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Bank Closure (Stone)

Volume 593: debated on Tuesday 3 March 2015

It is a great pleasure to serve under your chairmanship, Mrs Main.

Following the news of the decision to close the Eccleshall branch of NatWest bank, I called for a meeting with the head spokesman for Royal Bank of Scotland, which owns NatWest. Eccleshall is in my constituency, and I support my constituents to the hilt in this important matter, not least because the branch is the last bank in Eccleshall. I urge RBS to keep the essential facility open as a key service. My constituents in Eccleshall, including businesses, the elderly and the infirm, need access to bank services. They should not be made to travel, using cars and increasing traffic; their local banking facilities should be in the town where they live.

Eccleshall is a vibrant, attractive place with many small businesses, pubs and restaurants, and farmers nearby, all of whom need banking facilities daily. The bank will be keeping the ATM—I asked for how long—and has reached some agreement with the Post Office, but our local concerns in Eccleshall far outweigh any of that.

Accounting procedures within the bank’s internal systems remove large chunks of income, such as business, wealth management and mortgages, from the branch income measurement. As a result, only large city branches are likely to be shown as profitable. Were interest rates to rise again to a higher rate, would not small town branches such as Eccleshall become profitable again? Furthermore, banks go on and on about their good customer service, while often making huge losses—even when not in turmoil—but closing a bank in a place such as Eccleshall is the opposite of good customer service.

Stafford borough council’s letter on the matter followed an emergency motion and stated:

“The council expresses its disappointment at the decision by National Westminster Bank to close its branch in Eccleshall. This is the ‘last bank’ in Eccleshall and leaves all residents, particularly the elderly, vulnerable and those in remote areas without an adequate banking service.”

Such an emergency motion is a most unusual step for a borough council. It was also supported by 780 signatures on a petition and, indeed, I will be presenting a parliamentary petition after the debate.

Letters went from the council to the chief executives of RBS and NatWest, copying in the Chancellor, the Secretary of State for Communities and Local Government and the Secretary of State for Business, Innovation and Skills. In addition, I wrote to the Minister for Business and Enterprise. I asked and continue to ask RBS to review its decision in the light of those letters and the strength of feeling against the closure. In its letter to the NatWest chief executive, Stafford borough council requested that the bank review its decision. In 2010, RBS as a whole had committed to maintain a bank in communities where—I emphasise—it was the last branch in town, even identifying 168 communities where it was already the only branch in town. In 2014, however, at least 25 of those were closed, and Eccleshall appears to be facing the same fate soon. Through the Minister, I ask RBS not to close our NatWest branch.

In the past five years alone, 431 communities have lost their last surviving bank branch. The nearest alternative NatWest branches for Eccleshall residents are in Stone, which is a 12-mile round trip; Stafford, a 16-mile round trip; Trentham or Newport, each a 19-mile round trip; and Market Drayton, a 25-mile round trip. The banks seem to want to accelerate the rate of closure, especially in rural communities, in spite of the speech by the Secretary of State for Business, Innovation and Skills the other day, and what about the national NatWest pledge not to close the last branch in town? Why can RBS not branch-share, while maintaining the Eccleshall branch to achieve its existing targets? We only need the one branch. The fact that NatWest is part of RBS, with all its historic difficulties, only makes the proposed closure worse.

My broader personal interest derives from the fact that my family founded the Abbey National building society and the National Provident in the mid-19th century, and in my view and that of many of my constituents, banks also have a social purpose. NatWest data claim to show low usage of the Eccleshall branch, but the data is contrary to local reports. People have noticed that queues for the counter service are often extremely vibrant and visible.

The post office, which is intended to offer substitute services, according to the bank, can undertake a wide range of counter transaction services, but it does not have significant capacity to provide a real alternative. The queuing area in the post office is too small and it has only one full-time staff member and two counter positions. How long will the queues be when businesses pay in their weekend takings, especially the pubs and restaurants, on Mondays? As I said, there are plenty of pubs and small businesses in my constituency, so the banking of weekend takings will make things worse, especially for the disabled and elderly if coinciding with pension days and so on.

Banks offer a core service to all in the community, not only to individual people, but to businesses and groups, whether families, single people, the elderly, the infirm, farmers and so on—every stratum of society. If there is a mobile banking service limited to an hour, what happens if people cannot get to Eccleshall at that time? The post office has no disability compliance and wheelchair users cannot obtain access, while its standard paying-in maximum for business is £1,000 per day, which is far below what the pubs need to pay in each Monday. Also, the bank branch can amend or cancel standing orders, but the post office cannot.

On communications about the closure, I have been told that five NatWest Eccleshall business customers merely received a letter and that no meetings have been held. On internet banking, Eccleshall does not fit a pattern of internet-subscribed services and telephone banking. My constituents will be forced to use online or telephone banking services. Many do not have access to the internet and do not feel safe talking to people on the telephone about personal finance.

There has been no effective community involvement in the closure decision. If my constituents are to have a growing and diverse community in their local area, with local employment and services and increased housing, they need to be supported by a local bank in the community, rather than decision making being taken away from their people and business. The Eccleshall community is a caring one, and as I go around the town I know that people feel strongly about the issue. My constituents in Eccleshall value the local NatWest branch and want to retain it. The town is a small, vibrant community. I urge the Minister to intervene with RBS to recommit to maintaining the “last branch in town” policy commitment.

The chief executive of RBS, Mr Ross McEwan, wrote to me last week with the RBS 2014 full-year results. Part of that correspondence refers to a section in the results entitled “A better bank for customers”, in which he says that for too long UK banks have focused on “market share”, rather than “customer care”:

“It is why over the last year our people have worked hard to embed this ‘customer first’ mentality into everything we do as a bank…we are determined to reach our aspiration of being number 1 for customer service, trust and advocacy”—

by 2020—

“It won’t be easy, but I firmly believe it is doable.”

At the end of the letter, he says:

“We will continue to focus on doing what is right for our customers.”

All I have to say is: we shall see.

RBS has an operating profit of £3.5 billion, with an underlying operating profit that increased by £l billion in 2014, less the £2 billion in fines—the ones we know about. That is not good. Thus, in 2015, we might reasonably expect profits to exceed £5 billion, but what about my constituents and their service from the bank in Eccleshall? The chairman and chief executive both reiterated their “customer first” policy. The chairman stated that NatWest must become the No. l bank for trust, service and advocacy, with the chief executive adding that

“the customer has to come first in everything that we do”.

The chief executive met the Chancellor to discuss bank branch closures on the very same day that I was meeting NatWest executives to discuss the closure of the NatWest bank in Eccleshall. That was on Tuesday 27 January 2015. The Chancellor called for a minimum standard for managing any bank branch closure. That speaks for itself.

I also now have problems with closures by the Co-operative bank. It, too, has a poor history. I met with the head of branch network for the Co-operative bank last Wednesday to oppose its decision to close branches at Blythe Bridge, Cheadle and Stone in my constituency. The nearest alternative branch will now be in Longton, which is approximately eight miles from all the other branches. The branches are scheduled to close by the end of July. The Co-operative bank also claims that its customers are its main priority, but how can customers be its main priority if it is removing banks in such key local towns? It says it will write to affected customers to let them know about the changes and the alternatives available to them.

I understand that Bob Rickert, the chief operating officer tasked with helping restructure the bank, left it last week, and last October saw the departure of its chairman, Richard Pym. The Co-operative bank is struggling to turn itself around after facing a £1.5 billion financial black hole, which we have all heard about and was quite clearly self-induced. The bank is not expected to make a profit until at least 2017, and in December, it failed the Bank of England stress tests, designed to scrutinise banks’ ability to weather a downturn.

My constituents in Stone do not want the Co-op bank in their town to close. They banked with its predecessor for 30 years and want a full local branch. The post office is not a good alternative, as it could not offer a full service and the queues are long. The same applies in Cheadle and Blythe Bridge.

I call on the Minister to intervene by writing to the banks and to do everything possible to try to prevent the proposed Co-op closures in Cheadle, Stone and Blythe Bridge, as well as the closure of the NatWest branch in Eccleshall.

It is a great to serve under your chairmanship today, Mrs Main. I congratulate my hon. Friend the Member for Stone (Sir William Cash) on securing this debate and on presenting his case as compellingly as he always does. He has made good points to which I am extremely sympathetic. I well understand—I have my own constituency cases on the issue—how people feel when a bank in their area is to be closed. Bank branches are often felt to be at the heart of a local community. I appreciate that, as he said, the people of Eccleshall have produced a petition with close to 800 signatures expressing their concern at the loss of their bank branch. Each of those people, and those in the neighbouring communities in Blythe Bridge, Cheadle and Stone who are losing a branch of the Co-operative bank, will feel, quite rightly, that their town is losing a little piece of its identity.

Eccleshall has had a NatWest branch since 1970, and has had a bank branch operating since the 1870s on what I can well imagine is a well loved local site, so the situation must be unsettling for local people. I am deeply concerned about closures not just in my hon. Friend’s constituency but across the country. I therefore want to tell him a bit about what I and others in the Government have been doing to try to make sense of the situation and to protect the important local access to banking services that so many people need and want.

At the same time, my hon. Friend will appreciate that the way we bank is going through an unprecedented period of change. Customers are reducing their use of high street branches and embracing new online and mobile technology. Although we all recognise that decisions on where branches are located are commercial ones, I assure him that the Government can set the tone, stressing the importance of day-to-day banking services to everyone’s daily life. As Economic Secretary, I have made that a personal priority and have worked hard to make sure that the vital services that the banking industry provides remain as widely available as possible.

NatWest has set out its case that the number of transactions at its Eccleshall branch is low compared with the rest of its branch network, but I absolutely recognise the disappointment felt by customers more broadly in the local area at the news of the closure. People often feel that there is inadequate consultation with the community and local stakeholders who may be affected. NatWest has followed current best practice, giving customers a three-month notice period and contacting its most active and most vulnerable customers to help them find alternative ways to bank. However, if people are to feel that their concerns have been heard, and if local businesses are to feel that the services underpinning their livelihoods are safe, banks must go much further. That is why I have been working to encourage the industry to adopt a new protocol that each bank will undertake to follow so as to mitigate the impact of a local branch closure.

Did my hon. Friend hear the interview on this morning’s “Today” programme with the chief executive of Barclays bank, in which he talked about the amount of money he is earning and about bank bonuses, which are also under wider discussion? The chief executive and chairman of the Royal Bank of Scotland keep making statements about customer service—we have heard much the same sort of thing from the Co-op—but that does not help my constituents or anyone else in the country. They then find a little edge here or there with regard to the profitability of a particular branch. Does she agree that if banks want a reputation that is worth maintaining, it will involve making sure that people in communities such as Eccleshall have actual access to the kinds of services that the banks say they are offering in their annual reports and in the public arena—on radio and television?

I agree to a great extent with my hon. Friend. There is no doubt that banks are keen to restore their damaged reputations and that the big UK banks in particular are determined to show that they are there for their customers. I therefore agree with what he says about the need to make sure that they are addressing the needs of those customers and not looking only at commercial realities. Equally, however, I know he will agree that it is not for Government to intervene in private businesses to force them to retain completely unviable branches. We need instead to make sure that banks pay careful attention to the balance between commercial realities and the needs of local communities.

On Government activity, I seem to remember only a few years ago an extensive bail-out for RBS. There are also questions in relation to the Co-op. It seems to me that when banks want help—and by help, I mean monumental bail-outs—it comes from the Government and the taxpayer, yet when they say they are putting customer service first they close small but important branches in places such as Eccleshall, which needs its branch.

I am grateful to my hon. Friend for those further remarks. Again, I completely agree that banks have a long way to go to restore confidence that they mean what they say when they talk about customer service. However, again, he will understand if I do not say that a bank must open a branch in this place or that. Those decisions are commercial ones. The Government need to ensure that banks balance the needs of customers with commercial realities.

I mentioned that I have been urging and encouraging the industry to adopt a protocol that each bank would follow to mitigate the impact of a local branch closure. The protocol should not simply set out a series of steps for individual banks to take before they close a branch, but should raise the game of the industry as a whole, including how it listens to the concerns of its customers, and, crucially, how it responds. I am pleased to say that discussions on the protocol are at an advanced stage, and agreement is expected soon, thanks to the help of the trade body for banks, the British Bankers Association. We are hopeful that we will get something positive that will address some of the issues my hon. Friend raised.

My hon. Friend mentioned the availability of banking services through local post offices. I completely understand that for customers having a local post office is not the same as having a local bank branch. However, the services available through the Post Office offer most customers a real opportunity to continue to bank locally. We can and must do more to ensure that everybody understands and is comfortable with using the banking services available to them through their post office. For many customers, the Post Office can provide access to their bank account, including the ability to withdraw money, deposit cash and cheques and check their balance at all 11,700 of its branches throughout the UK—a huge network.

In some respects the Post Office can offer wider customer benefits. I know that a number of post offices, including in my constituency, have much longer opening hours than a typical high street bank and provide services seven days a week. Recently, I met the head of the post office network to talk about moves to improve the network, to provide more customer-facing space and more security, and to improve the range of financial services that it offers. The Post Office is working with its postmasters to ensure that facilities are upgraded and that appropriate security is put in place to enable customers to bank safely, and it is determined to do more to ensure that essential banking facilities remain available in as many communities as possible. The Government have committed almost £2 billion to protecting and modernising the post office network.

I believe that we can continue to improve the banking services that the Post Office offers and make them more consistent for customers, which is why I have encouraged the British Bankers Association and the Post Office to look at a standardised approach to counter banking services available through post offices. The Government expect a report on the progress of those talks in the near future.

My hon. Friend raised concerns about the future of banking beyond the traditional branch network, and about the services that will be accessible to all. It is vital that we ensure that vulnerable customers—particularly the elderly and those in rural constituencies—have suitable access. In Eccleshall, I believe that NatWest has made provision for a change to an existing mobile bank route, so a more traditional NatWest presence will still be available in the town.

A whole new world of banking is becoming available, and we should be excited about the opportunities that online and mobile technology can provide. The UK is positioning itself as a world leader in financial technology, and we can already see signs of the benefits that all the developments in financial technology can bring. For example, since April 2014, customers can securely transfer money instantly to other bank accounts using only their mobile phone number as identification, which means that they do not have to access a computer or travel to a branch to make a payment. From 31 July 2016, customers will be able to use their telephone to photograph cheques for payment into their bank account, making life easier for customers in remote areas. Several banks are taking action to help their customers use those new technologies with confidence.

We are also making progress on ATM provision. The number of free-to-use ATMs is at an all-time high, and 97% of withdrawals are now made free of charge. I understand that in Eccleshall NatWest will still provide an ATM in the local community. There are also two other free-to-use ATMs within 1 mile of the branch that is to close.

More generally, it is often the most isolated or disadvantaged communities that have the worst access to free-to-use ATMs, so the Government are working closely with the LINK network’s financial inclusion programme to subsidise free-to-use cash points in more than 1,400 remote and deprived areas across the UK. Importantly, members of the public can nominate their area for inclusion. I believe that the ATM network can play a more important role in addressing some of the concerns voiced by consumers whose local branch is closing.

On a trip to India last year as part of my job as Economic Secretary, I was impressed at the widespread use of smart ATMs, which have far greater functionality than those we tend to have in the UK. They allow customers not only to make withdrawals and deposits and check their balances, but to carry out a wider range of transactions, such as purchasing train tickets and bus passes. Progress in the UK could be made by simply ensuring that ATMs allowed customers to deposit cash. That facility would be particularly beneficial to local small and medium-sized enterprises if it were provided in a way that allowed depositors to feel safe and secure—for example, within the confines of a Post Office, a store or an e-lobby. I have raised that issue with the banking sector, and my officials are engaged with LINK to find a way forward.

In conclusion, although the Government recognise that individual branch closures are commercial decisions and must continue to be so, I fully understand the disappointment felt in Stone and other communities when local bank branches close. There is no doubt that customers’ usage of banking services is going through an unprecedented period of change, but it is vital that we ensure that vulnerable customers—particularly the elderly and those in rural constituencies—have suitable access.

I want to reassure my hon. Friend that it will continue to be my personal priority for the remaining weeks of this Parliament to ensure that the vital services that the banking industry provides remain as widely available as possible, wherever people live. I fully intend to make further progress on the initiatives to get banks to create a new protocol, to look at what services the Post Office provides, and to push further on using technology to provide solutions to businesses and customers in rural areas. Once again, I thank my hon. Friend for raising these important issues in this vital debate.

Question put and agreed to.

Sitting adjourned.