Thursday 11 January 2018
[Philip Davies in the Chair]
Forestry in England
I beg to move,
That this House has considered the fifth report of the Environment Food and Rural Affairs Committee, Forestry in England: Seeing the wood for the trees, Session 2016-17, HC 619, and the Government response, HC455.
It is always pleasure to serve under your chairmanship, Mr Davies. It is good to see my friend from the Select Committee on Environment, Food and Rural Affairs here. I have forgotten her constituency. Sheffield, is it?
Penistone and Stocksbridge, that is right. It is also good to see my hon. Friend the Member for Brecon and Radnorshire (Chris Davies), who sat on the Select Committee in the last Session and had a lot to do with this report, and who also chairs the all-party parliamentary group on forestry, and other hon. Members. It is also good to see the Minister is still in her place—congratulations.
Forestry and woodland provide multiple environmental, social and economic benefits. The Department for Environment, Food and Rural Affairs estimates that woodland provides at least £1.8 billion in social, environmental and economic benefits each year. Trees are beneficial for carbon capture, reducing flooding and improving air quality, as well as providing timber for commercial production and creating green spaces for people to relax in and enjoy. But it was particularly disappointing to hear the Government say that there is no need for forestry representation when discussing the UK’s exit from the EU. Given the nature of research and development and that forestry research is already underfunded, I ask the Minister to reconsider keeping this funding in place, in particular for disease control. I found the Government’s response to our report, if I may say, disappointing. I hope she will be able to address some of the concerns we all share about forestry.
I very much support the ambitions of the northern forest and I look forward to the Government bringing forward the practical application of creating a great woodland across the north of England. I ask of the Minister that at some stage we will be able to discuss exactly how this will be achieved. We have the national forest, which we will be able to expand, but I am keen to see whether we can find ways of bringing land into tree planting and take the farming community with us as we do it. There will be land very suitable for tree planting. The land north of Hull is some of the best arable and vegetable growing land in the country. We need to ensure we have this balance.
I am sure the Minister will also consider the type of forest we require. We require tree planting for the environmental, social and community benefits, but what really matters is how we deliver a large forest in the north of England in the future. I want to see a mixture. For instance, take the Blackdown Hills in my constituency: there is a lot of forest, farmland in between, copses and areas where people can stay, walk and enjoy themselves. Woodland is great and woodland is right, but we also need a mixture of landscapes for it to be enjoyed. I always remember driving through the Redwood forest in the United States of America. We drove through the forest for some three days. One of the Americans said to me, “Gee, have you been to the Redwood forest?” and I said, “Yes, I have, but I’ve almost seen enough of it.” I saw a tremendous amount of trees and they are fantastic, but I think we need a mixture of landscapes to really make it enjoyable for the public.
In our report we asked for a one-stop shop for farmers and landowners to get grants and advice on which trees to plant. So far, the Government have resisted this idea, but I think it will be more and more important to do that, because we have environmental schemes, which we can change as we move to a British agricultural policy that is much more linked to forestry, but we also have to ensure that support can be accessed reasonably easily and that it is encouraging farmers and landowners to plant trees. I have said many times in this House that when I was a young farmer, if I borrowed a lot of money to buy land and said to my bank manager, “Well, now I am going to plant trees,” he would say, “Mr Parish, you should plant something that may bring an income in a little sooner, rather than 50 or 60 years hence.”
I am not asking for a licence to print money for farmers, I am just saying that if we want to encourage farmers to plant trees—I believe that on marginal land and certain types of land they will be quite keen—they need the right support. Why should a farmer—perhaps a seventh generation, or even first generation, sheep farmer, beef farmer or arable farmer—be told, “Right, you must now plant trees.”? I do not think any Government will do that, but we can encourage farmers to plant more trees. This northern woodland will be a real challenge, but it could also be very successful. However— I say again—it has to be done in the right way.
I spoke before about the countryside stewardship scheme. We have found in the past few years that there have been fewer schemes in place and fewer trees planted. There is a real opportunity now, because the schemes under the EU common agricultural policy do not allow for enough tree planting, and where they do, we have to work out whether the tree is a tree or a sapling and all sorts of complications. I am sure that is something we can make much better.
I also acknowledge that the EU is part of the problem and that post-Brexit the policy can change. Farmers, I believe, will be interested in planting more trees. We can also plant trees in banks to help with flooding. We can have more forestation, more woodland, greater wildlife and retain soils in the fields and stop communities from being flooded. There are many advantages to changing this. Today, I listened to the Prime Minister set out our 25-year environment plan, for which I have much enthusiasm, but now I want to see the practical application of how we will meet these goals. If we want to change a financial regulation in banking, we change it and that hopefully fixes the problem, but if we want to plant millions of trees, we have to physically plant those trees, we have to find the land and the policies to do it. I am not saying that we cannot do it, but what matters is how we deliver that in the future.
Timber from the woodlands has many economic benefits. I know that my hon. Friend the Member for Brecon and Radnorshire has done much work on timber, timber use and natural timbers being used in this country. We also need to look at that. Going back to the New Forest—do we want woodlands just for recreation? Do we want them for the carbon capture? Or do we also want them for the wood they will provide in the future? We sometimes think that trees live forever. They do not, and we need to cut them down and then replant, so let us look at the type of trees that we are growing.
Yes, my hon. Friend makes a very good point. It will also be about linking the woodland and the craft to a given area. We could do the same with types of wood and the crafts that come from them as we do with food, farming and types of cheeses. It is an interesting point. Linking it to planning is not necessarily the responsibility of the Minister today, but is something that I am sure the Ministry of Housing, Communities and Local Government could look at.
Coming back to timber, we now have an opportunity to grow a number of types of trees. We also have an opportunity to advise farmers, landowners and those who want to plant trees on the varieties and species to plant. It is very difficult, and nobody can be blamed for this, but who would have known that we would be facing Chalara and ash dieback? We were not facing it a few years ago. In the south-west and in parts of Scotland, the larch has virtually all had to be cut down because of disease. As we move forward, it is going to be so important that we have the right types of trees so that it is right for recreation, the right scale, organisation and landscape of planting, and that we plant the trees that, hopefully, will be there for generations. That, in itself, will be a big challenge.
I invite my hon. Friend to come up to my constituency where Delamere forest nurseries, which are part of the Forestry Commission, grow many different types of trees and look in particular at future climate change impacts and what species will be best to plant.
If I can get the Whips to allow us to get as far as Vauxhall bridge before calling us back for a vote, I will definitely try to get up to my hon. Friend’s constituency. She is absolutely right. Naturally, we are looking for ash trees that will have a resistance to the dieback. Where I farm in Somerset we had elm trees completely destroyed by Dutch elm disease in the ’70s and ’80s, and we are yet to find an elm tree that is resistant to the beetle and to Dutch elm disease. Those sorts of things are so important so that we have our native trees as well as new trees that can be brought in.
Does my hon. Friend agree that as we seek to select the correct species mix in certain areas it is important to take account of local knowledge? In my constituency, the Friends of Leckhampton Hill and Charlton Kings Common has a huge number of volunteers who help to maintain local woodland and up on the Cotswold escarpment. Their views should be taken into account; does he agree?
I very much agree with my hon. Friend about local knowledge, because sometimes a local tree, or the strain of a tree in a given area, is the one that we need to plant. That is so important. I always say that it is good to have 25 letters after your name, but sometimes those who have real local knowledge, know exactly what they are doing over the years and have had experience also need to be listened to. I would endorse that entirely.
With the renewable heat incentive, biomass boilers are a means by which we can grow some woodland—some hardwoods and others. We can also thin woodlands out to manage them in a better way. I have to admit that I spent 10 years in a terrible place called the European Parliament—I know that there will be a lot of hissing and booing at that point—but I did actually see a much better management of woodland in parts of southern Germany, in Austria and in other countries. They were actually using their woodland and the wood resource much better. We see woodlands for sale in many parts of this country, and people buy it as an investment and enjoy having a bit of it, but they never really do much to it. Woodland can be a greater resource for not only biodiversity and wildlife but timber, and that is where we can do more.
On ancient woodland, I better not mention the Parliamentary Private Secretary, my hon. Friend the Member for Taunton Deane (Rebecca Pow), who likes to chain herself to every ancient tree that she finds, and quite rightly so, because she is very concerned about ancient woodland being cut down. We do need to consider that. Again, we have heard from the Prime Minister that trees need to be protected, and we are keen to see that happen.
Finally, when the Minister sums up, will she tell us exactly how she sees the way forward towards having DEFRA, Natural England and the Environment Agency completely joined up in delivering more trees, more woodland planting and a better grant system that is more accessible, easier and more attractive to those who want to plant trees in the future, so that we fulfil our aspirations to plant more trees? Can we also encourage organisations such as the Woodland Trust and others, which are doing so much good work, with even more help? I am a great believer that planting more trees is good for recreation, good for the environment, good for carbon capture and good for wood production.
It is a pleasure to serve under your chairmanship, Mr Davies. It is a pleasure to follow the hon. Member for Tiverton and Honiton (Neil Parish), who chairs the Environment, Food and Rural Affairs Committee in a very skilled, constructive and inclusive manner.
I start by declaring an interest. I am a member of the Woodland Trust and the Yorkshire Wildlife Trust, which the Chair of our Committee will be pleased to know. I chaired our sessions on the report because the Chair was indisposed, if I can put it that way, and was very pleased to do so. The report made 15 recommendations, and since it was published the Government have made good progress in some areas—for example, trees and woodland have become better embedded in cross-departmental Government policy, such as in the clean growth strategy—but in other areas the Government’s response has been rather weak, and some extra clarity is needed on their position.
Before I go through that, I want to refer briefly to the environment plan. It is very difficult to have this debate without referring to today’s publication of the 25-year plan, which is strong on rhetoric. This morning the Prime Minister delivered a bucolic vision of the countryside where everything smells nice and looks good, but the realities of the countryside are rather different. One of the challenges of this plan will be the need to establish how rigorous it is in terms of its ability to deliver. It has already been noted that there is no legislation planned to underpin the priorities of the plan and the delivery of its objectives. I note the commitment to a national tree champion, and it would be good to hear from the Minister —I, too, am pleased that she is still in her place—the detail of what exactly this national tree champion will deliver.
To return to the report, I will speak in turn about three important areas of policy. I hope the Minister will take my comments in the spirit intended and consider them carefully in her response. First, on funding, it became clear during our inquiry that the current system of grants and subsidies is not working, as the hon. Member for Tiverton and Honiton said earlier—I nearly called him my hon. Friend. The countryside stewardship scheme was singled out for its tortuous system of administration. As he pointed out, our witnesses almost universally favoured a return to a one-stop shop system for grants. That would not only deliver a seamless and accessible approach to securing grants, but give more of a balance between forestry and agriculture, knitting the two together in terms of how landowners and farmers can deliver our objectives as a country.
The Secretary of State has told us that such a system cannot be implemented until we leave the European Union. However, we recommended that the Government take steps now so that they can reinstate such a system post-Brexit on day one, whenever that is. We have yet to see any evidence that any steps have been taken, although in his letter dated 24 November to the Chair of the Select Committee, the Secretary of State said that he is
“keen to interrogate”
the concept of a one-stop shop further, and to
“consider how such an approach could operate in future.”
I ask the Minister directly: can we expect the details of the review of countryside stewardship and the fruits of the Secretary of State’s thoughts on a one-stop shop to be published any time soon? Can we expect clarity, or perhaps even a Green Paper, on how all of it might work if the Secretary of State accepts that the concept represents the right way forward?
Ancient woodland is our most wildlife-rich land habitat. It is key to fighting climate change and tree pests and diseases. More than that, it is a priceless commodity that we should all cherish. It frustrates me enormously that the idea that we can destroy ancient woodland and replace it by planting elsewhere is still current in many circles, particularly in the planning system and the attitudes of some developers—not necessarily housing developers, but developers across the piece. I refer, of course, to the application in my constituency to build a motorway services station that would involve significant destruction of Smithy wood, which is ancient woodland. Local people feel strongly about it and do not accept that the destruction of ancient woodland is a price worth paying for the jobs that the service station would deliver.
One crucial recommendation of the report was that the Government maintain an up-to-date public register of ancient and veteran woodland. Such a register would provide a focus for scientific research and aid sustainable development and planning. It could form the cornerstone of woodland conservation policy—that is how important ancient woodland is to our tree heritage. The Government’s lacklustre response to that recommendation was to assess the feasibility of the idea. Since the report, the Woodland Trust has generously offered to support the register through funding, data management, staff resources and expertise. Have the Government finally managed to assess the feasibility of the recommendation, giving particular thought to the kind and constructive proposals made by the Woodland Trust?
Finally, on woodland cover, it was heartening to see the Government pledge £5.7 million at the weekend to help start the creation of the northern forest. I pay tribute to the Woodland Trust for its imaginative thinking, and I support wholeheartedly its efforts to raise the rest of the moneys required to deliver the project. Although I cannot commit personally to finding the rest of the £25 million, I will do all that I can to support the trust in that respect. It is important that the trees are planted in the right places and that we think through the project properly. I am sure the trust will do so.
There is a danger that the northern forest concept will overshadow and obscure the fact that the Government are currently failing badly on their targets for planting more trees generally, which are themselves limited in ambition. In our inquiry, the Select Committee recommended that the Government commit to reaching 12% woodland cover by 2060, and to plant 11 million trees by 2020. Whether or not the Government meet those targets will be the marker for whether their forestry policy as a whole has worked. The northern forest is good, but Parliament should not be fooled for a minute into thinking that it is the next stage in the Government’s forestry ambitions. As it stands, the target of 11 million trees by 2020 will not be met.
The Minister has said previously that the target will be met easily. I hope so, but I am not confident. The two years since the pledge was made have been two of the worst planting years on record. The rate has been roughly half what is required if the Government are to have any chance of fulfilling their commitment. That does not bode well for the long-term target, on which serious doubt has unsurprisingly been cast by the forestry sector. To reach it, planting rates would have to sit consistently at 5,000 hectares a year for the next 42 years, roughly double the rate of recent years. I look forward to the Minister’s response on that point.
We need to reach the short-term target of 11 million trees by 2020, and we need to reach the more ambitious target of 12% of woodland cover by 2060. The Secretary of State himself admitted that that is limited in ambition at the recent Woodland Trust reception—I think he referred to it as “pathetic”. If it is pathetic and limited in ambition, a target of 11 million trees by 2020 should be achievable. What will the Government do to achieve it, as well as helping the Woodland Trust deliver its northern forest?
Finally, I refer briefly to the comments made by the Chair of the Select Committee about the need for mixed planting and the role of forestry in our economy and agricultural system, in terms of recognising its economic value more clearly. That was at the heart of the report. I completely acknowledge his points and agree with his comments. They were important points about the industrial role that timber can play in our economy and the need for the Government to properly support our foresters and the role of forestry in the economy. The grant system is at the heart of all that, and it must work properly if we are to improve forestry’s role in our economy and make it more robust. I look forward to the Minister’s points, particularly on that.
Order. Before I call the next speaker, there are four people seeking to catch my eye, and I intend to call the Front-Bench speakers at 2.30 pm. I will not impose a time limit, but if people can be mindful and keep to about eight minutes each, it will give everybody a fair crack of the whip.
It is a pleasure to serve under your chairmanship, Mr Davies. Before I begin, I point Members to my entry in the Register of Members’ Financial Interests. I am grateful to my hon. Friend the Member for Tiverton and Honiton (Neil Parish) for securing this debate and for his work and that of the hon. Member for Penistone and Stocksbridge (Angela Smith) on the Committee during the writing of the report. I know that my hon. Friend has taken a long-term interest in such matters across his career, both in the House and beforehand. That kind of long-termism is what I would like to talk about.
One thing that comes across time and again in the Select Committee report is that the sector needs long-term decisions taken very far in advance, purely and simply because it takes 40 years or more to grow a tree. When one considers that length of time, one sees the disincentives for landowners to plant, because they do not get a return on what they plant for 40 years. That is the main issue that the Minister faces in encouraging landowners to plant. I am pleased to see the Minister back in her place, because continuity helps long-term thinking, as is evident in the 25-year environment plan that was launched today.
I have briefly spoken about Delamere Forest already, which is in my constituency. It has 750,000 visitors a year and is described as the “green lungs” of the north—that is, until the new northern woodland, an initiative that I am delighted about, gets built. The forest contains several sites of special scientific interest. Its nursery grows a wide variety of trees that help research into the resilience of forests, particularly to the threat of climate change, and provides for all the Forestry Commission planting across England. It is a huge asset to my constituency and to the country. I invite the Minister to come to visit the forest and see the fantastic work that takes place there.
When it comes to enhancing the forests, I welcome the Government’s ambitious targets for the medium and long term. Planting 11 million trees by the end of this Parliament will be a step forward in the stewardship of our natural heritage. Likewise, the longer term aspiration of increasing woodland cover from 10% to 12% by 2060 is rightly ambitious, but I ask the Minister to commit to that as a target, not as an aspiration—perhaps she will deal with that in her response. Like the hon. Member for Penistone and Stocksbridge, I am concerned that we will not meet that goal.
The Government need to encourage the private sector to step up and plant more, which means giving long-term assistance to landowners. In the 25-year environment plan, I am pleased to see ideas of measuring the extent to which carbon can be locked up in our trees and of encouraging the building industry to use UK-grown timber. Hopefully, they would mean that wood would not be burnt for biomass, carbon would be locked up and recycled wood would be used to renovate buildings. It would be a future win if the Ministry of Housing, Communities and Local Government were to look at using better, British timber in building, which would create a good market for UK-grown produce.
In the 25-year environment plan, I am also pleased to see that the Government are looking at a forest carbon guarantee scheme. I am keen to hear more about that from the Minister. If the kind of woodland management that my hon. Friend the Member for Tiverton and Honiton described is to happen, we will need an annual payment to cover its costs. The reality is that thinning out trees or dealing with trees that are blown over by massive storms hitting the UK is expensive—there is often a net cost to the landowner—and does not provide a return.
If we are serious about forestry planting in this country at the required scale, I encourage the Minister to look at an easy-to-access grant scheme. The Government are asking landowners to plant in situations where they could, for example, rent out that land to other farmers for arable farming or stock grazing. Farmers will need some sort of incentive to encourage them to plant trees there.
I want a diverse landscape in the UK. I want our native species to be planted, but I also want commercial species such as Sitka spruce and Douglas fir to be planted as resources that can be used for highly efficient buildings. There are very good building designs in Scandinavia and elsewhere that use wood, are highly energy efficient and are quick to build because they can be pre-fabricated. That is failing in the UK at the moment because the banks are failing to recognise the long-term durability of houses built using wood. If the Minister works with colleagues in the Ministry of Housing, Communities and Local Government to get some sort of certification scheme going, we can have a virtuous circle in the UK that works to the benefit of our constituents and the environment.
We import 80% of our timber—a shocking statistic. I encourage the Minister to take forward some of the ideas that have been published today in the 25-year environment plan and to work across Departments to see how we can encourage that virtuous circle of planting that will bring all the benefits that my hon. Friend the Member for Tiverton and Honiton spoke of. In the meantime, I extend my invitation to visit the wonderful forest of Delamere to all hon. Members present.
It is a pleasure to follow the hon. Member for Eddisbury (Antoinette Sandbach).
One of the few areas of the economy where we can be fairly sure that Brexit will lead to an increase in activity is tourism. The fall in the pound relative to other currencies has already led to a boost in our tourism from domestic and foreign visitors. The nature of our countryside is crucial for the future economic health of our country.
Woodland makes a vital contribution to the feel of that countryside. It is not easy to quantify, but if I were to ask anyone who knew anything about England to paint a picture of the English countryside, I would take a fairly safe bet that it would have at least some trees in it.
I do not underestimate the importance of trees as commercial timber. I would support any measures that would increase our ability to meet our timber needs from trees grown in this country, but we need to bear in mind that the tourism value of woodlands—especially ancient woodlands—is usually much greater than their timber value.
We need a woodlands policy that maximises the tourism value of our woodlands while also meeting our timber needs. Some of the classrooms that I was taught in as a small boy were built in wood back in the 13th century, so it is certainly a very durable material.
I was not there when they were built, no.
To maximise that tourism value, we need woodlands that are large and established enough to boost biodiversity. Small copses and individual trees have great value, but we need some larger forests in this country, although I do not wish to replicate the American redwood forests of the nightmares of the hon. Member for Tiverton and Honiton (Neil Parish).
We need to protect our biodiversity-rich ancient woodlands wherever they are. We need more trees of all sorts and trees to fit with our other economic and land-use needs, but I take this opportunity to press for the protection of ancient woodlands, for more serious forests in the UK in the future, and for policies that ensure that those things are achieved.
It is a pleasure to serve under your chairmanship, Mr Davies. I thank my hon. Friend the Member for Tiverton and Honiton (Neil Parish) for securing this debate and for chairing the Environment, Food and Rural Affairs Committee so eloquently and constructively. It was a pleasure to serve under his chairmanship for the first two years of my parliamentary career in Westminster. I also welcome the Minister back to her place. It is a pleasure to see her and I look forward to working with her open-door policy over the next few years before she goes on to even greater things.
I have a declaration to make. The forestry and wood-processing sector is well represented in my constituency of Brecon and Radnorshire: we have three sawmills, including the largest single-site sawmill in Wales—BSW’s at Newbridge-on-Wye—which employs 148 staff. Over the past decade, BSW has invested more than £6 million in the site, which produces more than 150,000 cubic metres of saw and timber each year for the construction industry and for the fencing and landscaping markets.
Given that I represent a large rural constituency in which forestry and timber support so many jobs and families, hon. Members will not be surprised to hear that I have served as chair of the all-party group on forestry since 2015, when I was elected. Not many of its members are present today, but it is always well supported and it represents all sectors of this country. Unusually, Scotland is exceptionally well represented. Sadly, not many Scottish Members are in the Chamber—I am sure they have all rushed off to their trees in Scotland because they miss them when they are down in London—but the Scottish Government are leading on tree-planting and forestry. England, Wales and Northern Ireland could do with learning from Scotland. This is probably the one and only time I will ever say that, but I do give Scotland credit.
I am proud to have served for the past two years on the Environment, Food and Rural Affairs Committee and to have contributed, along with three other hon. Members present—my hon. Friend the Member for Taunton Deane (Rebecca Pow), the hon. Member for Penistone and Stocksbridge (Angela Smith) and our Chair, my hon. Friend the Member for Tiverton and Honiton—to its important and constructive report. I am sure you have read it from cover to cover, Mr Davies, so I will not dwell on it for too long.
Absolutely. Despite its title, our Committee’s inquiry looked beyond England, and a number of our recommendations are relevant to the forestry and timber-processing industries throughout the UK, which employ nearly 80,000 workers and contribute £2 billion to our economy each year. Forestry businesses operate across geographical boundaries—Forest Sawmills in my constituency has operations in Worcestershire and in south-west Scotland. This diversity is reflected in the make-up of our all-party group, in which the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) sits alongside the hon. Member for Stroud (Dr Drew) and my hon. Friend the Member for Berwick-upon-Tweed (Mrs Trevelyan). Forestry crosses not only constituency and country borders, but party lines. Long may that continue.
This is the second Westminster Hall debate on forestry since I was elected in 2015. In December 2016, while the Environment, Food and Rural Affairs Committee was considering forestry in England, I secured a debate on tree planting in the UK. Much has happened since, but sadly not all of it has been positive. Our report noted in March 2017 that the UK was the third-largest importer of timber in the world, behind only Japan and China. Since then, unfortunately, the UK has overtaken Japan to become the second largest importer of timber—at a time when the World Wide Fund for Nature warns that global demand for wood will triple by 2050. That, perhaps more than anything, demonstrates clearly why it is so important for Parliament to make its voice heard and send a strong signal to the Government that the UK must plant more trees now to ensure a secure and growing supply of domestically sourced timber in the future.
I have referred to the considerable investment in timber processing in my constituency. I am pleased to say that rising demand for timber products, which is good not only for our environment but for our economy, means that similar investments have taken place up and down the country. However, investment in processing capacity by companies such as Norbord, Egger, and James Jones and Sons is entirely linked to the availability of the raw material they require—timber. The industry body Confor—the Confederation of Forest Industries—predicts that, unless tree-planting rates are greatly increased, the UK faces a timber gap in the next 20 years. We can plug that gap by taking action now, but there really is no time to lose.
Our report referred to:
“Getting the most out of forests and woodland”
and highlighted the need for a “long-term strategy for forestry”. It is self-evident to those of us with even a passing knowledge of forestry and timber processing that, as hon. Members have said, any strategy for the sector needs to be long term. It takes at least 30 years for a sustainably grown spruce tree to be ready for harvest. To put that in perspective, the trees being harvested now were planted when Ronald Reagan was President of the USA, the USSR was still in existence and, perhaps most surprisingly of all, the now untouchable Manchester City were in the second division of the Football League. Changed days indeed, Mr Davies.
Our report recommended that
“the dual benefits of agriculture and forestry should be recognised by having a single grant scheme to support both sectors.”
It also urged
“those in the forestry sector to approach the Parliamentary Under-Secretary of State for the Environment and Rural Life Opportunities as early as possible with any concerns, opportunities and thoughts they have on the forestry sector when the UK leaves the European Union.”
I am pleased to say that the forestry sector, under the umbrella of Confor, has done just that—it has had very positive talks with the Minister. I began my speech by welcoming her back to her place. One thing I can say is that her door is always open, both to Members of Parliament and to the industry. She is always prepared to have discussions, and I thank her for that.
The industry has published an excellent discussion paper with proposals for how a common countryside policy can support forestry and woodlands in the UK when this country leaves the EU, which it will. It has also made great efforts to engage with environmental non-governmental organisations, farmers and landowners to find common ground on how best to support the Government’s aspirations for a green Brexit and how to replace the common agricultural policy. In October, Confor published a joint statement with the Woodland Trust and the Country Land and Business Association, setting out guiding principles for the Government to follow to support our forests and woodlands in the years ahead. I urge the Minister to consider those principles.
Many people with an interest in forestry have an understandable fear that it is the forgotten F-word, constantly competing for attention with food, farming and fisheries. It does not get the attention that such a successful industry, which provides good-quality jobs in rural areas such as Brecon and Radnorshire, fully deserves. Next time hon. Members speak about our countryside and its great rural businesses, I urge them not just to praise farming and fisheries—although they do need praising, believe me—but to make a point of saying “farming, fisheries and forestry” instead. It is not often that using the F-word improves a sentence, but that was a good example. I am pleased to commend our report and thank our Chair for introducing it.
I welcome the opportunity to follow my hon. Friend the Member for Brecon and Radnorshire (Chris Davies). It is also a pleasure to serve under your chairmanship, Mr Davies.
I congratulate the Chair of the Environment, Food and Rural Affairs Committee, my hon. Friend the Member for Tiverton and Honiton (Neil Parish), on introducing this debate on the Committee’s welcome and thoughtful report on a significant issue. It gives us an opportunity to highlight the significant importance of forests and woodlands not only to our environment, but to our quality of life, as hon. Members have pointed out. I was pleased to see that sentiment reflected in the report, in the Government’s response and in the evidence given to the Committee by witnesses.
My suburban constituency of Chipping Barnet illustrates that the debate is not just of interest or relevance to rural areas. There are a number of woodland areas in Barnet: we have woodland around Monken Hadley common that dates back hundreds of years—it may have been continuously wooded since the end of the last ice age. Coppetts wood, at the other end of the constituency, used to be part of Finchley common, the haunt of highwaymen in the 17th and 18th centuries. It underwent a spell as a sewage works, but was subsequently revived and renewed and is now a welcome public space. Whitings wood between Arkley and Underhill brings us right up to date, because it was planted in 1996 and is now ably managed under the stewardship of the Woodland Trust.
A key goal for me as a Member of Parliament is the conservation of our natural environment. I warmly welcome the work that the Committee has put into the report, the strong commitment on the environment that the Prime Minister made today and the 25-year plan that has been published.
Like others in this debate, I want to focus on ancient woodlands. I welcome chapter 6 of the report, which covers that area. I also strongly support the Conservative manifesto commitment to strengthen protection for ancient woodlands in the planning system. I recently had the pleasure of joining the all-party parliamentary group on ancient woodland and veteran trees, and I was alarmed to learn at the first meeting I attended that as many as 500 ancient woodlands across the country may be under threat. I appreciate that in certain circumstances some loss of this valued habitat is unavoidable—for example, in relation to crucial major infrastructure projects of national significance—but I am alarmed that according to research by the Woodland Trust, current threats to ancient woodland include projects for caravan sites, leisure activities, waste disposal and, as we heard from the hon. Member for Penistone and Stocksbridge (Angela Smith), a motorway service station. It is hard to see how that kind of land use can possibly justify the destruction of irreplaceable ancient woodland.
Our planning system should provide that building over ancient woodland should be permitted only in wholly exceptional circumstances. I support the Committee’s call for more extensive and systematic measurement and recording of ancient woodlands so that we have a better understanding of what we have and how much of it is under threat. I hope the Minister will respond to those important recommendations.
A key goal for all of us who recognise the benefits of woods and forests is not just protecting what we have, but planting more trees. I therefore urge the Minister to ensure that the Government deliver on their commitment to plant 11 million trees during this Parliament, plus a further million in our towns and cities. I note the scepticism we have heard from some this afternoon and from some witnesses in the Committee’s inquiry on the likelihood of the Government being able to deliver the long-term goal of 12% forestation by 2060. DEFRA’s response to the Committee rightly indicates that the private sector will be crucial in delivering on that very long-term goal. I agree that it is important for the private sector to do more.
With that in mind, I hope the Minister will consider putting a renewed focus in the Government’s clean growth strategy on planting trees as carbon stores. My understanding is that companies can include trees planted abroad in their carbon accounts, but cannot claim a similar credit for trees planted in the United Kingdom. I hope the Government will consider changing that. In other crucial decisions they will be making over the next few months, such as the replacement for the common agricultural policy, I hope that the Minister and Secretary of State will take into account the importance of woodlands and hedgerows. I appeal to the Minister to ensure that trees, hedges and small woods are better integrated into our new system of agricultural support.
In his speech to the Oxford farming conference recently, the Secretary of State said that he wanted sustainability and environmental goals to be at the heart of the UK’s new system of farm support after we leave the EU. I urge the Minister to ensure that that includes rewarding farmers for taking care of trees on their land and supporting them to add new trees, hedges and shelterbelts. It is important to bear in mind what has been said this afternoon and what is in the report about the importance of ensuring that the system for administering and applying for support payments is vastly simpler, more straightforward and more logical that the CAP it will replace.
In conclusion, as the evidence to the EFRA Committee showed, woods and forests provide a whole range of benefits to everyone in our society, including tackling climate change, reducing floods and improving air quality. As we have heard eloquently from a number of speakers, there also include significant economic benefits. As places of beauty and tranquillity, woods and forests can deliver significant and valuable public health advantages by providing opportunities for recreation, physical and mental relaxation and an escape from the pressures of life in modern Britain. Projects such as the northern forest illustrate the value we place on our woodlands, because it has captured the public’s imagination.
In preparing my remarks today, I was reflecting on the track record of my predecessor as Member of Parliament for Chipping Barnet, a wonderful man by the name of Sir Sydney Chapman. He was famed for his project, “Plant a tree in ’73”. It was one of the first large-scale environmental movements. It was followed by the less well-known, but equally well-named, “Plant some more in ’74”. While Sydney is sadly no longer with us, the trees that he was responsible for planting will leave a green and leafy living legacy for decades and perhaps even centuries to come. In future years, I hope this Government will be remembered for many positive things, but also for the trees and woodlands we planted as part of our commitment to be the first to leave the environment in a better state than we found it. We have the opportunity to do that. I urge the Minister and her colleagues to ensure that that happens.
It is a pleasure to serve under your chairmanship, Mr Davies. I congratulate the hon. Member for Tiverton and Honiton (Neil Parish) on securing this interesting, topical and timely debate. I wish a belated happy new year to all. It is good to see members of the Woodland Trust present. I will try to be fairly brief and get to the end of this speech without losing my voice.
Many enlightening points have been made during the debate. The hon. Member for Penistone and Stocksbridge (Angela Smith) made good points on how to merge forestry and farming. She also talked about ancient woodlands. I am eternally grateful to the hon. Member for Taunton Deane (Rebecca Pow) for her ambition on preserving ancient woodlands. She provided me with a huge insight into the problems that exist. The hon. Member for Eddisbury (Antoinette Sandbach) talked about addressing short-termism. We have been practising short-termism for far too long. It needs to stop but there seems to be no end in sight. Things are taken week to week, month to month and year to year, and that has to change. The aspiration that she mentioned needs to become a certainty in policy.
The hon. Member for Ipswich (Sandy Martin) mentioned tourism, a special interest of mine, which I will speak about later. I am extremely grateful to the hon. Member for Brecon and Radnorshire (Chris Davies) for his words recognising the work that the Scottish Government are undertaking. The right hon. Member for Chipping Barnet (Theresa Villiers) well expressed her local knowledge and interest in the history of her area. She also talked about the conservation of ancient woodlands and the threats to them. All those things are very commendable, and I agree entirely with many of the things that have been said. There is cross-party agreement on many of these issues. Trees, birds, wildlife and the whole habitat depend on the whole transnational situation.
I would like to bring to the Chamber’s attention how the matters we are debating today affect Scotland and their potential impact on Scottish interests. I hope that Members will bear with me—I recognise this is essentially a debate on English issues—if I get a wee bit parochial. The Scottish forestry sector supports more than 25,000 full-time equivalent jobs and contributes some £1 billion gross value added to the Scottish economy. Our forestry sector represents 64% of the UK’s total green wood output. It is an essential part of our landscape’s visual appeal, Scottish industrial supply chains and the provision of a multitude of ecosystem services, from flood mitigation and erosion control to habitat for pollinators.
Considerable social and health benefits are being realised through the Scottish Government’s use of planning policies to encourage the afforestation of vacant and derelict land. Tourism and recreation in Scotland’s national forest estate contributes £110 million each year to Scotland’s economy, supporting around 4,000 jobs. That was brought clearly into focus just yesterday at an event I co-hosted in the Jubilee Room in Westminster Hall with my hon. Friend the Member for Linlithgow and East Falkirk (Martyn Day). The companies benefiting from the hugely successful series “Outlander” were exhibiting their products there. For providing such a marvellous afternoon, I would like to thank the Earl of Hopetoun; Campbells, which is a successful fine food business located in the Falkirk area; Mary’s Meanders; and Diageo, which supplied the wonderful whisky. It was plain to see that the beauty of our landscape was critical to the success of the series, and the tourism it has subsequently attracted is enormous. Within the series, producers used magnificent trees to set many of the scenes—indeed, trees and forests were crucial to the location sought out.
Our woodlands are to be treasured, but forestry is a sector vulnerable to uncertainty. Trees occupy land for a long time, and leave it in a condition that is expensive to restore to its original state. No sane land manager is likely to consider planting them unless they are certain that they will benefit. In addition, key parts of the sector’s supply chain, such as commercial forest nurseries, find it difficult to cope with surges and crashes in demand. It is therefore vital that the Governments in Scotland and the UK do all they can to provide the sector with a long-term view of the incentives and support mechanisms in the markets that will be available for forestry once we leave the EU.
That brings me to the crux of the matter. The forestry Bill passing through the Scottish Parliament includes the formal devolution of competences over forestry but, as we withdraw from the EU, the allocation of funding for both forestry and agriculture has been retained here in Westminster by the UK Government. As you will know, Mr Davies, European funding has been a vital lifeline for forestry in Scotland and elsewhere, with 55% of the Scottish Government’s forestry grant scheme coming from the European agricultural fund for rural development. The current round of that scheme is worth £252 million from 2014 to 2020. Forestry research is vital as we adapt to and try to mitigate the effects of climate change and the spread of exotic tree pests and diseases. However, as the Environment, Food and Rural Affairs Committee heard during its inquiry, the money made available for it has halved in recent years, and the Forestry Commission’s research agency relies on European money for some 16% of its dwindling budget.
I have a significant question for the Minister, to which I hope she will respond. Professor Graeme Roy, director of the Fraser of Allander Institute, giving evidence to the Scottish Parliament two years ago in July 2016, said:
“Scotland has about 8 per cent of the UK population, but about 18 per cent of UK CAP payments come to Scotland. How will that funding reach the Scottish budget? It will not come through tax revenues. If comes through Barnett, you will get 8 per cent of the equivalent spending in England and Wales, which is certainly not 18 per cent. What is the mechanism by which those additional revenues will flow into the Scottish budget?”—[Scottish Parliament Official Report, 28 July 2016; c. 17.]
I reiterate that question, and ask the Minister how she intends to bridge the financial chasm identified by Professor Roy that is opening up between Scotland’s present share of the UK’s common agricultural policy payments and what we can expect to receive via the Barnett formula.
At present, we have guarantees from the Department for Environment, Food and Rural Affairs underwriting the EU funding allocated up until the UK leaves the EU in 2020, but again that represents a cliff edge beyond which nothing is certain. We have no clarity as of yet about what support for agriculture or forestry will look like in a post-Brexit UK, nor do we know how money will be allocated to the devolved Administrations. Since we have recently seen the appointment of a Secretary of State who is a great believer in communities being their own architects of choice, could the Minister provide an update on his plans for funding post-2020? Such an announcement—it may have been made and I have missed it—would do much to alleviate fears in this sector, such as those expressed by the UK forestry sector representative body Confor, which predicted in 2016 that uncertainty over future grant funding availability will discourage investment in large planting schemes.
The Scottish forestry sector is valued by the Scottish people and Government, and is of strategic importance beyond being a source of timber. The Scottish Government recognise the importance of forestry in mitigating and adapting to the effects of climate change, restoring environmental health and improving human health. It is a vital and expanding part of Scotland’s industrial chain. Considerable private investment has been made in both forest management and processing timber. Investors need reassurance that Scotland is open for business, and clarity regarding future trade arrangements and tariffs. I will end by again asking the Minister for clarity about future funding and trade arrangements, and echoing the call made by the hon. Member for Tiverton and Honiton for deeds, not just words.
It is a delight to serve under your chairmanship again, Mr Davies. I thank the Chair of the Environment, Food and Rural Affairs Committee, the hon. Member for Tiverton and Honiton (Neil Parish), for introducing the debate. If nothing else, it gets Lord David Clark off my back. When I was on the Committee he spent a lot of time asking why we never debated forestry. I had to explain to him that I was a limited voice on a much bigger Committee, but it is good that the Committee has discussed it, and that the hon. Gentleman has managed to arrange today’s debate for the same day as the announcement of the 25-year environment plan. If only I had that much authority, I would not be where I am today.
This is an important milestone and an important piece of work by the Committee. Government Members can be critical of the Government, and I will also make some points in that respect, but today’s debate is largely consensual, because we all love trees and want more trees. The only question is how we get them. Sadly, we do not always simply get more trees—some are cut down, which causes all sorts of problems. I have a great many friends in Stroud who seem to spend a lot of their time sitting in trees that they do not want cut down, but that is Stroud, and they are the people I represent. I therefore have an interest in how trees have grown and been saved, and sometimes not been saved.
Today’s debate is marked by the interests of a number of bodies. I will declare my own interests: I am a member of both the National Trust, which has a great many trees in Stroud, and the Gloucestershire Wildlife Trust, which also has trees. I am indebted to the Woodland Trust, which also has trees in Stroud, and Confor, which does a marvellous job in making sure that the all-party parliamentary group on forestry—it is good to see the group’s chair, the hon. Member for Brecon and Radnorshire (Chris Davies), here—functions very efficiently and effectively. I dare say, That is why we are discussing trees today.
I owe much of my knowledge of forestry to a dear late friend, John Workman, who, by any stretch of the imagination, would be described as a forester. He was such a good advocate of forestry that he bequeathed all his woodlands—he was a single gentleman—to the National Trust. The Ebworth Estate—I do not know whether hon. Members know Stroud—is a wonderful centre. The woodlands around are crucial to the way in which Stroud, as a constituency, lives, breathes and functions. His dream was always that there would be a ring of trees all the way around the centre of Stroud, so that people could walk round without ever leaving the woodland. That has not quite come to pass, because there are certain private woodland owners who have not yet agreed to full access. I say to the Minister that it would be interesting to see how the new structure of farm payments will encourage woodland owners, with sensibility, to make sure that there is proper access, so that people can walk round and get the benefits of that.
I am always interested in calls for access, because one of the big problems is the spread of disease. Phytophthora ramorum spores can very easily be spread on people’s boots, so if someone walks in a forestry that has phytophthora in it—most of the Forestry Commission wood in Wales does—other woodland could be infected. Will the hon. Gentleman comment on how he would deal with the question of access versus disease?
When speaking of access, I used the word “sensibility”. People cannot be allowed to walk wherever they want—that has to be recognised—but there is a lot of evidence that the right to roam, within reason, has been less destructive than some people would allege, and I think that we can move forward on that.
We have had very good contributions from my hon. Friends the Members for Penistone and Stocksbridge (Angela Smith) and for Ipswich (Sandy Martin), from the right hon. Member for Chipping Barnet (Theresa Villiers), and from the hon. Members for Brecon and Radnorshire and for Eddisbury (Antoinette Sandbach), as well as a short contribution from the hon. Member for Yeovil (Mr Fysh). Although hon. Members from the Scottish National party are largely interested in Scotland, it is good that we recognise that this is a genuine United Kingdom debate. We should welcome that, and learn from what they are doing right in Scotland, because we all have to plant more trees.
To be slightly critical of today’s environment plan— I have only just got a copy of it, but perhaps the Minister can explain this to me—the first bit says:
“We will also work with industry and support Grown in Britain to increase the amount of home grown timber used in England in construction, creating a conveyor belt of locked-in carbon in our homes and buildings”.
I am not quite sure what that means. If the Minister can tell me what “locked-in carbon” neutrality is, I would be very pleased to be disabused.
In the few minutes I have left, I will concentrate on three areas, some of which have been highlighted already. I want Minister to understand where there is a need for more detail, both in the response to the Select Committee report and in the 25-year environment plan. First, there is the issue of how we get to 12% by 2060, which is not clearly spelled out in either the response or the 25-year environment plan. We need detail about how that will be achieved. There is a lot on aspiration, but much less on the detail. Those with knowledge of the industry are more than a little sceptical about where the detail will come from.
Secondly, there is the issue of woodland management and how we protect our ancient woodlands, which a number of hon. Members highlighted. We need to lay down clearly what the criteria are for the planning system. I am aware that that is not the Minister’s responsibility, but she will have to talk to the Ministry of Housing, Communities and Local Government about areas where we are protecting woodlands, which means that they cannot be developed.
A particular interest of mine is how forestry relates to climate change. Again, I have not had the opportunity to read the 25-year plan in detail, but I am a bit worried that the approach to carbon capture and to using woodlands as part of how we deal with climate change is not as clearly spelled out as it could and should be. It would be useful if the Minister can say something about how management, protection and growing more trees will be achieved.
Finally, as the Chair of the Select Committee intimated, the grant system is more than a little messy. The way that countryside stewardship approaches woodlands is dated. There are a number of other grant schemes, which I have never really understood—I am not an expert in this field—but I talk to people who have an interest in how they might be persuaded to grow more trees. As has been made clear, we are not just talking about the new northern forest, much as it is welcome—I suppose the northern forest will be alongside the new northern powerhouse, but it could be around it. This is not just about the big answers, but about the small copses and areas around the market towns where I live. We have got to give landowners, including housing developers, the opportunity to come up with innovative schemes.
I want to mention two other people in passing, because they are apposite to this debate. John Parker, who happens to be a constituent of mine, is the head of trees at Transport for London, and has taught me a few things about how we need to look at tree surgery, which we have not touched on, and the way in which we maintain urban trees as well as trees in the countryside. That is very interesting, because we must not see urban trees as negligible. They are part of the solution, so we need more trees in the urban setting. Chris Uttley has been leading a project to try to keep the water upstream so we have less flooding in towns such as Stroud, and part of that is about the sensitive planting of trees. Those people are important to me locally, and they have part of the solution for dealing with climate change and flooding, and maintaining our natural environment alongside our built environment. I look forward to hearing from the Minister, who is going to provide all the detail now she is back in office.
It is a pleasure to serve under your chairmanship, Mr Davies. I congratulate my hon. Friend the Member for Tiverton and Honiton (Neil Parish) on securing this debate on forestry, and I thank his Committee for producing its report. Hon. Members will have seen our formal response and our exchange of correspondence with the Committee. I welcome this debate, which is extremely timely, particularly given that the 25-year environment plan was published today. We are moving forward and developing a long-term vision for the environment. Today, the Prime Minister launched our landmark 25-year plan, which sets out how we will improve the environment over a generation. I was very pleased to be reappointed Environment Minister to see some of it through and I thank hon. Members for their kind words.
The much-said mantra “the right tree in the right place” can serve multiple benefits, as has been illustrated today. Forestry and woodland creation, and its sustainable management, offer a wide range of economic, social and environmental benefits, including landscape scale habitats for wildlife, increased biodiversity and reduced flood risk. Indeed, we are spending £15 million on more natural flood management schemes to understand better and more systematically how things such as different ways of planting trees can make life better. They also contribute to improved soil, better water quality, the personal enjoyment of nature and, as has been pointed out several times, the supply of timber.
Well-managed trees, woodlands and forests have a role in the countryside and the urban environment, which is why it is so disappointing that certain councils seem hellbent on removing trees from city streets. I am sure my right hon. Friend the Member for Chipping Barnet (Theresa Villiers) is keen to ensure the Mayor of London keeps his pre-election pledge to plant 2 million trees in London. We are still working on our plans to help more councils plant trees to meet our 1 million tree target. They will be supported with an advice pack about the best kind of species and cultivars, which will contain guidance on different methods of tree surgery, which the hon. Member for Stroud (Dr Drew) talked about. We know that there is excellent practice in local government already, and we want to ensure it is as widely known as possible.
To reassure the hon. Member for Penistone and Stocksbridge (Angela Smith), we remain committed to our ambition to plant at least 11 million trees during this Parliament and a further 1 million trees in urban areas.
I am pleased to say that we made that pledge in 2015, which naturally would take us to 2020. We restated the pledge in 2017, so we have restarted the clock. It will be a further 11 million trees by 2022—in this Parliament. I believe we will do that comfortably, not least because HS2 Ltd is setting aside money, £5 million, for schemes and will plant trees over the next few years, so I am confident that we will go past that target. In this debate, we are focusing on the schemes relating to DEFRA, which is where I intend to focus my attention.
We want England to benefit from significantly increased woodland cover by 2060, which is why we stand by our shared aspiration to achieve 12% woodland cover. We will achieve that only through a mix of private and public investment. I reiterate that it is a key part of the Government’s clean growth strategy, which identified the milestone of an extra 130,000 hectares to be planted by 2032.
I recognise the slow start of take-up of the countryside stewardship scheme and the woodland carbon fund. However, we have made a number of changes, partly driven by our review. I am confident that by focusing our efforts and making these changes, we will see an increase in tree planting.
The hon. Member for Penistone and Stocksbridge asked that question, too. The tree champion will help to co-ordinate activity. This is about having trees in the right place. I see them very much as an ally in ensuring we pull together the different stakeholders. They will also be a champion for urban trees and will ensure the trees we have stay in the ground, particularly in our urban environment. We are making progress in a variety of ways, and the tree champion will be a key part of that.
I want to make some progress, because I have plenty to say.
To return to the different schemes, I had the pleasure of visiting the Lowther estate last month and planting the first of 213,000 trees this winter. That has been funded through the countryside stewardship scheme. I was shown its plans for future woodland schemes for a rich mix of broadleaf corridors and softwood plantations that together will provide commercial forestry as well as huge benefits for wildlife. That was truly impressive.
I was delighted that the largest forest to be planted in more than 30 years finally got the green light. The first of more than 600,000 trees will be planted this March at Doddington North moor. That 350-hectare forest will store 120,000 tonnes of carbon, help to manage flood risk, boost timber industry businesses and jobs, and help red squirrel populations. That was funded through the woodland carbon fund.
Most recently of all, as already alluded to, I know that hon. Members are applauding the launch of the northern forest. We expect 50 million trees to be planted for communities along the M62 corridor—truly a green heart, or ribbon, for the northern powerhouse. That long-term project is led by our friends at the Woodland Trust and England’s Community Forests, and we are kick-starting it with DEFRA funding to accelerate this ambitious project. I understand that our partners have already managed to secure extra funding from the Heritage Lottery Fund, and I am confident that over the timeline of the project, given their successful track record—which is why we are partnering with them to achieve it—they will be able to take advantage of not only corporate funding but development schemes that attract other kinds of Government funding.
We have continued to work with the industry and reviewed the schemes that we have in place to encourage more planting. In taking a number of steps to remove barriers that were discouraging applications for funding to support tree planting, we have made internal changes to improve operational processing. For example, the country has been mapped by the Forestry Commission, which has worked with Natural England to identify appropriate areas for significant afforestation. The commission is also working with National Parks to identify suitable planting areas, and I am looking forward to visiting the South Downs tomorrow to discuss that further.
We have raised the environmental impact assessment threshold for afforestation to 50 hectares in mapped low-risk areas, with full prior notification of relevant details required below that threshold to ensure that we maintain the environmental protection. The Forestry Commission has also set up a large-scale woodland creation unit to support the development of projects by directly influencing landowners. I am grateful to the chair of the Forestry Commission, Sir Harry Studholme, for stepping up his efforts. With him, I will be meeting landowners and estate managers later this month.
Informed by the review, we improved the application forms for the countryside stewardship scheme for 2018 and released guidance three months earlier than in the previous year, in effect significantly extending the application window, which opened last week. The woodland carbon fund, the aim of which is to provide larger forests—to recognise the point made by the hon. Member for Ipswich (Sandy Martin)—is a one-stop shop process administered by the Forestry Commission. Again, we have made significant changes, including lowering the planting threshold to 10 hectares, providing funding for forest roads and making a second-stage payment five years after planting. We have now received two more applications and I am aware of another 10 that are to be submitted.
My right hon. Friend the Member for Chipping Barnet talked about the domestic carbon market and, as was highlighted in the clean growth strategy, we wish to establish that. That is my intention. The industry says that it needs more confidence that the planting rates are getting under way before we can establish something that is financially resilient, but I am confident that we can achieve that.
On there being two schemes, we are keeping both because they have different objectives. The countryside stewardship objectives include improvements in biodiversity and habitat, flood mitigation and water quality, while the woodland carbon fund focuses on largescale carbon capture. In both cases the UK forestry standard is the guideline on the mix of planting, which does not predefine the split of species, but diversification of planting, as we have heard, helps to improve woodland resilience and protects future supplies of timber, biomass and other benefits.
We are also considering future schemes carefully. I have previously challenged the sector on improving the quality of woodland creation plans so that they clearly satisfy the expectations of the UK forestry standard. I am pleased that the Forestry Commission, the Institute of Chartered Foresters and key forestry stakeholders are working together to develop support tools, training and communications to upskill all parties involved in the design, assessment and delivery of forestry proposals. Some of the most recent woodland creation planning grant applications have shown a high quality of design planning and are being used as exemplars to guide future applicants.
On active management, which has been discussed extensively today, we know that improving markets for hardwood timber will bring more undermanaged woodlands into production. This year we will continue to promote the market opportunities for timber. Our work with the ICF and other organisations to improve the quality of plans and the way in which we process them will reduce the time taken to get the management plans in place. We do not only support new planting. We offer options through countryside stewardship to support the active management of the woodlands we already have. Since 2016 we have had nearly 600 woodland management applications, which would support more than 44,520 hectares, bringing them back into active management.
On ancient woodland, my officials have met the Woodland Trust and other groups to discuss how best to prevent the loss of such woodland. We recognise its importance and that is why ancient woodland enjoys the special protection that will be further enhanced in the updated national planning policy framework. That said, our records show that there are 340,000 hectares of ancient woodland, which is 26% of total woodland area, and that between 2006 and 2015 just 57 hectares, or 0.02% of the overall ancient woodland area, were lost permanently to other land uses. We are exploring the opportunities for better recording the loss of ancient woodland, including the potential for updating the ancient woodland inventory. I understand that officials are still in discussion with the Woodland Trust about the detail, but its support is welcome.
On other Committee recommendations not already covered, Forestry Commission England will continue to publish the headline performance updates, which include the rate of new principal Government-supported tree planting and both the total area and the percentage of woodland in England in active management, on a quarterly basis. The Forestry Commission will review the indicators it publishes on woodland creation, aiming to reflect the creation supported by Government more clearly. The commission has also committed to providing the sector with information on short to medium-term expectations of planting rates, based on grant applications received and those in preparation. My officials have discussed with the Committee on Climate Change the long-term trajectory for woodland planting to match the five-year carbon budgets and our 2060 aspiration.
On the industrial strategy, it is for the industry to come forward with a proposal for a sector deal, but I assure my right hon. and hon. Friends that we absolutely support the industry. On skills and apprenticeships, the Forestry Commission worked with the sector to create a new apprenticeship standard, and it is liaising with industry, the Royal Forestry Society and the Institute for Chartered Foresters on the creation of higher-level forest manager apprenticeships. The commission is engaging colleges, training providers and assessment bodies to promote take-up of the standard. A small number of universities in the UK also provide forestry degrees, and last year I was pleased to meet students and recent alumni at Bangor University.
At the Ministry of Housing, Communities and Local Government, we are identifying options to encourage the use of more domestic timber in construction. Nothing will happen overnight, but the clean growth strategy clearly supports the use of more home-grown timber in construction. We will work with Confor, Grown in Britain and the sector. The locked-in carbon is the essence—instead of concrete, metal and all the other things, we can achieve things just as well with wood.
Across Government, we will continue to explore how to do more for British forestry and timber-processing businesses. On the renewable heat incentive scheme, we want to ensure that waste wood is used only in specifically designed boilers. On research—I am running out of time and I appreciate that the Chair of the Select Committee may wish to reply briefly—I assure him that we have developed strong links with the industry and non-governmental organisations. Forest Research devotes 25% of its budget to knowledge exchange. We also work with the Scottish and Welsh Governments to explore future business models. European Union funding is also possible, although EU regulation does not cover forestry. Finally, in response to the hon. Member for Falkirk (John Mc Nally), I have to be candid: future funding arrangements are a matter for further discussion between the Governments of the different nations. I can give no pledge today.
I hope that I have covered all the subjects I wished to. We have made some changes and we are seeing an uptick in the number of trees being planted. People are applying more through our different schemes, and I encourage them to do so further. We will continue to monitor that, adapting as necessary to achieve our ambitions.
I thank the Minister for her words, for her contribution to managing our woodlands better in future and for the tree planting into the future. Now that we are bringing forward a tree champion, perhaps we have the opportunity to look again at our woodland grant system, to see if we can bring it and pull it together.
I thank all hon. Members for their contributions today. My wife and I take the dog around Battersea Park in the morning when we are here in London. Those trees have been planted for generations, so we can enjoy them now, and they have also seen many political parties come and go. We can be absolutely assured that were we to need a cross-party approach to planting trees for the future, as Governments of all persuasions come and go, that is probably the one thing that we can agree on.
Seriously, trees breathe in carbon dioxide and breathe out oxygen, so they are good not only in the countryside but in our cities. They can be our lungs for the future. We can also make much more of our wood industry. We can have everything if we do it in the right way. My final point, as I started the debate, is that as we plant more woodland, we should ensure that it is a mixture of trees and landscapes, so as to provide good access to such forest for all people, whether it is recreational or good for the environment and carbon capture. It can also be good for our future to have more wood in our houses.
Motion lapsed (Standing Order No. 10(6)).
Banks and Communities
[Mr Mike Gapes in the Chair]
I beg to move,
That this House has considered the role of banks and their responsibility to the communities they serve.
As always, it is a pleasure to serve under your chairmanship, Mr Gapes. I thank the Backbench Business Committee for giving us this time to discuss a profoundly important matter. I also thank all the right hon. and hon. Members across the House who have supported the debate, and I welcome the new Minister to his place.
The debate is, in part, a product of the Royal Bank of Scotland’s disappointing decision towards the end of last year to close 259 branches. Those closures will start to come into effect, and communities in my constituency will be cut adrift from the face-to-face banking that is so essential. The towns of Dunbar and North Berwick are to be hit, which have high streets with diverse mixes of independent and chain businesses. The impact has been succinctly described to me by a constituent, who said:
“Dunbar supports many small businesses, not just on the High Street. How and where will they bank their cash takings? Online banking does not work for cash. Many older people in the town are dependent on the bank local branch, especially those who have no computer, or are wary of internet banking. Dunbar whose population is rapidly expanding, and the nearest RBS branch is 12 miles away.”
All Members here may have in their constituencies banks that are closing, in some cases leaving towns with no banks at all.
I thank the hon. Gentleman for securing this debate. It is important to note that the branch closures that he refers to are only the latest tranche of branch closures; they come on top of a series of branch closures, and that is even more devastating to what they used to call the branch network.
Indeed, I will come on to the statistics about the existence of branches in the United Kingdom.
My hon. Friend the Member for Ogmore (Chris Elmore) tells me that when the branches close in his constituency towns, one town will be left with no bank and the other town with just one. That one bank will serve 58,000 people. This debate is more encompassing than just a recent set of closures. It seeks to ask a very pertinent question about the responsibility and the relationship between retail banking and the communities they should be so proud to serve.
I congratulate my hon. Friend on securing this important debate. The banking sector has been promoting research into issues that often result from branch closures, such as financial exclusion and isolation. Does he agree that it would be useful for banks to have the results of such studies before they commence local branch closures, such as the closure in Hoyland in my constituency?
As a member of the Backbench Business Committee, I was delighted to support the hon. Gentleman’s important application. In Wales, and in my constituency in particular, we have towns where exactly what he describes has happened: we have towns with no banks. That causes immense problems, but it has been going on for more than 10 or 15 years. Does he think that the closure policy that the banks have to go through—that tick-box process—is strong enough?
The question that the hon. Gentleman raises of the tick-box attitude towards the investigations that banks carry out is one of the fundamental problems with regard to all consultation. Is it genuine consultation, or is it an economic decision that has been taken somewhere and then just implemented, almost irrespective of the evidence that they find when the consultation takes place?
I am keen to hear remarks from the Minister about what the Government, who obviously represent the United Kingdom in that interface between banks and the consumer and constituents, are able to do to push back those bank closures and, more importantly, investigate and establish the bank’s view of the relationship between them and the communities that they serve.
Banking as an institution goes back many thousands of years. It began in the temples—other buildings that communities held sacrosanct and safe. Tensions between money and religion have run in parallel throughout the same period. I do not intend to investigate that, but I suggest it shows the close link between the trust that people put in the individual they give their money to, to look after, and religion. Looking forward through history, the banking sector developed with the European banking families, who established a way of transferring money across Europe and then the world. Then, the Bank of England was established in 1694 and, perhaps more importantly, the Bank of Scotland in 1695.
Deposit banking has been a part—a foundation—of our society from the very beginning. That relationship was not built on pure profit, but on trust; initially, trust of individuals who promised to take care of others’ money; promise and trust of families who looked after moneys, and then the institutions. Such trust has developed over time, reinforced by close contact. That trust moved and continued to deepen and develop as banks became the cornerstone of our high streets. What of that bond of trust today? What is the feeling of banks’ most important stakeholders—those community individuals? They still entrust their money, which is then used by the bank to do so many other business activities.
In 1998—20 years ago—there were more than 11,000 branches. Today, the most recent figures indicate that there are just 6,000 local branches. Bank closures have escalated rapidly, with just over 1,000 closures in the last two years.
My hon. Friend is making a very powerful speech. He talked about the shrinking number of banks in general; I am losing a NatWest apiece in Ealing and Acton. When high streets are hollowed out and they become ghost towns, small businesses have nowhere to deposit anymore. The elderly are on the wrong side of the digital divide and are disenfranchised. Who would he say are the winners? Not even the property developers are—in Acton, the HSBC has been empty since 2015. There are no winners in this at all. Does he agree?
My hon. Friend raises a very interesting point about who the winners are in this situation. Certainly, we can identify the losers. The losers are the very community that we hold so dear; the losers are the high street—that geographical area where people gathered together and still try to. As my hon. Friend says, we have high streets that have been hollowed out. We need to find a way to stop this hollowing out and fracturing. The banks form a crucial, fundamental part of the foundation of maintaining our high streets, which we need to maintain our community and our society. We have reached a tipping point now—a point of no return—where the Government must step in with practical solutions to stop future closures and to address the fragmenting relationship with banks.
In 2015 we had the access to banking protocol, which spoke highly of financial inclusion and local engagement from big banks, but that fell short of any statutory protections. Members will be aware of the Griggs report the year following, which offered a series of constructive remarks and ideas to improve the settlement. Unfortunately, it addressed areas where the last bank had already left town. It does not, like my party's position, commit to a new legal protection that would enable banks to keep a presence in their local communities, which need them so much. Any new settlement should be constructively built in partnership with the banks and should engage with the shareholders of the banks who often engage with them most the local users.
What are the other answers? The Government have tried, and I suggest failed, over the past three years to try to displace some of the local bank branches with community post offices. The post office is another fundamental cornerstone of our high street and community. As my hon. Friend the Member for Coatbridge, Chryston and Bellshill (Hugh Gaffney), a campaigner on this matter, will testify, that alternative provision works only if the post offices are not themselves being ripped from our high streets and from the communities they serve at a similar rate. Post offices rightly have a valued position on our high streets, but we cannot place the burden and responsibility of banking on a workforce who are already stretched.
The decision to merge retail banking into our post offices is not workable in the present form, and nor is it a popular alternative. Figures from Which? show that although the British public think most post offices are doing a great job, many do not even know of the alternative banking options available there. I also tentatively welcome services such as the mobile branch service operated and offered by RBS and the idea of shared buildings. My constituents do not believe that such solutions go far enough to ensure a trustworthy banking presence in East Lothian. They may fit an economic model, but they do so at the risk of continuing to fracture the trust. The single solution of a banking van might work in one place, but will not work in another. To apply it as an idea across the country is foolish and short-sighted.
The trust that people have is also influenced by the quality of protection that communities witness. Local bank staff, placed at the heart of communities, have a responsibility to be the last check and balance in terms of consumer protection. Speaking with campaign groups, including Which?, this week, I was heartened to hear of cases where people had gone into their local branch to withdraw large sums of money and the bank teller has said, “This is unusual for you. What is this about?” With that simple question they have prevented a retired couple from losing substantial sums of their life savings. That solid local relationship with trained members of staff in the local bank can go a long way to protect current accounts from bank fraud, and staff can also advise on and discuss people’s challenging financial problems.
When it comes to the assessment of community safety, I raise the question of the bank’s responsibility when a sophisticated thief dupes an individual out of money. Is it right that the bank can absolve itself of all responsibility simply because the crime was so complex and maliciously delivered that the victim genuinely believed they were dealing with their own bank branch? Such a crime might be a lot harder if the perpetrator first had to build a branch on a high street to defraud retired couples of their money.
The advent of online banking has been transformative, and it will continue. There is no argument or objection to that, but I am concerned that focus has shifted solely to it as the answer to the banking problems. It would be completely irresponsible to abandon the 20 million people who still depend on face-to-face bank services. Online banking, which will continue to grow, must be accessible. It is certainly not the fault of the big banks that Governments have failed to implement a broadband service fit for the 21st century. Nor is it the fault of the banking industry that nearly 2 million people across the UK experience internet speeds of less than 10 megabits per second, meaning that online banking will not work. But banks should be made to consider broadband blackspots and digital inclusion when they plan closures, as well as the impact of shifting consumer services from face-to-face banking to online services.
Four in 10 Scottish consumers experience service issues with their broadband. How does the banking industry expect a transition to take place? In 2015, 80% of my rural constituents were dissatisfied with their internet speeds, and yet banks in Tranent, Prestonpans and Gullane in my constituency have closed in the past three years. I am interested in the thoughts of my Scottish colleagues and others here on this matter. Should big banks be made to consider broadband speeds in any meaningful consultation on bank closures?
It would have been nice to have had a consultation before we heard that the bank was closing. The buccaneer spirit of the Royal Bank of Scotland is exemplified by the fact that it did not bother having a consultation.
Physical money is the most symbolic representation of trust, but there is strong evidence that banks want to move as quickly as possible away from the physical movement of cash on to online and electronic transfer. Any transition from face-to-face banking to online services must take place at a similar rate to a drive to remove cash from society. Significant numbers of our constituents rely on cash to facilitate their budgeting, and those who do must not be abandoned in the rush by banks to change.
Last year it was suggested that 10,000 free-to-use cashpoint machines are at risk of closure. Some 2.7 million people in the UK still rely entirely on cash. The free-to-withdraw cashpoints will vanish first from communities where the individuals who rely most on cash for budgeting are based. Additionally, among the small and medium-sized businesses that make up our high streets, the challenge of banking cash is increasing. I have examples of constituents in Prestonpans who now have to travel, sometimes by public transport, with their daily take to the nearest bank where they queue for up to 30 minutes to pay the money in.
Insurance and safety issues prevent them from storing cash on their premises, and the cost of contracting the deposit to security companies is prohibitively high. When the issue was raised with the banks, they said, “The money can be paid in at the post office,” but the post office will not take larger sums of money because it does not want to have the problem of transporting the cash either. In the constituency of my hon. Friend the Member for Bridgend (Mrs Moon), where tourism is a major industry, she has a business that banks more than £2 million a year but, following a bank closure, it has the responsibility for taking the cash elsewhere.
The closure of cash machines and the continued closure of high street branches are alienating business owners and older customers, fracturing still further their trust.
I thank my hon. Friend for giving way in his compelling and comprehensive speech on a critical issue for society. Does he also recognise that the programme of closures seems to target disproportionately the poorest communities in our society? In my constituency, where unemployment is twice the national average, we have seen RBS closures in Possilpark, one of the poorest communities in Glasgow, and in Dennistoun, as well as the Clydesdale Bank in Springburn. But in one of the wealthiest parts of the city—for example, Byres Road—those banks are fully represented on the high street. What is going on there? Is that not a problem?
Absolutely. I thank my hon. Friend for that intervention. There is a serious question to be asked about which communities the banks are changing their model of banking for. Is it for the most vulnerable? Is it those who are stuck on the wrong side of the digital divide? Certainly the evidence shows that bank closures have hit hardest in communities that have below average incomes.
Banks are and should be a trustworthy pillar of any community. They should stand proudly on our high streets as responsible hubs, along with post offices, GP and dental surgeries and the high street shops that draw constituents into their community. Recent figures from Unite have shown that the proposed closures of 62 branches will lead to 165 job losses. That is devastating for small communities, but we hear that the losses will be offset by the shifting of jobs to head office and call centres. However, the people losing their jobs are of course predominantly women responsible for families, who are unable to make long journeys to different areas. Are they being asked to move out of their communities? The change in banking models affects vulnerable customers most, with 90% of closures taking place in communities where the income is below the national average.
Members will recognise that the model being advocated by the banks is one in which few industries operate. They are founded on so little face-to-face contact, with such limited real-time relationship between consumers and the organisation, that they represent something more like social media network platforms. I wonder whether in fact the banking industry seeks to move to the Twitter and Facebook models. The relationship of trust that once existed between the bank manager and the individual is in serious danger of being lost to an algorithmic financial model.
I hope that my speech will not lead Members to think I am being luddite about digital reform. I embrace it, and what I am saying is as much as anything friendly advice to the banks, but I cannot envisage, with so many still not using online services, that we should continue dogmatically to push through changes to people’s accounts, affecting such large groups of people. Social media platforms had their users come to them; banks seek to migrate their customers onto their digital platforms. The trust that the banks have had and have treasured so much throughout their and their community’s history is at risk.
As I have made clear, the purpose of today’s debate is not just for the people I serve to hear the Government condemn bank closures. They want to hear how the Government can keep banks at the heart of communities and facilitate genuine discussion so that banking institutions can rediscover the value of the close link that they have had throughout their history with the communities that entrust them with their money—which, indeed, the banks used to invest elsewhere. Very recently the banks looked to those communities to save them and the financial engine, and communities stepped up. Communities are now looking to the banks to save the high streets and the bond of trust that is the cornerstone of the relationship. We need a social responsibility clause so that members of the communities to which our banks belong can have an integral and valued role, and trust can once again be established.
I am afraid we have limited time for the debate and I strongly advise that speeches should be no longer than four minutes, or we shall not have enough time for the Minister and the Opposition spokespersons. I intend to move to the Front-Bench speeches at about 4 o’clock, so I should be grateful if, as far as possible, interventions could be limited and speeches concise.
It is a privilege to serve under your chairmanship, Mr Gapes. I compliment the hon. Member for East Lothian (Martin Whitfield) on obtaining the debate. It was my privilege to accompany him to the Backbench Business Committee and I was delighted when permission to hold the debate was granted.
If anyone should be aware of how important banking is to people in their daily lives, it is the banks themselves. They know that people need banking services to get paid, pay their bills, save and, usually, buy a house. They know that keeping a pile of cash under the bed is not an option in our society, so they should recognise that it is their responsibility to ensure that rural communities in particular have reasonable access to banking services. Unfortunately, as a Member who represents a largely rural constituency, I have to tell the House that many rural communities are losing that access and their connection with banking.
I am going say something now that might be seen as something of an article of apostasy in my party, because I am going to agree with the Scottish National party council leader in Stirling. He wrote to me just before Christmas making some valuable points that I can only agree with. In fact, I think I may have said them first, which justifies me in agreeing with him. He makes the point in his letter about the Royal Bank of Scotland closing its Bannockburn branch, which means there will be no banks at all there. I want to use this opportunity to commend the people of Bannockburn ward, more than 2,000 of whom signed a petition asking the Royal Bank of Scotland to review its decision. I want to make a point that is also made by the leader of Stirling council:
“This closure will have a disproportionate impact on some of our most vulnerable citizens”—
as was mentioned earlier—
“within the Bannockburn and Eastern Villages area with many reliant on high street banking.”
The letter continues:
“I have been approached by concerned constituents many who are elderly and neither have the access or ability to engage with on-line banking. Many are distrustful and indeed fearful of using the internet for such transactions.”
That point was also made by the hon. Member for East Lothian. I have also been approached by hundreds of my constituents—I do not exaggerate—who tell me that it is a fundamental act of injustice to remove the banking services from the communities that, as he said, need them most.
In my constituency, RBS plans to close three branches—in Dunblane, Bannockburn, and Bridge of Allan—leaving one RBS branch in the entire constituency. By the way, that branch is in the centre of Stirling and access to it is impossible for anyone with any form of mobility challenge. It is not the best locality—either for car parking or for getting to—for the single remaining RBS bank in my constituency. That is bad news for small businesses, which benefit from having a local branch, as the hon. Member for East Lothian explained well. It is bad news for the staff who work in the branches, and for elderly people and people who are less well off, who are less able to make the journey to a branch several towns away.
I should make it clear that the Royal Bank of Scotland is not the only offender. I should also make it clear that I used to work for RBS, when I was a callow youth, on leaving school.
Thank you very much. The hon. Gentleman has become my hon. Friend suddenly.
I have a fondness and affection for the Royal Bank of Scotland. It is a grand old Scottish institution, which has been ruined by the mismanagement of the directors of a decade ago.
I ask the Minister to look at what the banks propose. They are saying, “We are going to close the branch. Go to the post office.” That is not practical.
My constituency faces closures in Alloa, Kinross and Comrie. In Comrie, we face exactly the issues that my hon. Friend has mentioned, with customers being referred from the bank branch, in a place where there is weak broadband, weak infrastructure and a post office in the newsagent. That is not acceptable to my constituents, and it is pathetic customer service from the Royal Bank of Scotland.
The reality is that there are limitations on the amount of cash that can be taken and given out over the counter, and that must be confronted. The irony of all the closures, as has been mentioned twice in the debate, is that they affect the communities that have the weakest broadband connection. They are going to have to go digital without a broadband service. It is ridiculous and I call on the Minister to call on the Royal Bank of Scotland to conduct a proper review of and consultation on the branch closures.
It is a pleasure to serve under your chairmanship, Mr Gapes, and a great pleasure to follow my hon. Friend the Member for East Lothian (Martin Whitfield), who made an excellent speech.
When HSBC decided to close the last bank in Shildon, a town of 10,000 people in my constituency, the mean spiritedness of the bankers was fully on display. We asked them to make a £10,000 contribution to the local credit union. They could not afford to do that, but let us look at the fancy salaries of the people at the top of these banks. This debate is about the values of those institutions. RBS is closing its branch in Barnard Castle, and there is a massive petition going in Barnard Castle and Teesdale. Many local people, small businesses, charities and churches ask, “How are we going to manage?” They are outraged that, even though we own that bank, the Government fail to put controls on what it does.
Hon. Members have rightly spoken about broadband. Branches are being closed in low-income, predominantly rural areas—precisely the areas with the worst broadband, where it is most difficult to access internet banking. This is a structural problem. People in my constituency have to drive all the way to Leeds to have any kind of sensible discussion about a business issue. That is a four-hour round trip. That means that someone who is trying to run a small business has their day taken up by visiting the bank.
I suggest to the Minister that we should look at changing the competition rules. It seems to me that it might be possible for some banks to share premises, which would undoubtedly enable them to save money, but they say that that would be a breach of competition legislation. That tells me that the competition legislation and the competition authority’s mandate are wrong. There should be a public interest test as well as a competition test so that the banks do what they are meant to do: serve the public.
It is a pleasure to serve under your chairmanship, Mr Gapes. I congratulate the hon. Member for East Lothian (Martin Whitfield) on securing the debate.
The Royal Bank of Scotland’s decision to close 62 of its branches in Scotland—a decision that will leave 13 towns in rural Scotland without a single bank—is an absolute disgrace and will inflict further long-lasting reputational damage on RBS. That it announced that decision so callously, without even having the courtesy to hold consultations with the communities involved, is absolutely unforgivable. One would have thought that RBS, having been bailed out by the public purse to the tune of £45 billion, would display a degree of humility. Its decision to turn its back on so many communities, particularly those where the RBS branch is the last in town, is a scandalous abdication of its social responsibility to rural Scotland and to the people who were forced to keep it afloat when it risked sinking without trace during the financial crisis.
RBS plans to close three branches in my constituency: those in Campbeltown, Rothesay and Inveraray. Those ruthless closures will not only hurt local businesses and individuals; they will be hugely damaging to Argyll and Bute. We have worked hard to tell people that we are open for business. We have actively promoted Argyll and Bute as a great place to live, work, raise a family and do business. These closures undermine all that hard work.
It does not have to be this way. We, the people, pumped £45 billion into RBS a decade ago. We own it. The Government therefore can, should they wish, intervene to stop these closures in their tracks. My constituents know, as we all do, that the taxpayer owns 73% of the Royal Bank of Scotland and that the Government can—and, when they choose to, do—get involved. I am sure the Minister does not need me to remind him that when it was announced that Stephen Hester, the previous chief executive of RBS, was leaving, the then Chancellor, George Osborne, told the “Today” programme that
“as the person who represents the taxpayer interest…of course my consent and approval was sought.”
There is undeniable precedent for the Government to get involved in the state-owned Royal Bank of Scotland.
Just before Christmas, the Prime Minister told Parliament that she had chosen not to involve herself in the RBS branch closure programme. My constituents and I hope that the Government had time to reflect on that decision over Christmas and had a change of heart, and that the Minister will confirm today that they will summon RBS chief executive Ross McEwan to Downing Street and let him know that, in the interests of our rural communities, the branch closure programme has to stop. If that is not the case, will the Minister explain to my constituents exactly why the Government have chosen not to involve themselves in the closure programme? Will he explain that to the people of Inveraray, a tourist hotspot with retail outlets, cafés, bars, hotels and a huge, flourishing tourist industry, who will be left without a single bank and will need to make an 80-mile round trip to their nearest Royal Bank of Scotland branch?
In the coming weeks I intend to present three petitions from Campbeltown, Rothesay and Inveraray, so that the people of Argyll and Bute have their voice heard in this place. Until then, I will take every opportunity to press the UK Government to accept their responsibility, because we paid a very heavy price to own RBS and the least we expect is for them to protect our rural communities from the excesses of the Royal Bank’s hatchet men.
It is a pleasure to serve under your chairmanship, Mr Gapes, and I congratulate the hon. Member for East Lothian (Martin Whitfield) on securing the debate. I welcome the Minister to his new role and I look forward to working closely with him on this subject. I believe that meetings are being scheduled as I speak.
The issue of banks in our communities is part of the wider issue of excessive centralisation, which has been happening for decades and concerns many of us with rural constituencies across the UK. Centralisation can have a range of unintended consequences for communities in which vital services are removed or reduced. This is a timely debate about an issue of great importance to constituents in Banff and Buchan, who recently learned that they would be losing two Royal Bank of Scotland branches: one in Banff, the county town, and one in Turriff, which is my home town.
Those closures are in addition to others in rural areas in the north-east of Scotland, including Ellon and Huntley. We have already heard that a total of 62 RBS branches across Scotland will close. As my hon. Friend the Member for Stirling (Stephen Kerr) said, we should not forget that those closures come on top of previous closures. The Bank of Scotland branch in Macduff, just across the River Deveron from Banff, closed down just last year. That was the last bank on the high street. Of course, it was said at the time that there were still banks across the river in Banff, but they continue to close. When will that end?
A couple of Clydesdale Bank branches in my constituency that closed down—one in Banff and one in Mintlaw—are still sitting empty more than a year on. In some cases, former banks are grand old buildings that would be valuable for another use. In fact, I must admit that I looked at one of those premises as a potential constituency office, which may or may not have been politically sound, but I could not get the owner of the building to come back to me. They did not seem interested in renting it out. That is perhaps a different subject, but we do not want empty premises on any of our high streets.
These closures affect not only the towns in which the banks are situated, but the surrounding rural communities, particularly in very rural constituencies where towns are far apart. People go to banks not just to withdraw money, but to seek financial advice, apply for mortgages, pay their bills, cash cheques and so on. We should not underestimate the importance of having a friendly face behind a bank counter to explain and guide people through processes that are not everyday occurrences.
As we have heard, a local branch is not just a convenience; it is a necessity. That is particularly true in rural communities. We hear that people increasingly use online banking—these days I do pretty much all my banking online unless someone gives me a cheque, when I have to find a branch to cash that cheque—but when broadband is barely better than dial-up, as in much of our rural communities, that can seem like an extravagant luxury.
One of the RBS closures has been announced for my home town of Turriff, where there is a local savings scheme called the Turriff Friendly Society, which has been around for 143 years. The society has about 400 member accounts. Each member account might have multiple people contributing to it, so perhaps more than 1,000 people are affected. The savings scheme has struggled to cover banking costs in recent years due to low interest rates and it has managed to keep going only by charging small membership fees. The main worry of the society, which currently banks with RBS, is the threat of high costs and service charges for moving to another bank. One of the vital services the society requires is use of a night safe, which is not something we often see in modern banks. It will lose that when the bank closes.
All banks, including RBS, must realise that they are part of the lifeblood of a local community. People provide their loyal custom, and in exchange they expect some very basic services. When it is no longer commercially viable for a branch to remain open, it is imperative that a bank looks at what alternatives can be provided to the people who rely on it. A mobile banking van once a month, for example, is not the answer if there is not the dependable mobile signal that it relies on.
It is a pleasure to serve under your chairmanship, Mr Gapes. I thank my hon. Friend the Member for East Lothian (Martin Whitfield) for securing this timely and important debate. There is no doubt that how we access banking services has changed in recent times. However, as with any change, there is a balance to be struck between evolving practice—in this case, the rise of online banking—and ensuring that the drive for change does not cause damaging disruption to the services local communities rely on.
The recent round of bank closures by RBS, NatWest and Lloyds has got the balance wrong, as did the previous round of bank closures. The Government’s view is that bank closures are a commercial matter only and that they will not intervene in such issues. As someone who used to run a small business—I refer Members to my entry in the Register of Members’ Financial Interests—I can say from experience that local branches are not just private companies but essential utilities to the communities in which they are based. An easily available, well-run local bank branch has all the productivity benefits of good roads and a reliable internet connection.
The Government cannot absolve themselves of responsibility by claiming that such closures are simply a commercial matter. Research by the Federation of Small Businesses shows that branch closures are damaging to small businesses, with one study finding that lending to small businesses in a given postcode area fell by almost two thirds following a bank branch closure. Lending for small businesses grows on average from one quarter to the next by 2.13%. However, after a closure, growth falls to 0.79%—a reduction of 63%.
In the last round of closures it was announced that six bank branches were closing in a matter of months. Both Blantyre and Cambuslang no longer have any bank branches. I recently asked my constituents what effect the closures were having on them. One respondent, Joy, said:
“My husband is self-employed and he has a lot of coinage to bank. Because of the bank closures, we now have to travel from Cambuslang to Rutherglen, as the branches in Cambuslang and Burnside are now closed. There never seem to be more than two tellers on the counter at any one time and you can wait for over 30 minutes before being seen. This eats into time that could be spent earning.”
RBS says that post offices can provide services in the place of closed branches. However, I have concerns about the capacity of post offices, which have also closed in great numbers, to meet that demand. Post offices do not have the expertise of local branches, which will deprive people of easy access to more complex banking services.
The impact of such closures will be felt hardest by those who struggle either physically or financially to travel, meaning that the elderly, disabled people and the poorest in society will be most affected by the Government’s failure to act. An impact will also be felt by aspiring local businesses. From my experience, I know how important it is to build that trusting relationship with a bank from the beginning, and there really is no better way of doing that than old-fashioned face-to-face contact.
It is likely that small businesses will receive less money for setting up and essential in-branch transactions will take more time and be less accessible to those who find it difficult to travel. Banks draw people to the high street, and retail businesses are already struggling to survive. Any decline in footfall and reduction in availability of free-to-use ATM machines for customers to withdraw cash could well be the final straw for many retail businesses.
It is important that we view local branches not just as commercial enterprises but as essential local utilities that play an important role in supporting local economies. Communities rely on banks, but that relationship is two-way. When the banks got into trouble, it was taxpayers in our local communities who stepped in to save them. What a dreadful way this is to repay that favour.
It is a pleasure to serve under your chairmanship, Mr Gapes. I congratulate the hon. Member for East Lothian (Martin Whitfield) on securing the debate—I applied for a similar debate, and I agree with the sentiment he expressed: namely, that local bank branches are critical to the communities they serve.
RBS has clearly angered many following its indefensible decision to close more than a third of its bank branches across Scotland. It has a cheek to claim in a recent ad that it is the royal bank for the whole of Scotland. It has taken the ridiculous decision to close its busy branch in Renfrew town centre, leaving its only branch in my constituency in Paisley—a branch that has access problems. The bank freely admits that that branch has poor parking facilities, and it is more than 400 metres from the nearest bus stop. Given its position on a busy one-way system, that will not change, which makes life difficult for those with mobility problems to access it. Since I was elected two and a half years ago, this is the fourth bank branch closure campaign that I have been involved in.
The people of Renfrew’s reaction to the decision is testament to the strength of feeling on the matter and their support for the local branch. Mrs Cuthbertson posted on my Facebook page to say:
“I am a pensioner, as is my husband, who is also disabled. Both of us will find it extremely difficult to get to the next closest RBS branch in Paisley as there is no direct bus link to it.”
Mr Butterfield emailed me to explain that he is “shocked” and “distraught” about the decision. He is registered blind and his brother has special needs. He needs help from the fantastic RBS branch staff, who help him pay his bills. They have no idea what they will do once the branch in Renfrew closes its doors. That highlights once again how RBS has ignored the needs of its loyal customers who have a disability.
I should say, I am a customer of the Renfrew branch, which is a busy branch. There is not a time when I go in when I do not have to wait in a queue—so much so that, last week, I abandoned what would have been a fairly time-consuming request for the teller because the queue was nearly out the door.
A few weeks ago, I met RBS executives in Renfrew, alongside representatives from Renfrew community council and Renfrew development trust, and Councillor Shaw, a local ward councillor. To say that the meeting was disappointing and ultimately unproductive would be an understatement. Despite promising to do so prior to the meeting, they could not—or rather, they would not—provide any relevant information or specific transaction numbers to back up their decision. They stated only that 11 factors were taken into account when making the decision, but they refused to tell us what those factors were. They could give no explanation as to why the branch had been refurbished months earlier.
I have a lot of respect for the Minister, but he has recent history in letting me down—[Interruption.]. Not this time, I hope, but Paisley should have been city of culture. I hope at the very least he will look to speak to RBS to ensure that local MPs are given the facts that back up the closure decisions.
The UK Government have legislative and regulatory responsibility for banking and, as a major stakeholder in RBS, they could and should stop the closures. All that is required is political will. Their unwillingness to act speaks volumes. We on the Opposition Benches will not sit idly by and allow RBS to abandon its responsibilities to local communities by closing these vital branches.
It is a pleasure to serve under your chairmanship, Mr Gapes. I, too, congratulate the hon. Member for East Lothian (Martin Whitfield) on securing a debate on a matter of the highest importance for communities across the United Kingdom. West Wales was home to some of the first banking networks, set up at the end of the 18th century to facilitate the booming trade of sheep and cattle and to allow Welsh drovers to deposit large sums of money safely on their way to and from London. Is it not therefore tragically ironic that we now face a situation where these very same rural communities, home to some of the earliest banking networks, could soon be deprived of any at all?
Nowhere, perhaps, is that precariousness more apparent than in Ceredigion. The seaside towns of Aberaeron and New Quay have lost bank branches, while the old market towns of Llandysul and Tregaron recently made headlines by becoming towns without any banks at all. The recent round of closures means larger towns in Ceredigion losing branches. It is important to note that, beyond the impact that those recent decisions will have on Cardigan and Lampeter, the consequences will be doubly felt by some of the other towns in the county. When they lost their own branches, the communities were told they could visit the branches in Cardigan and Lampeter instead. Now those branches are closing.
I do not deny that the way people bank is changing, but I argue that the way it is changing differs across the country, which needs to be reflected, as the hon. Member for East Lothian mentioned. For many in rural areas, new and alternative ways of accessing banking services are simply not possible due to a lack of broadband. As a consequence, online banking and card payments, let alone contactless payments, are a distant prospect for many.
In rural areas, the closure of a branch often requires transferring to another branch many miles away, which poses a problem for older people, those with poor mobility, and those living in rural communities where transport links are few and far between. What is more, small business owners find themselves having to close shop to travel 20 or 30-odd miles one way to the nearest branch, merely to bank their takings. It is not sustainable for many small businesses to close for an afternoon or a day just to travel to the nearest bank.
Ultimately, the best way to combat the impact of the bank closures would be to develop a publicly supported community bank network along the lines of the German community banking model. In the interim, an urgent summit of all UK retail banks should be pursued, to discuss their plans regarding the branch networks. For too long, the approach taken has been reactive, waiting for decisions and then allowing them to happen. If we continue in the same way, hon. Members should be in no doubt that our communities will be starved of essential services, announcement by devastating announcement.
We must take the initiative so that we can prevent further closures. That aim could be secured by strengthening the access to banking protocol and introducing greater requirements on banks to abide by their responsibilities to the communities that have long supported them. Arranging a summit of all the major banks would also be an opportunity for the Government to facilitate greater efforts to maintain an equivalent level of banking service in rural areas. Why, as the hon. Member for Bishop Auckland (Helen Goodman) mentioned, should we not pursue greater co-operation or perhaps even the establishment of banking hubs, where existing high street banks can co-locate rather than completely vacating rural towns?
Before Christmas, the Minister referred to action he had taken to raise awareness of the services in the post office. Why do we not pursue that avenue further, and build a proper community bank on the existing infrastructure of the post office? That would entail a significant amount of initial investment, since not every post office is currently configured to undertake such functions and staff are certainly not adequately resourced. However, increasing banking provision in local post offices could offer one way of ensuring that communities and businesses in rural areas continue to be able to access essential banking services. A lot needs to be done if that is to work, and it needs to be done urgently.
What we see here is a bank that has acted in a buccaneering way, with no impact assessment at all, no community responsibility and no thought of how it might affect communities. The community I am talking about is an island community, and one of their first thoughts was of the Cashline machine. Islanders on the island of Barra have to take a five-hour ferry to Oban and then either take a few hours’ drive to Gairloch or another ferry to Tobermory on the island of Mull to access a Cashline machine. Their next thought was, of course, going to South Uist, which would involve at best a half-day trip at a cost of about £20 or £30 return to access maybe £50 from the Cashline machine.
Luckily, on day one RBS, after telling us it had done thorough diligence and been very thoughtful, had to reverse its position after a few tweets about what it was doing on the Cashline machine—so little was the thought that RBS had put into the buccaneering, high-handed, reckless hatchet-man job. It does not care about the communities it has served for so long, and it is showing them no loyalty whatsoever. As a customer of RBS—the only bank on the island of Barra—it is absolutely sickening to find that it is turning its back and walking away, and that it does not care.
I argue that the way RBS is going about this at the moment is such that the patriotic move would be to move money out of the Royal Bank. It can drop the name “Scotland” for the way it is treating people all over rural Scotland at the moment. Whether in East Lothian, Stirling, Inveraray or even Wales, the way RBS is going about this is in no way decent, moral or nice. It is a bunch of people on corporate welfare, with £16 million in bonuses a year. Now, £16 million in bonuses a year would pay for the salaries of the staff at the branch in Castlebay, Barra, for 266 years. That is the level of greed we see from those people—it is not just greed, but cowardice and irresponsibility.
I invited Ross McEwan to come to Barra, and I got a letter from Les Matheson, which said:
“Thank you for inviting Ross McEwan and Hollie Voyce to visit the Isle of Barra. As the CEO for Personal and Business Banking I regularly visit our branches across Scotland to meet customers and staff, and I can confirm I will be visiting Castlebay in the New Year.”
He came in on a flight in the morning and went in the afternoon. How do I know? Because I happened to visit the branch with a banking issue on Friday afternoon, to be told by the staff, “Did you know you missed Les Matheson coming to Barra?” It was an act of utter cowardice. None of them have yet come to face the community at all.
Before I come to the end of my speech, I congratulate the hon. Member for East Lothian (Martin Whitfield) on securing the debate and say to him, “Very well done indeed.” I was trying to do the same myself. I hope that some of us will give thought to demonstrations outside the headquarters of the Royal Bank of Scotland if it continues in this way. My hon. Friend the Member for Argyll and Bute (Brendan O'Hara) pointed out that George Osborne, when he was Chancellor, sought consent for Stephen Hester’s appointment. I have to ask the Minister: this time, with the devastating blows that are hitting Conservative, Labour, Scottish National party, Liberal and everyone else’s constituencies, was consent sought?
I know the Minister is a principled man. He is in a new job, and such a job in the Treasury is a great test of principles. We will have to see who is in charge here. Is the bank owned by the Government, or do the bankers own the Government? Who is telling who where to jump? Who is pulling the strings? What is happening? The Government cannot play Pontius Pilate. With the Bannockburn closure, I am left to think that we will have to send the Royal Bank and its greedy corporate welfare home to think again.
It is a pleasure to serve under your leadership, Mr Gapes. I am also grateful to my hon. Friend the Member for East Lothian (Martin Whitfield).
I will say a few words in this important debate. I have shared my concerns with many colleagues, who have highlighted their grave concerns today about the proposed RBS branch closures. That is particularly important to me because three RBS branches in my constituency have been identified for closure: one in Chryston, one in Bellshill and one in Tannochside—my own bank. I wrote to Ross McEwan on 12 December on behalf of my constituents and I am still awaiting a reply. I urge other colleagues to do the same. I would also like to place on record my support for the approach taken by Unite the union, which has pledged to work not only to save jobs but to save the constituents who depend on those banks. That is an approach that I support 100%.
I know that time is brief, so I will say a few words about high streets. Communities and high streets up and down our country are at breaking point. We have seen small independent shops closing due to the rise in rates. As my hon. Friend the Member for East Lothian has noted, we have seen Royal Mail privatised and post offices up and down the United Kingdom closed, and now we have RBS doing the exact same thing in Scotland. As a member of the Communication Workers Union and someone who has travelled up and down the UK fighting post office closures, I find it an absolute disgrace that the banks are now trying to use the post office as an excuse on availability when post offices have been closed and closed. My CWU members would have loved that bankers’ bailout money—it being Scotland, I should repeat that: I did say “bankers”.
The closures are a recipe for disaster and show little respect for many of our constituents, who do not have access to a computer at home and do not have internet banking. They show little respect for the people who need a bank for their affairs, especially the small businesses I met in Chryston that are concerned about their local bank shutting. It is the only bank in town, and the local shops do not know where to go or how safe the staff will be putting money away for banks and the rest of it. For those who live in rural communities as we do, banks are so important to the high street.
After eight years of Tory austerity and the same from the SNP in Holyrood, many of my constituents are living by their pay packet, week to week. If these banks shut, all we are going to see is an improvement in ATMs, which will replace the banks. With austerity and the cuts just now, my constituents live by their money week to week. They will go to the bank and be charged £2 to lift £10. That is not on, and that is what I am fighting against for my constituents.
It has been noted that 1,000 banks have shut. That means more job losses. I am a member of the Scottish Affairs Committee, and we have invited RBS representatives down next week. I will be taking these issues forward with them. I pay tribute to my hon. Friend the Member for East Lothian and thank you, Mr Gapes, for your time.
I begin by thanking the hon. Member for East Lothian (Martin Whitfield) for securing this debate. In the clamour to get this debate, he was the first one out of the trap.
I am very pleased to take part in this debate, but I wish it was not necessary. The latest round of closures has been characterised, as we have heard today in so many words, by a lack of consultation and an arrogant disregard for the majority shareholders involved: the taxpayer and the consumer. I find myself in the most unusual position—I hope it happens many times in the future—of agreeing with the hon. Member for Stirling (Stephen Kerr). He is absolutely correct to say that these closures will have a disproportionate impact on some of the most vulnerable members of our communities.
This debate is very timely. In Scotland another 62 branch closures have been announced. Of course, RBS vowed in the distant past not to close the last bank in town, but it seems that the PR experts who came up with that for RBS have now been completely disregarded, because the bank is rather ashamed of having made that vow. There has been no consultation, and as we heard from the hon. Member for East Lothian, there has been a tick-box mentality as these banks shut up shop and turn their backs on our towns without a backward glance.
Thirteen communities in Scotland will be left without a bank at all following the recently announced closures. It is incumbent on me as the Member for North Ayrshire and Arran to point out that in my constituency, the latest round of closures brings the number of towns without a bank up to seven. The towns of Dalry, Stevenston, West Kilbride, Ardrossan and Beith no longer have a bank, and now we can add Kilbirnie and Kilwinning to that list. I honestly do not think that any constituency in the UK has been hit so hard or so cruelly. Indeed, the banks are stampeding out of Ayrshire at an alarming and staggering rate, and RBS is leading the way.
I cannot overstate the sense of anger and betrayal felt by the communities affected right across the United Kingdom, as we have heard today. This is a bank that was bailed out by the taxpayer to secure its survival. Let us not forget that its survival was under threat because of its own mismanagement and incompetence. We, the taxpayers, stepped up to save this bank, and we still own 73% of it. What we have heard today about these closures is a very bitter pill to swallow indeed.
The UK Government retain all legislative and regulatory powers in terms of financial services, so they do indeed have the authority to call a halt to this devastating round of closures. If they choose to do that, it means that banks, stakeholders and the UK and Scottish Governments can consider how best to take account of the obligation to banking customers and our communities. Whatever the banks may say, they have an obligation to our communities—they have a service obligation, a financial obligation and, I would argue, a moral obligation. Like my hon. Friend the Member for Argyll and Bute (Brendan O’Hara), I will present a petition to Parliament on this issue, to allow my constituents’ voices to be heard.
Let us be clear about what these bank closures mean. They mean that the affected communities no longer have access to day-to-day essential banking services. It means that my constituents in Kilbirnie must undertake a round trip of 18.8 miles to access their new so-called local bank, many of them relying on public transport to do so. It means RBS customers in Saltcoats are being directed to the next RBS, which is a round trip of 12.8 miles, and Kilwinning customers are being asked to undertake a round trip of 6.8 miles to visit their new local branch.
All of that is before we even get to the impact on local businesses, which increasingly lack access to night safes. If local businesses cannot bank their takings at the end of the business day, they must incur an extra insurance charge for keeping the cash overnight, with all the security implications of that. These small businesses are the backbone and lifeblood of our communities and our economy. Without a local high street bank, their very futures become more precarious as well.
Make no mistake: to leave a town with no bank is financial and social exclusion. I am really fed up of hearing that people now bank online and that branches are no longer needed. I accept, as everyone today has, that some people are changing the way they bank, and good luck to them. However, many people do not bank online, for a variety of reasons. We heard from the hon. Member for East Lothian that digital exclusion is a significant factor, but it is not the only factor. I do not bank online. I choose not to bank online, and I will not be bullied into banking online by any bank. We are being bullied and forced to bank online because we are not behaving in the way the banks would like us to.
Mobile banks, which RBS constantly brings up to placate the towns that it is abandoning, do not assuage customer concerns, because they are unreliable and not disability compliant. The Prime Minister said in the Chamber that branch closures were operational matters for the banks, but that is really not good enough as we face what can only be called a high street banking crisis. Banks have shown and are showing increasingly that they have no sense of service to our communities. It is time for the UK Government to establish and enforce a guaranteed minimum level of service provision for essential banking services that recognises the importance of continued access to banking for our local communities. I have put it to several banks, as they seek to abandon our towns, that an option they might want to look at is reducing their opening hours. The fact is that they want to shed the asset. They want to close up shop without a backward glance. They are not interested in what our towns need.
As for the UK Government arguing that these are operational decisions, there is a precedent, as my hon. Friend the Member for Argyll and Bute set out, for a publicly owned bank seeking Government consent as its majority shareholder. The previous Chancellor, George Osborne, confirmed that point during his time as Chancellor. His consent was sought by RBS over the departure of the previous CEO, Stephen Hester. That means the UK Government right now could reject any new RBS branch closures in locations where no appropriate face-to-face alternatives are in place. They should require RBS to ensure that practical and sustainable alternative banking services are put in place before any closures are signed off. Otherwise, the road we are going down will lead to the end of high street banking.
The UK Government have both the legislative and regulatory power and responsibility for banking and financial services. Given that banks are riding roughshod over communities with no sense of service or their responsibility for leaving customers high and dry, it is now time for a guaranteed minimum level of service provision for essential banking services to be put in place. I urge the Minister to listen carefully to the very real anger and sense of betrayal that these closures have given rise to, and to use all the means at his disposal to have these decisions revisited. Otherwise, every high street bank we still have will not remain for much longer.
I begin by congratulating my hon. Friend the Member for East Lothian (Martin Whitfield) on securing this debate on a topic that is clearly of such central importance to many Members. I also congratulate him on his speech, which I mean not just with the usual courtesy. I thought it was an excellent introduction and a fair assessment of the situation the UK faces, and particularly Scotland.
This debate is the first in which I face the new City Minister. I warmly welcome him to his new role. He will find the shadow Treasury team always available with reasonable suggestions for a fairer and more prosperous Britain. I look forward to spending a great deal of time with him on statutory instrument Committees over the next few years.
I often think that banks have one thing in common with those of us who are politicians—with Members of Parliament in this place. People often say that they are not keen on politicians but that they feel quite affectionate towards their local MP. Similarly, many people do not feel particularly affectionate towards the banks, but do have quite a lot of regard for their local branch. We can see in this debate the strength of feeling that changes to the high street banking presence have generated.
The British banking industry is vital to our national economic infrastructure and is a sector that we should be able to be proud of. It is clearly important because of the revenue that it generates for the Treasury. UK- domiciled banks contributed an estimated £35 billion in tax in 2017 and they also employ 1.5% of the entire UK workforce.
Well done—perfect pronunciation as well. The UK has a problem with productivity. Does the hon. Gentleman agree that this move means that people will have to spend many hours moving about the country to get to the banks, which were much closer at one time, not on their core activity? It is a destroyer of productivity. On that basis alone, the UK Government should call them to heel.
That is a very reasonable point. Hon. Members such as my hon. Friend the Member for Bishop Auckland (Helen Goodman) and the hon. Member for North Ayrshire and Arran (Patricia Gibson) have shared stories of the round trips, the incredible journeys, that people have to make because of the lack of a banking presence locally. I thought that my constituency was quite badly affected, but the stories that I have heard today show just how widespread the problem has been.
The lending that banks provide is essential to financing growth in the economy, for both individuals and small and medium-sized enterprises. Many British people who are in credit benefit from free banking and 24/7 access to their money through a variety of channels and new technologies. However—and it is a big however—the memory of the British public is not so short that they do not recall the immense damage wrought on the country in 2008 by the financial crisis, which started in the banking sector. We should not underestimate the profound impact that those events have had on public trust in both retail and business banking.
Bailing out the banks, as the Government of the time did, was, without question, the right move. I often say that it would be more accurate to describe that as the Government bailing out the public from the consequences of what the banks had done, rather than straightforwardly bailing out the banks. However, those actions, which in some cases brought establishments into public ownership, clearly reiterated that the relationship between the banks and the public should be reciprocal. The fact that taxpayers’ money was made available to banks reinforces that financial institutions are of central importance to our economy’s wellbeing.
Banking is unlike other industries, in that dealing with people’s money gives banks a unique and special responsibility. That brings with it, rightly, higher expectations about conduct, culture and putting the customer first. As a country, we have in the past 10 years legislated for a considerable increase in bank regulation, much of which, we hope, will prevent us from ever having to witness events like those of 2008 again. I recognise that in tandem with that many banks have made efforts to bring about cultural change internally, to overhaul systems and processes and to show that they take their role in the economy seriously.
However, there is clearly still so much to be done in rebuilding the relationship between the banking sector and the public. A YouGov study released in March 2017 showed that just 36% of British consumers trust banks to work in their customers’ best interests. Last year, I was at Mansion House for one of the industry body dinners, where the chief executive of one of the big banking representatives said that its research showed that just 13% of SMEs felt that they could trust their bank to do the right thing for their business. That is no good for the banks or for us as politicians and it is certainly no good for the businesses that feel that way.
Now is the time for banks to demonstrate that they have learned from the past and to recompense for past failings. This is not just about a banking presence on the high street. The historic events involving things such as RBS’s Global Restructuring Group are a case in point. Serious mistakes, errors of judgment and, we have to say, in some cases, criminal activity took place, with appalling consequences for some businesses in this country. It is not enough that the requisite cultural change has taken place to prevent such events from happening again; rather, the banks must show that every effort has been made to rectify that behaviour, show that complaints are taken seriously and, crucially, show that changes are in place to ensure that customers can never again be exploited in that way.
That underpinned Labour’s decision to table an amendment to the Finance Bill calling for a reversal of reductions in the bank levy. The cut in the bank levy is in effect a tax giveaway to the big banks and is worth £1 billion in 2018 alone. Given that that comes at the same time as the Government’s baffling decision to sell off RBS shares at a huge loss just as the bank returns to profitability and after the taxpayer has paid the fines for past behaviour—
First, I am very grateful to the hon. Gentleman for suggesting that such a promotion might be possible. It is not something we can take for granted, but I will specifically address the RBS branch closures later in my speech. I want to make the point at this stage that rightly, and for a variety of reasons, the British public are questioning the return that they have got for their investment in the banking sector.
Much of this debate has been about branch closures. I think that everyone in the debate has admitted that we are in a time when the banking sector is undergoing considerable technological change. The exciting bit of that is the potential to deploy some of the advances for the benefit of those people who have had trouble interacting with the traditional banking system. It always confounds me that this country can play host to the most successful and most global financial sector in the world, yet at the same time we have such high levels of financial exclusion. More than 1.5 million people remain entirely unbanked. In many cases, how the traditional banking system has worked has compounded the problems rather than seeking to solve them.
I want to see new technology give us new ways to address financial exclusion, rather than being used as an excuse to push more people towards the excluded position. There is no doubt that the reports that the sector itself is looking into show how low-cost, flexible and accessible services can be provided to people who are excluded. Doreming, for example, allows individuals to shop without access to a bank account. We want to work with both the banking sector and regulators to ensure that such initiatives can access a level playing field, with the right safeguards for those who use them. When I talk to people in the financial sector, they show huge enthusiasm and passion for using their expertise to make the sector world leading and to address some of these issues. However, 10 years on from the financial crisis, rather than having that moment of reflection and seeing what new opportunities we could use to tackle financial exclusion, debates such as this, about the sense that banking is being removed from more and more people, seem to dominate.
It is crucial that we use technology to benefit all consumers, rather than creating a pared down, automated banking sector that leaves vulnerable customers without the support they need or that gives us a situation akin to what we see in the energy market, where a small group of savvy consumers get quite good deals, but at the cost of a larger group of people subsidising them and getting quite a poor deal.
Specifically on branch closures, there is no doubt that the branch network has been shrinking at an accelerating rate. In December 2016, Which? reported that more than 1,000 branches of major banks had closed between January 2015 and January 2017, with nearly 500 more set to be axed in 2017. We have seen from recent announcements by the Yorkshire Building Society and, more dramatically, by RBS, which plans to close 259 branches, just how much that is accelerating. As I said, this has affected my own constituency: Mossley, Stalybridge and Hyde have all seen branch closures. But frankly, the scale of some of the stories that hon. Members have shared today has been quite shocking. I want to say clearly that we believe the scale of the closures is disproportionate and unwarranted and should be reconsidered. In 2015, the big four high street banks made profits of more than £11 billion from their retail businesses, which own and operate the high street networks.
Research conducted by the Social Market Foundation in 2016 found that a strong consumer appetite remains for a physical presence when banking. Nearly two thirds of consumers would prefer to talk to someone face to face when making a big decision, and nearly half of those who had visited a branch in the previous 12 months said that that was for reassurance and support with more complicated transactions. The report found that 11% of the population—nearly 7 million people—use no other banking service than their local high street branch and that those people are overwhelmingly older and less affluent. Another study found that lending to small businesses in the postcode area actually fell following a local branch closure—that has to be of concern.
If you bear with me, Mr Gapes, I will conclude in a moment, but I want to say specifically that Labour’s answer to this problem is to propose a change in the law regulating banks, so that no closure can take place without appropriate local consultation—not a tick-box exercise—and without Financial Conduct Authority approval. A future Labour Government would obligate banks to undertake a consultation with all customers and to ensure they involve representatives of the relevant local council. The branch would be mandated to publish details of the reason for closure and include the relevant financial calculations showing the revenues and costs of each branch affected. The share of central costs such as accounting systems, IT, cyber-security and personnel allocated would have to be separately identified, especially as many of these costs are relatively fixed and are not proportionate to the number of branches in the network.
I thought the suggestion from my hon. Friend the Member for Bishop Auckland is absolutely the right one and I have considered it for some time, that is, how, when branches leave the high street, the sector can come together to provide a joint solution. Those of us who use online banking recognise that there will parts of our lives in the future when we might no longer be able to do that—whether because of dementia or Alzheimer’s—and we need a solution.
In conclusion, Britain has a world-leading and robust banking system, but the banks must work with all of us, as policy makers, to tackle problems such as the lack of investment in this country and financial exclusion, and crucially to make sure that we move away from a country mired in personal debt to one with robust savings. Only when they are able to do that and show that their branch networks are part of that, will they be able to restore some of the faith that was lost in the sector 10 years ago.
It is a pleasure to serve under your chairmanship, Mr Gapes. I thank the hon. Member for East Lothian (Martin Whitfield) and my hon. Friend the Member for Stirling (Stephen Kerr) for securing this debate. I recognise the 10 passionate speeches we have had from the Back Benches and acknowledge the Backbench Business Committee for allowing the debate. I am glad that we can discuss such an important topic as I represent the Government for the first time as Economic Secretary to the Treasury.
It is clear—we all agree—that banks play an important role in our communities and that their services make a valuable everyday difference to millions of individuals, consumers and businesses. I will try to respond to some of the points made and set out some of the areas where I think there are some positives, before I conclude.
Banks exist to help us achieve our goals in life: a rung on the housing ladder, starting a new business, paying in that first pay cheque or saving for that first family holiday. We have heard a lot about the closure of physical branches and I feel that frustration, which has been expressed in my own constituency mailbag this week with the closure of Lloyds bank in Wilton, just outside Salisbury.
I acknowledge the frustration that so many hon. Members have expressed and that their constituents have passed on to them. It is frustrating and disappointing. The closures represent inconvenience and interruption in the pattern of local daily life. It also feels like a greater challenge in a community’s identity—a point made by a number of colleagues this afternoon—particularly in areas where local amenities are limited. That can sometimes be part of a wider changing profile for the high streets and there are a number of challenges that need to be overcome.
I understand hon. Members’ concerns about the announcement that RBS and other banks have made in recent months, and it is right and natural for those who represent the community to ask why those closures must take place. However, I need to be clear at the outset, before I can look at some of the mitigating measures, that these are, despite what we might hope, commercial decisions for each bank to take without Government intervention.
I will come in a moment to express where the intervention can take place and where that responsibility lies, but first I want to refer to some of the cases made in the debate.
The hon. Member for East Lothian referred to a bank branch closure where the nearest branch is 12 miles away, but there is a Lloyds bank within walking distance. I also want to refer to the point—[Interruption.] It is important that I try to respond to some of the points made, so let me progress. He and another hon. Member made the point about cash deposits at post offices. All post offices can take cash deposits up to £2,000, which covers 95% of transactions, but arrangements can be made by a bank with a post office should customers wish regularly to deposit more.
My hon. Friend the Member for Ochil and South Perthshire (Luke Graham) intervened and talked about the branch in Alloa. There is a Yorkshire Building Society bank within walking distance. In Kinross, there is a TSB within walking distance. I would encourage constituents to vote with their feet. I may be destroying shareholder value in RBS and therefore the Government, but we should make clear where there are alternatives, because they do exist. The hon. Member for Argyll and Bute (Brendan O'Hara) referred to closures in his constituency—I think it was Campbeltown. There is a Halifax branch within walking distance. In Rothesay, there is a TSB within walking distance—[Interruption.] I can concede—I am not going to give way, I have very limited time.
Thank you, Mr Gapes. If I am going to get through and give some detail, I need to press on. The point I am making is that, in a number of cases, alternatives are available. I want to make that clear—it needs to be made clear by us to our constituents.
The hon. Member for Bishop Auckland (Helen Goodman) and another hon. Member made a constructive suggestion about shared premises. That is obviously a decision for individual banks to consider, but through the office that I hold I would encourage the industry to think creatively about how banks can continue to serve their customers and minimise the impact of bank closures. Those are certainly conversations that I will take forward in my engagement with the industry.
Let me get back to the script, as it were, and try to make some progress so that I can address some of the issues that have been raised.
I will not, if the hon. Gentleman does not mind. I realise that his constituency is perhaps unique in the United Kingdom, and I acknowledge that those alternatives are not going to be available in every circumstance, but that was not my purpose in making that point. What I am trying to say is that there are alternatives and we should be talking about them.
The responsibility of banks is to consider the impact of closures on a community and to mitigate that wherever possible, but as we have heard today, and as the title of the debate suggests, banks are much more than just bricks and mortar. Their contribution to our economies and communities does and should go much wider: providing basic bank accounts to those who need them; providing the mortgages that help young people to get their first step on the housing ladder; and offering financial education.
I will now set out some of the ways in which banks are developing and evolving. Like all businesses, they must adapt to changing customer behaviour. The industry estimates that branch visits have fallen by roughly a third since 2011, just seven years ago. Three times out of five, when customers need to make a payment or otherwise interact with their current account, they use a mobile to do it. It is easier and quicker than it has ever been before to manage our money in that way. We are much less likely to use a physical branch on a regular basis, and that has driven some of these decisions. The banks’ branch networks are changing to reflect that, and I suspect that trend will continue.
Earlier this year, we saw the implementation of open banking, a new initiative that will transform how we are able to manage our finances, unlocking new opportunities for businesses and consumers. Good-quality broadband is important to ensure that these innovations do not leave anyone behind. That is why the Government are taking action to support access to these new digital services. The new universal service obligation on high-speed broadband will give everyone in the UK access to speeds of at least 10 megabits per second by 2020, which should play a big role in enabling some more of these services.
We are supporting customers who still need or want to bank in person. The Government support the industry’s access to banking standard, which commits to providing a minimum of three months’ notice. Some banks are giving longer periods—I believe that RBS was giving six months’ notice of closures in December. I note the observations of some Members on the inadequacy of that process, to which the banks will need to respond, but there is a practical way that we can shape the banks’ approach in a local area. The access to banking standard is overseen by the independent Lending Standards Board. It will monitor how banks, including RBS, fulfil their obligations to their customers under the standard, and it is responsible for enforcement.
The Government have supported improved face-to-face banking services at the post office, which is a critical element. The post office network is in good health, and the number of branches grew significantly in 2017 for the second year running. As a courtesy, I need to make way for the hon. Member for East Lothian to respond to the debate.
Motion lapsed, and sitting adjourned without Question put (Standing Order No. 10(14)).