way to keep oneself in the black altogether.
Before 2021, about six branches a month were closing in Scotland,
but since 2021 that has increased to about eight a month. Post
offices are also now closing: between 2011 and 2021, we lost 112
post offices to closure in Scotland alone.
My hon. Friend is making a really important point about both
banks and post offices potentially being lost to communities.
Does she agree that when banks close and abdicate their
responsibility, their suggestion that post offices will simply
take over their services is unfortunate and unacceptable? It is
as if the banks think they are not at all accountable. That is
not how we should address this.
Absolutely. Banks are allowed to say, “Well, it is okay if we
close, because there is a post office nearby.” That will not
always be the case, as more and more sub-postmasters struggle. I
will come on to that later.
The head of policy at Age Concern Scotland has noted:
“These closures often hit older customers hardest, leaving them
cut off from vital services and making it harder for them to
manage their money...As we battle through this cost of living
crisis it is more important than ever that older people can
access their money as cash, for free, and use it whenever they
need to.”
The number of cash machines that are closing is disgraceful. For
example, in my local area in Lanarkshire we have lost nearly 100
cash machines in four years. In July 2018, Lanarkshire had 650
cash machines but that had fallen to 561 by last February. And
the really important point is that the number of free-to-use ATMs
in my area had dropped by 555 to 426. That means that the only
ATMs that people can access are ones that charge them for taking
out their own money; they are paying a poverty premium. That is
ludicrous and it is really affecting people on a daily basis.
As I have said, for years banks have said, “It’s okay if we close
our local banks, because there will always be post offices
nearby.” However, as I have also already said, post office
closures have picked away at their number, too. What will the
Department do to protect network and community services that are
run through post offices, especially in relation to people who
cannot get to banks?
Given the different ways of running post offices, it is really
difficult to tell how many sub-postmasters who have taken on
banking to a great degree are now struggling. I do not know
whether folk here are aware of this, but 70% of the members of
the National Federation of SubPostmasters are only earning the
national minimum wage, despite the good work that they do in
providing post office services and now banking services. That
figure came out before the cost of living crisis, so the
situation will be even worse now.
It is also very difficult for Post Office Ltd to encourage people
to take on post offices or sub-post offices because of the
Horizon scandal. The other thing is that the Post Office
lozenge—the sign that we are all very familiar with—goes outside
a building and says, “Post Office”, but inside that particular
building there might only be a drop and collect service for
parcels. So, people think that there is a post office where there
is not one.
On banking transactions, many Members have already said that many
local businesses now use local sub-post offices to pay in takings
in cash. That is important, because it keeps money in the local
area and it really keeps some high streets going. However, last
year new regulations to combat money laundering were introduced
by the Financial Conduct Authority—actually, I have found it
difficult to find out if it was entirely the fault of the FCA or
UK Finance. Recently, it has been very difficult for local
businesses. There are no banks, so they take their money to the
post office, but a limit was imposed on how much each business
could deposit.
I am very pleased to say that last month the FCA noticed that a
more tailored approach should be taken by banks for cash deposits
by business customers, on the basis of expected business customer
activity. However, that also links back to the problem that
sub-postmasters have, because they were losing money as customers
could not deposit all of their takings and many customers then
had to travel many miles to be able to deposit their money
safely. I am hopeful that, when this issue is properly sorted
out, a tailored approach will allow local business owners to go
back in and carry out their business the way they did before.
Real clarity is needed on banking hubs. I have visited the
banking hub in Cambuslang, and one is to be opened quite near my
constituency in Carluke, hopefully reasonably soon. The building
in Cambuslang was fantastic. The way it works is that each bank
that has signed up sends a representative to the banking hub once
a week to give business advice. As many Members have pointed out,
people go to banks not just to take out money; they need advice,
help with filling in forms, and other things like that. Those
things were being done in the hub. I spoke to many customers that
day, and they were very happy with the service given. It was a
pilot programme, and it is still unclear what effect it had on
the local post office branch, so we have to bear that in mind.
The NFSP is concerned about the fact that there is no third-party
oversight of the banking hub recruitment process. It is not known
how those who gained the right to run the banking hubs were
selected. I have already written to LINK about that, and I am
awaiting a response.
Consumers are able to access cash at a post office only if their
bank has signed up to the banking framework agreement. Which? has
raised concerns about the long-term viability of the agreement,
as it is voluntary and there is a time limit on it—I think the
last one to which banks signed up was for three years. Barclays
bank originally did not sign up, which was quite a loss for its
local customers. I am calling for access to cash at a post office
to be placed on a firmer and more sustainable footing in areas
where local cash needs are unmet. Can the Minister comment on
that, and update us on where we are going?
Returning to the post office argument, if banking hubs have an
impact on local post offices, then that is something that we have
to be very careful about. Part of the difficulty is that the
Treasury and the Department for Business and Trade are both
involved, and there is not a great deal of communication between
them. I know it is getting sightly better, but this Government
have for many years almost had a silo mentality, in which one
Department did not really know what the other was doing. That is
to the detriment of people who have to use banks and post
offices—if they are still there. I would really welcome the
Minister’s comments on that.
I again thank the right hon. Member for Aldridge-Brownhills and
all the other Members who have spoken. This is a real ongoing
problem, and like my hon. Friend the Member for East Renfrewshire
(), I have stood here to
speak on the subject innumerable times. I have come at this
problem from different angles, and have tried to say something
different each time, but hat is proving harder and harder. It is
time that the Government got a real handle on the issue, and
started to protect consumers more, as well as those who cannot
use digital banking. That is not just older people, though many
older people struggle with either bad broadband or the inability
to handle new technology. We need a joined-up approach from the
Government to ensure that people can still access banks, post
offices and cash.
3.43pm
(Hampstead and Kilburn)
(Lab)
It is a pleasure to serve under your chairmanship, Mr Davies. I
thank the right hon. Member for Aldridge-Brownhills () for securing this debate, and
for eloquently laying out the case for why bank branches are
still important in many of our constituencies, whether rural or
suburban. Too often the political discussion on bank branch
closures focuses only on concerns around cash. While the issue of
cash is important, and I will touch on it later, there is also
the issue of the many other essential services that bank branches
provide. They have been outlined in this debate.
Age UK and others have rightly highlighted the importance of the
local bank branch to communities across the country. It provides
vital in-person services that older people rely on, whether they
are opening accounts, applying for a loan, making or receiving
payments or need help with a standing order. It would, however,
be wrong to assume that it is just older people who use bank
branches. There will always be a significant part of the British
population that needs the extra face-to-face support that hon.
Members have mentioned.
Natalie Ceeney has been working on the issue for a long time. She
is the chair of UK Finance’s access to cash action group, and she
has made it clear that there is a substantial overlap between the
people who rely on access to cash—around 10 million adults across
the UK—and those who depend on their local bank branch for
financial advice and support. In her report of her research and
engagement with local communities, which I encourage hon. Members
to read, she found that it was often the most vulnerable—ethnic
minorities, people whose first language was not English, and the
poorest in society—who relied on cash and in-person help with
their finances in their day-to-day life. That point was echoed by
the hon. Member for East Renfrewshire (), who talked about what
happened in her constituency, and noted that many people from
hard-to-reach communities needed those services. That is why some
of the figures that we heard in today’s debate are so
concerning.
Analysis published by Which? found that over half of the UK’s
bank and building society branches have closed since January
2015. That is a shocking rate of around 54 closures each month,
and there have already been 158 closures in 2023, with another
274 branches expected to close by the end of this year. My hon.
Friend the Member for Barnsley East () said that that is taking
place in her constituency, and explained how it has cut off
countless people in her area from the goods and services that
they require. Unfortunately, last year, when the Government
introduced provisions on access to cash in the Financial Services
and Markets Bill, which I led on, they did not introduce
protection for essential face-to-face banking services, which was
a glaring omission. I wonder whether the Minister will comment on
that. It risks leaving millions of people behind—not just those
without the digital skills needed to bank online, but people in
rural areas with poor internet connections, and the growing
number of people who cannot afford data or wi-fi because of the
cost of living crisis. That is another point made powerfully by
my hon. Friend.
The Opposition recognise that it is inevitable that payment and
banking systems will continue to innovate, which is a good thing.
Online banking is a far more convenient way for people to manage
their finances, but we have to ensure that the digital revolution
does not further deepen financial exclusion in our country. That
is why the Labour party wants to give the FCA the powers that it
needs to protect essential in-person banking services. To be
clear, I am not calling for banks to be prevented from closing
branches if they are genuinely no longer needed—quite the
opposite. I recognise that access to face-to-face services could
and should increasingly be provided through banking hubs, whether
those are delivered by the Post Office, as we have heard, or take
the form of shared bank branches or other models of community
provision. If a branch is genuinely not being used, it makes
sense that it should not exist, but if it is well used, I do not
see why we would close it.
I anticipate that the Minister will say that the Government
support banking hubs. We have heard that time and again, but let
us be honest: the roll-out of banking hubs has been pathetic.
Communities have lost 5,605 bank branches since January 2015,
while only four hubs have been delivered so far. That is just not
good enough. Figures from LINK reveal that only a further 52 are
in the pipeline. The figures do not add up or make us feel very
positive. People in our constituencies are telling us that it is
not enough, and a lot more has to be done. On top of that, many
of those planned banking hubs will not even provide essential
in-person services. They must provide a more comprehensive
service when they are built. That is why we must empower the FCA
to review the community’s need for access to essential in-person
banking services, and get a clearer picture of what is needed in
our constituencies.
That, of course, will not be enough on its own to tackle
financial exclusion. Alongside that, we will need to put in place
a proper strategy for digital inclusion. Banking hubs will have
to play a role in that. The Post Office has called for banking
hubs to have financial inclusion advisers, who can ensure that no
one is left behind. That is a very interesting idea, and I hope
that the Minister will comment on it. Labour believes that
banking hubs have the potential to tackle digital exclusion—for
instance, through dedicated staff, who could teach people how to
bank online and provide internet access to those who need it. I
would like to hear what the Minister has to say about those
proposals, although I recognise that this is not his brief;
perhaps he could comment on behalf of his colleagues.
We of course welcome the fact that the Financial Services and
Markets Bill finally introduced some protection for access to
cash, but it sadly falls short of what is truly needed. It does
not make any commitment to protect free access to cash. The hon.
Member for Carshalton and Wallington () talked a bit about free
access to cash and the community need in his constituency, which
I know well. I was born in St Helier Hospital, like him—many
years earlier, I have to say. I think his point was important. It
shows that it is not just rural areas that are affected; suburban
constituencies in London still have that community need. We need
free access to cash.
Data collected by Which?shows that there has been a rapid drop in
provision of free-to-use ATMs in recent years. There must be
something in legislation that protects free access to cash;
otherwise, our constituents will be in trouble. We saw a decline
of 30,000 free-to-use ATMs between August 2018 and February 2023.
That is a stark 26.1% fall. It is a shocking statistic. It is
forcing the poorest people in the UK to pay for access to their
own money. That seems ludicrous. We know that a massive 3.8
million people are in financial difficulty, and 15 million people
in total use cash for budgeting purposes. The right hon. Member
for Aldridge-Brownhills made the point that more and more people
are using cash to budget because of the cost of living
crisis.
The need to protect cash services will only grow in importance as
the cost of living crisis increases. The data collected by the
Post Office that I looked at showed that the use of cash has
actually risen in recent months. The cost of living crisis is
deepening. The poorest in society are increasingly turning to
cash to manage their budgets day to day, and week to week, and we
should help them by providing free access to cash.
I hope the Minister will take on board the concerns that have
been raised today. If his Government are serious about leaving no
one behind, there are three fundamental questions he must address
in his closing remarks, or take back to the Minister who has this
brief. Does he agree that the rate of bank branch closures is
reaching an all-time high? This is the time to empower the FCA to
protect in-person services. If not now, then when will that
happen? Secondly, does he recognise that the Government must work
with industry to accelerate the roll-out of banking hubs if the
initiative is to have any impact at all, and that banking hubs
must provide all the services that people need, not just a select
few? Finally, how will he ensure that everyone—particularly the
poorest in society, who rely on doing so—can access their own
money, without it burning a hole in their pockets?
3.53pm
The Exchequer Secretary to the Treasury ()
It is a particular pleasure to see you in the Chair, Mr Davies,
because I know that if you were not in the Chair, you would be
making an impassioned speech. I thank my right hon. Friend the
Member for Aldridge-Brownhills () for bringing forward this
debate. There is strong feeling on this subject across
communities and constituencies, including mine. She spoke with
great passion and knowledge on behalf of her constituents, whom
she serves very well.
My hon. Friend the Member for Carshalton and Wallington () quite rightly said that
banking is changing. In recent years, innovation has led to an
increase in online banking, which many people find quicker and
more convenient than banking in branch. We know this from our
experience, as well as seeing it in the data. In 2021, the
industry body, UK Finance, found that 86% of UK adults made
contactless payments; 72% banked online; and 57% banked using
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.
As the hon. Member for Barnsley East () pointed out, given the
rise of online banking, we have to ensure that digital
connectivity and mobile phone coverage are strong. In 2020, the
Government announced a £1 billion deal with mobile operators to
deliver the shared rural network, which will see operators
collectively increase mobile phone coverage across our country.
As for speed, in 2021 the Government launched Project Gigabit,
which commits £5 billion to expanding gigabit coverage to 85% of
households in the country.
The basic fact is that local bank branches receive fewer and
fewer visitors because, frankly, many customers’ needs can be met
digitally through video calls, banking apps or on the phone. In
that environment, banks and building societies have a decision to
make about how to provide in-person services to those who need
them in the communities in which they operate. Those decisions
are nuanced, local and, most importantly, commercial. The
Government rightly cannot and do not intervene in them.
That being said, we recognise the real concerns expressed more
widely about losing access to bank branches, which, as has been
said, are important to many communities. For a variety of
reasons, some members of our communities, such as those who are
vulnerable, may need to do their banking in person. All firms
should follow the FCA’s guidance to ensure that they carefully
consider the impact of planned closures on their customers. That
guidance sets the expectation that if a branch closes, firms will
put in place reasonable alternatives in order to meet customer
needs. Where firms fall short of that expectation, the FCA has
the power to ask for closures to be paused, or for other options
to be put in place.
I am interested to know the number of occasions on which an
intervention has been made after a closure. I hope the Minister
agrees that this is important. Banks should not close a branch
and then review the engagement and so on, because then it is too
late. Too much is happening on the back foot.
My right hon. Friend makes a good point. I will have the Economic
Secretary to the Treasury write to her with any figures that we
have on the pauses that have taken place as a result of FCA
guidance. LINK carries out reviews in order to suggest and
recommend the services that can be put in place. If there are no
bank branches left in a community, a banking hub can be
suggested. However, if my right hon. Friend will allow me, I will
ask my colleague to write to her with more detail on that
point.
The industry is innovating and finding new ways to respond to
customers who want and need to access in-person services. I am
pleased that we have heard a lot of discussion today about post
offices, because they play a vital part in this issue. It is
right to point out the statistics, which I was quite shocked to
learn when preparing for this debate. Some 99% of personal
banking customers, and 95% of business banking customers, can do
their everyday banking—can do such things as withdraw cash or
check their balance—at one of 11,500 post office branches across
the country. I was also shocked to learn that 93% of people in
this country live within just 1 mile of a post office, so almost
everyone can access their everyday banking services locally.
Does the Minister appreciate that that will be cold comfort to
people who no longer have a post office, or who have an
on-and-off post office, which is not a very reliable way of doing
business, or who do not live in the heavily populated areas that
presumably make up that 99%? That is probably an unhelpful
comment, in their opinion.
I accept the challenge, of course. The hon. Member for Motherwell
and Wishaw () also asked me to comment
on what support the Government are providing to post offices. I
can respond to both points.
In the 2021 spending review, some £227 million was secured in
Government investment between ’22 and ’25, including a subsidy of
£50 million to protect access to post office services in
commercially challenging locations. That later increased to £335
million, including a £150 million subsidy to those in
commercially challenging locations. I therefore accept what the
hon. Member for East Renfrewshire () says, but the reality for
the 93% who live within 1 mile of a post office cannot be
ignored. For those who are not within that catchment area, the
Government have stepped in with subsidy and significant funding
to ensure access to a post office.
We are lucky in this place, with two post offices that hardly
ever have queues, but in my constituency there are massive queues
outside the post offices, in which people have to wait a long
time. Also, some of the services that constituents want to use a
bank for are just not appropriate in a post office. Some post
offices, certainly in my constituency, are based in WHSmith or
another shop; it would not be appropriate to go in there to talk
about personal banking services. Will the Minister comment on
that?
What services banks provide is a commercial decision for them,
but they provide a lot of different ways to interact with them
these days, including several online options. As I pointed out
right at the start, the majority of the British public access
banking in those ways, whether online through a website, web chat
or a mobile banking app, or via the telephone. Customers of
commercial banks have a variety of ways to interact and get
advice, and I would encourage them to do so. It is not the
Government’s place to intervene in the commercial decisions of
banks on what services they provide and where.
In addition to what I have just laid out on the variety of online
services, many banks and building societies have programmes in
place involving community centres, libraries, mobile banking vans
or semi-permanent banking pods. The pods are structures that
provide a dedicated private space to support customers with
banking services. They can be moved around to different
locations, depending on demand—the hon. Member for Hampstead and
Kilburn () may wish to engage the banks
on those for her area. For people who need to speak to their bank
face to face, such places can make a vital difference.
Alongside those programmes, there is the high-profile innovation
of shared banking hubs, which many Members have referred to in
the debate. The hubs provide a dedicated space where customers
can meet community bankers, who support them with more complex
services. The hubs also offer a range of everyday banking
facilities, allowing customers to deposit cheques, check their
balance, and withdraw and deposit cash. More than 50 shared
banking hubs have been announced for communities across the
country, as has been said. Four have opened their doors already
and two more are expected in the coming weeks.
Does the Minister agree that 52 hubs are due to open, which is
great, but only four have opened? What more can he or his
Department do to encourage, or gently push or prod, the
organisers of the hubs to get them in place? The point made by
Members across the Chamber today comes down to banks closing and
hubs not opening.
I am grateful to my right hon. Friend. The Government recognise
and share the frustrations that she has voiced about the pace of
the roll-out of the hubs. Those are commercial arrangements and
the industry is working to deliver the hubs quickly. We expect
the delivery to accelerate over the coming months, but I share
the frustration. The Government have laid out very clearly, as I
have today, our expectation: we want the delivery to speed up. We
welcome these initiatives, which clearly demonstrate how
innovation is supporting access to banking in the longer term. We
believe that the impact of branch closures should be mitigated
where possible, so that all customers, wherever they live,
continue to have access to appropriate banking services.
We are also taking strong steps to protect access to cash, as has
been asked of me today. It is true that electronic payments are
being used more and more, and cash less and less. Over the last
decade, the use of cash to pay for goods and services has
declined by almost three quarters. However, cash continues to be
important for millions of people across the UK, including
businesses and people who may be in vulnerable groups. There is,
as ever, a balance to be struck. As more and more people and
businesses embrace the benefits of new payment methods, the
Government should not stand in the way, particularly when those
innovations can make it easier to start and grow a business or to
manage family finances, but we must offer reassurance and
protection for those who do need cash.
My right hon. Friend the Member for Aldridge-Brownhills asked me
to make a commitment on this, and I will say that the Financial
Services and Markets Bill, which is going through Parliament
right now, does just that. It will enshrine access to cash in
legislation. In doing that, we are helping to ensure that
everyone, whoever they are and wherever they live, is able to
manage their finances in a way that works for them. I hope that
that commitment has been heard today by not just my right hon.
Friend but many of her constituents, who I know will be concerned
about that.
Like many of the speakers in today’s debate, the Government
understand the challenges that these changes have brought, and
the nervousness that can accompany any change, but supporting
customers, communities, businesses and people across the country
remains our key duty. Of course, we will always welcome
innovation, especially in financial services, to support
competition and grow our economy. We will continue to work with
the sector, the public and all Members across the House to ensure
that we have a modern, flexible banking system that caters to the
needs of every person and business in our country.
4.07pm
I am grateful to the Minister for his response and to all
colleagues, from across the House, who have made contributions
today. None of us here is anti-innovation at all, but what we are
seeking from the Minister is continued reassurance that the
Government are on the side of customers, be they residents,
constituents, businesses, charities, organisations or the most
vulnerable in our society. I think we will continue to watch this
issue; I certainly will. It would be really helpful to have
greater clarity on hubs. I appreciate that that is a commercial
matter, but I will continue to look to the Government to see what
they can do to ensure that the people whom we all seek to
represent have access not just to banking, but to banking
services, information, advice and, most importantly, cash. I am
grateful to the Minister for his time and contribution this
afternoon.
Question put and agreed to.
Resolved,
That this House has considered the matter of high street bank
closures and banking hubs.
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