I beg to move,
That this House has considered the effect of Santander branch closures on local communities.
It is a pleasure to see you in the Chair, Mr Davies. I thank the Backbench Business Committee for providing time for the debate and express my sincere gratitude to the hon. Members for North Tyneside (Mary Glindon), for Angus (Kirstene Hair) and for Barrow and Furness (John Woodcock) and to my hon. Friend the Member for Central Ayrshire (Dr Whitford), who all joined me as co-sponsors of the application. Like many other hon. Members, they face the closure of Santander branches in their constituencies. It is a testament to the widespread anger in the House that we have come together on a cross-party basis to campaign against those closures.
I thank my hon. Friend for giving way so early in his speech, and I am delighted that he has secured the debate. He mentioned the anger, and I want to emphasise that the anger in my constituency has been exponentially increased. When Santander closed its Linlithgow branch last year, it encouraged customers to move to Bathgate—the very branch it is closing this year. That is farcical, and a true betrayal of elderly pensioners, who are less likely to use online banking.
Absolutely. My hon. Friend makes a powerful point. Many of us share the concern that the present round of closures may not be the last, and he makes the point eloquently.
I acknowledge the fact that senior Santander staff have joined us in the Public Gallery today, and I hope they will take to heart the serious concerns we express on our constituents’ behalf. I should also declare an interest because not only is the Parkhead branch in my constituency earmarked for closure, but I am a Santander customer and it is my local branch.
I am sure there will be some interventions, and I shall be happy to accommodate them to allow colleagues to put their concerns on record. My speech covers four main areas. First, I am concerned for the almost 1,300 Santander staff whose branches are due to be closed, and who face a deeply uncertain future. Secondly, I shall consider the local impact the proposals will have in the east end of Glasgow, where the branch at Parkhead Forge is due to close. Thirdly, I shall address some of the issues about reliance on the post office network. Fourthly, I shall focus on access to cash. Finally, I shall seek support from the Minister in making direct representations to the bank.
As I mentioned, when the closures were announced, my immediate concern was for the almost 1,300 Santander staff in the 140 branches in these islands. I know from speaking to staff at the branch at Parkhead Forge that the announcement on 23 January came as something of a bolt from the blue. When I met Santander executives the following week, I was disappointed to learn that although about a third of the staff may be redeployed, a deeply uncertain future remains for the other two thirds. Given that there are almost 6,000 fewer bank branches and building societies in the UK compared with 2010, those staff cannot exactly just move their skills to another local bank. That is obviously a key problem. Other banks have abandoned high streets and shopping centres, closing thousands of branches and abandoning the customers who stood by them during the financial crash. Abandonment is exactly what Santander proposes in the east end of Glasgow.
Unashamedly, as a constituency MP, I want to use some of my time today to make the case for keeping the Parkhead Forge branch open. I cannot fathom why it was selected for closure, given the widely known demographic issues in the east end of Glasgow. When I met Santander senior staff, I made the point that the Parkhead branch, situated in the busy Forge shopping centre, appears to have a heavy footfall, with customers like me often having to queue before seeing a teller. Frustratingly, I have still not received the transaction and footfall data I asked for from the bank, which makes me question whether Santander has looked at it at all. Surely if the branch were not being used enough, Santander would be content to demonstrate that by releasing the data.
In its initial impact assessment, and somewhat to my surprise, Santander suggests that east end customers should go to their next nearest branch, Rutherglen, which is not actually in Glasgow. The journey could perhaps be done by train. Of course, if Santander had bothered to do more than a mere desktop exercise, it would have realised that Parkhead does not have a train station and that the journey would take well over an hour and mean travelling through Partick, in Glasgow’s west end, which is simply ludicrous.
The hon. Gentleman makes a good point about the insensitivity of the one-size-fits-all letter that everyone was sent. We are losing two branches in my seat—not only in Acton High Street, which recently lost NatWest and HSBC, but in west Ealing, where we have lost Halifax and Lloyds. Our streets are being turned into ghost towns. The recommendation in Acton was to go to the post office. That has closed too. Where are people meant to go?
Absolutely. The hon. Lady makes a powerful point. I intend to come on to the recommendation that people go to the post office, because the argument is weak and does not stand up to scrutiny. She is right to point out the mass exodus of banks from high streets. Banks are a major part of the local economy, and it does not do them any good if they abandon the high street.
The closure of the branch in Helensburgh in my constituency means that the nearest Santander branch will be 25 miles away in the west end of Glasgow. I have serious concerns about the so-called impact assessment, which has been carried out only after the announcement. Does my hon. Friend share my fear that it will be little more than an exercise in justifying a decision that has already been made?
Absolutely. My hon. Friend does a power of work in his capacity as chair of the all-party group on rural poverty. He speaks powerfully about the impact the closure will have in his rural constituency. In my constituency, customers are not quite being asked to go 25 miles, but the point is well made, and I hope the Minister has taken it on board.
As I outlined in my Adjournment debate on this very subject last week, the impact on rural Lanark will be devastating for the local economy and the high street. Does my hon. Friend agree that banks should do more to consider the economic impact?
Absolutely. That is one reason why I am delighted to see the hon. Member for Ceredigion (Ben Lake) here for the debate. His private Member’s Bill looks specifically at the impact of such closures, particularly on rural communities. My hon. Friend’s point is well made.
The hon. Gentleman is being extraordinarily generous in taking interventions. Does he agree that if local impact assessments are done, they are ignored, and not just by Santander? Banks want to force people into online banking, and the real threat of that is that they will move towards allowing algorithms, not human beings, to take decisions. It is not just the high street that goes, but the personal interaction and the ability to appeal to a human being if things go wrong.
Absolutely. That fits nicely with the next point I want to make, which is about impact assessments. The bank concedes that only half of the customers who use the Parkhead branch use online, mobile or telephone banking services. The data concerning digital exclusion in the east end is widely available, so it beggars belief that Santander has overlooked it and still plans to pull down the shutters on a branch that serves some of the most vulnerable and isolated people in the country.
I want to turn now to the issue of reliance on the post office network to deliver banking services. Having asked the Minister about it during Treasury questions a couple of weeks ago, I can almost anticipate his response: that Santander customers can just do their banking at the post office. I think my hon. Friend the Member for Lanark and Hamilton East (Angela Crawley) felt frustration about that during her Adjournment debate last week.
I have a background in the Post Office. All we see is closure after closure, and now that WHSmith—the worst retailer on the high street—is taking the contract, it could also close post offices. The excuse given by the banks—that if they close down, people can use the post office—needs to be looked at seriously.
My hon. Friend is making a great speech. The branch on Renfrew High Street in my constituency is also earmarked for closure, and Santander suggested that customers use the post office network or the branch in Paisley. However, as many people will know, given the representations we have made, the fees the banking industry and Post Office Ltd pay postmasters to carry out this function are ridiculously low and unsustainable. The contracts are currently being renegotiated with the banks. Does my hon. Friend agree that the banks need to step up to the mark and pay post offices fairly for carrying out their banking functions?
That is an excellent point, and one I intend to come on to later. My hon. Friend has been a doughty campaigner on this issue, not only in terms of post offices, but in fighting a good campaign against the Royal Bank of Scotland closures in Renfrew, and we should pay tribute to that.
My hon. Friend is being incredibly generous in giving way. Before we move on from the role of the Post Office, I would like to share some information I received this morning. In a letter to me on 24 January, Santander assured me that it was working closely with post offices near closing branches to keep them informed and supported. This morning, the Post Office wrote to me saying that, due to commercial sensitivities, Santander does not share customer numbers with it, and therefore that it
“is exceptionally difficult to model the impact…on any given branch without having information on numbers and amount of cash withdrawals”.
Does my hon. Friend share my concerns about the veracity of an impact assessment that encourages customers to use the Post Office’s services, when Santander does not even share basic information with it?
Herein lies the issue that hon. Members on both sides of the House want to raise today. The Government’s line so far has been, “Oh, well, it’s fine—we’ll just shunt this issue on to the Post Office.” I am grateful that a number of hon. Members are homing in on the question of the Post Office, because that is the key weakness in Santander’s argument. First, there is a capacity issue because, given the rate at which banks are closing, we are expecting post offices to adapt to a significantly higher number of counter transactions within the same constraints as previously.
I am sorry to interrupt the hon. Gentleman yet again. I completely understand why the focus of this debate is on Santander, but from the point of view of the Government’s response, is Santander not taking the hit for a whole range of other brands that have been gradually leaving the high street over the past few years? Santander is almost the last man standing, so it is getting more adverse attention than it perhaps deserves. The blame the hon. Gentleman rightly attributes should be spread across all major banking brands and not just attached to this one.
The hon. Gentleman is right that other banks have been complicit in abandoning our local communities. I do not know whether he is due to lose a branch in his constituency, but the vast majority of hon. Members here are. As constituency MPs we have the right to come here to challenge not only the UK Government but Santander, which is planning to abandon our communities. I think we are spot on to be tackling Santander.
I thank the hon. Gentleman for being so generous in giving way. On the point he made about abandoning communities, there are two former bank branches currently lying empty in my constituency, and there is about to be a third. Does he not think that banks leaving high streets owe it to their customers to invest in the community again in some form, whether by helping to get a new tenant into the closed branches or by providing some other investment in return for the loyalty they have been shown?
I am grateful to another constituency neighbour for making a powerful point. It is great that the hon. Gentleman is here, because, with the planned closure of the Santander branch in my constituency, people have been moved to the one in his. The point that my hon. Friend the Member for Linlithgow and East Falkirk (Martyn Day) made was that, even if certain branches—such as the one in the hon. Gentleman’s constituency—have been saved this time, that does not mean they will not be at risk in future, so I am glad he is here to make his point.
My hon. Friend has been an absolute champion for his constituency in this campaign. Does he agree that post offices simply cannot provide the same level of service as a bank branch, and that it is insufficient for the Government to use post offices as some sort of response? If it is not Santander, it is every other bank abandoning the high street, and post offices simply cannot provide the same service.
That is spot on, because there is a question of sustainability for postmasters. We know that a huge number of previous Crown post offices have been transitioned to franchise partners, and we are seeing evidence that those partners may no longer find the offering attractive. Interestingly, Martin Kearsley, the banking director of Post Office Ltd, gave evidence to the Treasury Committee. When questioned on whether the Post Office makes a profit by offering basic banking services on behalf of providers, he answered:
“It does not currently. We are in discussions with the banks to change that position…What we do is charge the banks for the provision of the network and the transactions their customers do with us. We then share that model with our postmasters.”
We know that profitability is an issue for postmasters, but it is not the only one. When questioned about the fairness of postmasters having to offer banking services, Mr Kearsley said:
“we have seen a huge increase in the amount of cash coming into our branches. That is challenging, we recognise that and we are working hard to address it. That means postmasters spend a lot of time counting cash. We have provided new equipment to try to help. We have modernised and streamlined the processes, so that that can be done more effectively and rapidly, but we recognise that that is a challenge for them right now and we continue to innovate to fix those problems.”
The question is how on earth we can reasonably expect the post office network to pick up the slack from banks that have abandoned their customers, when the current model is demonstrably not sustainable.
That leads on to the question of the level of service provided. Although many everyday banking transactions can be completed at post offices, there are restrictions on what can and cannot be done. There are limits on deposits and withdrawals, for example. Currently, only 5% of consumers withdraw cash, and 2% deposit cash, primarily at a post office, and there is anecdotal evidence from Citizens Advice to suggest that level of service may be a major factor in that.
The lack of regulation is also concerning. While banks are regulated by the Financial Conduct Authority, the Post Office is not. Banking customers are not necessarily Post Office customers, so the same duty of care simply does not exist. Let us face it: franchise holders are in this to make a living, and banking is not profitable for them. When staffing and training costs are factored in, banking can be loss-making for post offices. All things considered, while I am sure that some postmasters will go above and beyond, they are certainly not compelled or incentivised to do so.
When all is considered, it is little surprise, then, that post offices suddenly close. There are 35 fewer permanent post offices in Scotland today than there were in 2011. On top of that, communities continue to be plagued by temporary closures. In my own constituency, Tollcross post office closed in December 2017. Although the Post Office calls it a temporary closure, in reality it has still not found someone willing to take the service on, 14 months later. That is just one community suddenly left without service.
In the neighbouring constituency of Rutherglen and Hamilton West, I gather that the post office in Rutherglen closed suddenly without explanation last June, leaving thousands of people without service in what is a highly populated area with a busy high street. In the Glasgow North West constituency, the Dumbarton Road post office closed suddenly in November last year, with local residents left in the lurch ever since. When these offices shut, there is no replacement service. The Post Office does not offer a mobile service in the interim. There is no universal service obligation in place to ensure that an alternative service is offered on a temporary basis while the problem is fixed. In reality, communities are simply left without.
I congratulate the hon. Gentleman on securing this important debate. He makes the good point that when branches close, there are often no alternative sources for people to access cash and banking services. My hon. Friend the Member for Carmarthen East and Dinefwr (Jonathan Edwards) fully supports the hon. Gentleman’s endeavours, but unfortunately he is engaged in the debate in the main Chamber. My hon. Friend has seen, just as I have in Ceredigion, that when branches close, the post office network is often simply not there, and communities are left in the lurch.
I know the hon. Gentleman has had experience of banks fleeing his constituency, where the local economy was already quite fragile, so he is right to put that on record. It is great to hear that input from him and from his colleague the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), because Wales is also seeing this happen.
While banks will point to the post office as a convenient replacement when they bail on communities, post offices certainly cannot be relied on to bail out the banks. I understand that banks need to look at economic viability when deciding whether to keep branches open, but they cannot fully replace a critical service with something that does not provide the same level of service and that cannot guarantee that it will even be able to keep its own doors open.
My hon. Friend is making a powerful case, and he is right to point out the lazy assumption that the post office will always be there to pick up the slack. I know for a fact that that is not true: in my constituency, in the village of Tighnabruaich, the post office ran out of money, and pensioners could not pick up their pensions last month. The postmistress did everything she possibly could to mitigate the circumstances, but while they were unusual, they were not unique, and they will be repeated time and again if we allow banks to assume that post offices will be there at all times to pick up the slack.
Absolutely. Such is my friendship with my hon. Friend that we share a psychic bond. He probably knows that I will come on to speak about access to cash.
The Access to Cash Review’s interim report from a couple of months ago makes quite stark reading. Despite more and more services becoming cashless, approximately 8 million people—around 17% of the UK population—say that cash is an economic necessity for them. However, that 17% is not evenly spread. Scotland is much more open to economic damage from the transition to a cashless society than other parts of the UK. The statistics show that cash use in London declined by around 8.5% in the 2017-18 financial year, compared with only 3.3% in Scotland. Scotland is still much more reliant on cash, and it is therefore vital that we are not pushed to become cashless at the same pace as other parts of the UK. Quite frankly, that cannot and should not be forced on people, particularly some of our older, disabled or more vulnerable people.
That is a powerful point. I suspect that if we broke those figures down, we would see a different situation in Kensington and Chelsea from that in Hornsey and Wood Green. That point was well made.
Research published this week by the consumer champion Which? found that 339 Scottish bank branches have closed their doors since 2015. However, we need to remember that this is not only about branches closing. When banks leave, they all too often take cash machines with them, and at this stage I pay tribute to the hon. Member for Rutherglen and Hamilton West (Ged Killen), who I know has done a lot of work on the situation around ATMs.
The rate of loss of cash machines across the UK should alarm us all, with LINK reporting that the UK lost more than 2,500 free-to-use cash machines last year. Financial exclusion is soaring and is fuelled by the transition from cash, hitting certain sections of society harder than others. For example, I regularly make home visits to constituents with physical disabilities, who tell me they rely on taxis for their freedom. I do not know what it is like elsewhere in the UK, but few taxi companies in Glasgow accept card payments. I also still encounter many constituents who have had a struggle even to open a bank account in the first place, so we really cannot assume that everyone has a debit card. Some of these people will quite simply lose quite a big element of their freedom if they lose easy access to their cash. Others might even be driven to high-interest credit cards or pre-pay debit cards that charge people a fee simply for accessing their own money.
Mental health is also all too often overlooked. The Money and Mental Health Policy Institute report “Seeing through the fog” contains startling testimonies from people with mental health problems. One says:
“I find doing things face to face much easier and better for me. I hate doing things over the phone and can get quite anxious when doing so…I don’t trust online banking and will avoid this for as long as I can.”
“I can’t handle the internet, I need human contact.”
Another respondent says:
“I need to see a person. I can’t cope with all this online banking stuff.”
It is little wonder that the institute’s evidence to the ongoing Treasury Committee inquiry into access to financial services concluded:
“Bank branch closures may particularly disadvantage people with mental health problems who struggle with remote methods of communication and rely on face-to-face support from firms to manage their finances.”
We cannot ignore people like this as society moves away from cash, and we certainly cannot treat them as collateral damage in the march of progress.
We have heard time and again that the UK is sleepwalking into becoming a cashless society, but that is no longer the case, because the evidence is there. We are here to discuss the issue today, and Ministers should listen and react, because we cannot afford to sleepwalk.
The closure in my community of one high street bank, and the removal of its cash machine, had a profound effect on the profitability of other businesses within just a couple of hundred metres, which rely on cash circulating. They noticed within a day the negative impact of that development.
The hon. Gentleman is spot on and really hits the nail on the head. That point was made to me by the Federation of Small Businesses. The reality is that someone going out to buy a couple of rolls and a newspaper will probably not want to tap their debit card to pay; they will want to use cash. If millions of people are left behind in the move away from cash, I am afraid that the blame will lie squarely at the feet of the Government.
That brings me to my final point, which is a direct appeal to the Minister. I do not think that the Government and Ministers can sit back and say that this is a commercial decision for the bank. Put simply, allowing banks to bail on our communities has a detrimental impact on the economy, which should concern the Government. When the Minister gets to his feet later, I want him to address some of the fundamental concerns I have raised, and which others will doubtless also raise, about how these planned closures will have such a detrimental impact on our economy.
The hon. Gentleman talks about internet transactions and shrivelling high streets. Does he agree that another solution for the Government is to look at business rate reform? The transitional phasing system means that places like Stockport subsidise the City. Businesses tell me that re-evaluations should be more frequent than every five years. In fact, a consortium of 40 retailers, including WHSmith, which has been mentioned, and River Island, whose head office is in Hanger Lane in my seat, is campaigning for that reform. Does he agree that it would be a good idea for the Minister to meet those 40 retailers?
Absolutely. As a Scottish National party politician, I am more than happy to talk about business rates, given that my party has lifted 100,000 small businesses in Scotland out of paying them. If the hon. Lady wants a debate on that, I am happy to talk about it.
Finally, my parting message goes to Santander itself. If it proceeds with these closures, Santander customers like myself will be forced to consider abandoning it. The message from all of us in this Chamber, I am sure, is crystal clear: save our Santander.
It is a pleasure to serve under your chairmanship, Mr Davies. I congratulate the hon. Member for Glasgow East (David Linden) on securing this important debate; we can see from the number of Members present the powerful cross-party consensus on the impact of bank branch closures on our local communities.
The most recent closures in my constituency and across the UK continue a worrying trend of declining public services. In Angus, 2015 saw the closure of the Royal Bank of Scotland in Brechin, 2016 saw the Edzell Bank of Scotland branch close and in 2017 it was TSB in Kirriemuir. In 2018, RBS in Montrose and the Bank of Scotland in Kirriemuir closed, and it has now been announced that there will be two further Santander closures by the end of the year.
From 2015 to 2019, my local authority saw a total of 12 bank branches close. Looking at the wider picture, from 2010 to 2018 the country as a whole saw a 35% decline in bank branches, but Scotland was above that national average, at 38%. Angus now has one Santander branch in the constituency catering for a population of 100,000 people, although obviously not all of them are its customers.
I was disappointed, as the local Member, to hear about the closures in my constituency through a local news outlet, as opposed to from the Santander public affairs team; I believe Members of the Scottish Parliament heard through that route. I got a letter through a few days afterwards. I have not been given the opportunity to meet Santander until a few weeks from now. I am very disappointed by the way in which it has treated this serious issue.
The closures have an important impact on communities across the UK, with rural communities affected slightly differently. Both customers and staff find themselves in incredibly difficult situations, as the hon. Member for Glasgow East pointed out. Of course, the solution to all this is digitisation, but that does not help everyone. I was quite surprised when I went to bank a cheque in my local branch the other day and was told that I did not need to do that in the branch because it can be done via phone. Even at 29, I was surprised by the level of technology that some banks have pushed forward. However, those options are not available to all.
People in rural communities increasingly feel that they are being penalised because of where they choose to stay, whether by bank closures or through other services being taken away from them. These bank branches are in the heart of communities and they cannot simply be replaced by the cited alternatives.
Let us look at the digitisation offering. In an area such as Angus, there is not fantastic mobile coverage or broadband across the whole constituency. In fact, my constituency was ranked 612 out of the 650 constituencies in the UK—one of the worst—for the roll-out of superfast broadband. People simply do not have access to it, so although yes, more people are using the internet for their personal needs—the figure went up from 63% to 83% between 2007 and 2016—that provision is not available to all. As much as banks are keen to highlight the digital offering, they have to recognise that that cannot be used by everyone. We also have problems with mobile coverage. I know that it can be suggested that people phone the bank on a landline to raise their issues, but between 2012 and 2017 landline minutes declined by about 50% because people are using their mobiles. But in Angus, we still have many notspots, where people simply cannot get through.
The other alternative that hon. Members have mentioned is the use of post offices. As much as I welcome Santander’s provision to help the more vulnerable to understand how they can access post office services, Santander will not be able to do that with them every day. There are post offices in the towns where my closures are, in Brechin and Forfar, and I have been assured that they will be able to deal with all Santander customers wanting to deposit and withdraw cash, to pay in cheques and to check bank balances, but what if they need to print a statement or transfer money to another person’s account? What if they have questions about their mortgage? Those are all issues that people need to deal with day to day. Santander needs to look into those specific issues and how it would expect people without connectivity and without a post office nearby to be able to carry out those tasks.
The hon. Lady makes a powerful point about the things that people need to do in a bank branch. I recently met Bank of Scotland representatives in my constituency and they spoke at great length about how wonderful the banking protocol was and how they had used it to stop transactions by vulnerable customers who had been sent along there by rogue salesmen or whoever to lift money out of the bank. They were able to spot that because they knew the customers; they had a relationship with them. Shortly thereafter, the Bank of Scotland announced that it was closing a branch nearby. How can the provisions of the banking protocol possibly be being met if everything is done online?
The hon. Gentleman makes a vital point. Many people want face-to-face interaction. For some people, the person they speak to when they go to the bank might be the only person they speak to all day, so it helps with combating loneliness, which we all know is so important. The hon. Gentleman makes the very valuable point that these staff get to know people; they create a relationship with their customers and look out for them on a personal basis.
As for the Post Office offering, one in three rural post offices closed between 2000 and 2009, and that decline has continued. We have to understand that post offices cannot always and will not always be able to accommodate all those who want to use them. It just seems to me that this is such a short-term approach, because if we have no post offices, if we have poor broadband and if we do not have mobile coverage, the digitisation method and post offices do not support all customers but support only a proportion of them. It is really important that Santander tries to explain to customers who do not have those points of access how it will still be a banking provider that those customers would want to deal with.
Protecting our high streets is also incredibly important. My high streets across Angus and in constituencies across the country are struggling very much. Post offices and banks are central to our high streets. They ensure that we have continued footfall day after day. When these sites are lost, the potential for these areas is hampered. Let us take the town of Kirriemuir in my constituency as an example. Kirriemuir was nominated in the Great British High Street Awards 2018; in my eyes, it was robbed, because it did not win. The area has a fantastic variety of high-quality local businesses that support numerous initiatives, for local residents and benefit the community. I am thinking of the efforts of the Kirriemuir and Local Business Association and Kirrie Connections. That is a high street shop, but in fact it is a dementia hub, which I visited only last week. People go there to spend time with those who are going through similar experiences to them.
I had the pleasure of being there when the judges were in Kirriemuir and looking round the town, which has so much pride in its offering. But now, it has lost its last bank. It will lose its ATMs. Businesses are forced to react because, as hon. Members have said, where will customers get their cash? Will investors be put off from coming to the town? Where will local businesses deposit their takings? When I was going round as part of small business Saturday, businesses raised with me time and again the fact that there are more card transactions because less cash is available and the fee on those card transactions is absolutely hammering them at a time when things are very difficult on our high streets. In addition, what of those constituents who want to use only cash? I understand that elderly people do not want a bank card or credit card; they want to pay only with cash. Why should we suggest that they should not be able to do so, if a bank and ATM are removed?
At a time when we should be doing everything for our high streets, we should be encouraging more footfall and not increasing the pressures, difficulties and uncertainty. One suggestion has been put forward time and again by my constituents: why cannot banks operate out of one building? Why can we not have a banking hub whereby all banks are located in one building? That means we keep a set of premises going, we keep choice for constituents and they do not have to travel as far as they might have to if a bank closed down.
The hon. Lady makes a very important point about banking hubs. Mine is just a point of information. It is ironic that some co-located branches used to exist in my constituency in the 1970s; two or three different banks would share the same location. Perhaps it could be a case of back to the future.
I thank the hon. Gentleman for his intervention, which shows that banking hubs would work. They would work in many communities. They would keep that vital place on the high street. They would keep choice and keep accessibility. Those who cannot log on online or do not want to could of course come and have a face-to-face discussion with someone in the bank. That is a really important point that we should be putting across, and I would be keen to know what my hon. Friend the Minister thinks of that proposal.
My final point is about transport, which I know other hon. Members have already discussed. Those who do not want to or cannot use phones or computers to do their banking will of course need to travel to the nearest bank branch, but customers who were using the Brechin branch will now have to travel 15 miles—it is a 30-mile round trip—to Arbroath, and those in Forfar will have to make a similar journey to get to Dundee. What about those with mobility issues? What about the elderly? What about those who do not have their own car? What about those who rely heavily on public transport links, which are also in decline? Those people have to rely more heavily on family and friends. Indeed, vulnerable groups perhaps have no choice but not getting to the bank.
It is really important that we look into all the aspects that affect our constituents. An elderly lady who came into my constituency office the other day remarked that the whole situation was crazy. I agree with her: it is far from desirable. Although I have been in this place for just over 18 months, I have always felt that the most powerful debates here are those in which we have cross-party consensus. I look forward to the Minister’s reaction on the impact that these closures will have on our high streets, on post office support—because we also see post offices in decline—and on the idea of banking hubs. We all need to work together to ensure that we soften the blow of bank closures for each and every one of our communities.
It is a pleasure to serve under your chairmanship, Mr Davies. I thank the Backbench Business Committee and the hon. Member for Glasgow East (David Linden) for securing this important and very relevant debate.
In my constituency of Heywood and Middleton, we have sadly been through all this before. The Heywood branch of Santander was closed in 2017 in a similar exercise to the one that we are seeing now, although at that time customers of the Heywood branch at least had the option of using the Middleton branch, and they were told that during the consultation. Now, it seems that that option is also about to go, leaving my constituency with no Santander branches whatever.
I look at Heywood town centre now and I can see how bank branch closures contribute to the decline of our town centres. In Heywood, NatWest closed its doors in 2015, Santander in 2017 and Lloyds Bank just recently, in January this year. The town centre is in decline, with many shops and small businesses closing. I am not laying the blame for that solely at the doors of Santander—obviously there are many other contributory factors—but I do think that the big banks need to acknowledge their community responsibilities. When they close a branch, they cut footfall, reduce access for elderly and disabled customers, and cause problems for small businesses in the area. Each branch closure chips away at our once thriving town centres.
In my constituency, the Rochdale Development Agency is currently making plans for Heywood town centre, deciding whether it should be residential, retail, or a mix, and it is in the council’s capital programme for the next financial year. It is vital that we regenerate our town centre and I hope that we can achieve this. I do not want the same thing to happen in Middleton, but the closure in July this year of the Middleton branch of Santander has been announced.
The announcement was accompanied by helpful advice on nearby branches, all of them more than a three-mile bus ride away, plus the information that banking could be done at Middleton post office. The powers that be at Santander seem oblivious to the fact that Middleton post office, in its turn, is being franchised into WHSmith in the town, with an expected reduction in service, as well as problems with accessibility for elderly and disabled customers. One of my constituents, Karen Dicken, tells me that once the post office has moved, she will no longer have access to post office services, as she cannot get her mobility scooter into WHSmith. Yet Santander appears to think that offering banking services via a Crown post office that is soon to be relocated is adequate. Clearly there are failings here on the Government side, as highlighted by their refusal to perform an equality impact assessment on the franchising of the Crown post office, but I find it staggering that Santander is so blithely unaware of what else is going on in Middleton town centre that it honestly thinks that offering post office banking services in the town is a viable proposition.
Santander UK is a member of the British Bankers’ Association and is a signatory to the access to banking protocol, which was introduced in May 2015. The protocol states that it is
“an industry-wide initiative, which aims to ensure that where banks close branches they do so responsibly and with consideration of the impact on customers and local communities.”
“we do not take the decision to close any branch lightly”,
yet it seems to me that this decision has been taken lightly, judging by the lack of attention to local issues, such as the impending closure and relocation of the Crown post office in my constituency.
I urge Santander to think again. I also urge my constituents to respond to the consultation. When the Heywood branch closure was announced, only six letters were submitted from constituents, with one more letter submitted from me. However, I have had a complaint from a constituent, who said that she has responded to the consultation and has simply been sent a repeat of what was already stated in the initial letter. She thinks it is a fait accompli. She says that she will move her account to a bank that does have a branch in the town.
Notwithstanding that, I urge all my Middleton constituents who want their town centre to continue to thrive to get their comments in now. I have also launched a petition to save Middleton’s Crown post office from back-door privatisation, which has attracted over 1,000 signatures, and I will present it to Parliament in due course. I do not want to be here in another two years’ time talking about the decline in Middleton town centre, and I urge Santander to fulfil its responsibilities under the access to banking protocol.
It is a pleasure to serve under your chairmanship, Mr Davies. I add my thanks to the hon. Member for Glasgow East (David Linden) and congratulate him on securing this debate. I am delighted to support him. As my hon. Friend the Member for Angus (Kirstene Hair) said, bank branch closures affect the constituents of hon. Members on both sides of the House. It is important that we stick together to represent people and stand up for the most vulnerable in our society.
In 2016, not long after I was elected, I was faced with a couple of bank closures in my constituency, in Cheam. The high street there thrives on independent shops. First, Lloyds Bank came to the end of its lease. I would give the constituent of the hon. Member for Heywood and Middleton (Liz McInnes) the same counsel that I gave my constituents who were upset about losing Lloyds Bank: vote with their feet and go to HSBC up the road. Unfortunately, just a few months later, HSBC decided to close, too. Constituents can be pulled from pillar to post, continually having to move, to chase the exodus from the high streets. Banks do not want to be the last bank on the high street, because all the focus would be on them when they eventually respond to a changing market.
I retain a good relationship with my local Santander branch in Sutton, which looks after customers of the two that are now closing. I remember a tweet that I sent to a constituent on 19 May 2016, in which I said that I had had a chat to Santander, which was closing quite a small branch in North Cheam, but was committed to its main Cheam branch. Fast-forward only three years: that branch is now closing. The last bank in Cheam will have gone.
When Lloyds Bank and HSBC were closing, residents set up petitions, but petitions only have so much value. Yes, they can show the weight of opinion and ask the banks to please be considerate, but when a banking chain has made a corporate decision, a petition will generate heat but not a lot of light, so we need to look at other ways to respond. Can we encourage customers to move elsewhere? Can we work on the post office network, despite the restrictions on that, which we heard about from other hon. Members? Are we putting an unfair burden on the post office network and the Government in relation to decisions made by corporate organisations?
In the case of the Santander closure in Cheam, three local councillors, Elliot Colburn, Holly Ramsey and Eric Allen, have taken a different tack. Metro Bank is looking at expanding its network in other areas, so they have made a direct approach to Metro Bank, saying, “Here’s a space. There are no banks. It is an area where there are a lot of independent shops. Metro Bank takes a different tack in its approach to attracting customers—it is a bit of a disruptor bank—so why don’t you come in and consider Cheam as an option?”
What more can we do? We have talked about the pressure being put on to post offices. In Sutton, it looks as though our Crown post office will be moved to WHSmith, which will cause angst and concern to a number of people there. On the other hand, not far away in Belmont, a village to the south of my constituency, a post office has just been opened at the back of a pet shop, and it is one of the best-used post offices. It won an award from the network as one of the best new post offices in London, coming second only to one on Oxford Street. That is pretty impressive. If it is put in an imaginative place, it will be used.
What more can we do? Should we look at the banking hubs and a return to the ’70s, or some form of technology to move banks from making corporate decisions to making marketing decisions, which can go a totally different way? If the bank takes a marketing decision to look at innovation, its corporate social responsibility will move the decision away from just being a box-ticking exercise for its shareholder report to being something that can actually add value to the high street and tackle the issues such as loneliness mentioned by my hon. Friend the Member for Angus. By making the high street a hub and a community centre and bringing in other businesses to work with the bank, the bank can become the centre of the high street, which has to be good for that bank.
The hon. Gentleman makes an interesting point about hubs, as have other hon. Members. What role does he think the Government should play in that? We have heard about the closure of Crown post offices, which the Government own, but surely hubs could be there, because they are well located and owned by us. We are the taxpayers and our constituents need those services.
The hon. Gentleman makes an interesting point. We have talked about how moving Crown post offices into WHSmith branches across the country will limit their structure, because they have some big buildings at the moment. The massive floor space of the one in Sutton is well used, so I am not sure how it will cope if it is restricted at the back of somewhere. It might be a regressive move. There is a limit to how much the Government can direct the Post Office and banks, but they must have a significant influence. They should treat the issue holistically as they look at the future of the high street in general.
We have talked about the access to banking standard. At least Santander now has to go through the process of mitigating the results and looking at who the most vulnerable people are—I hope it would want to do that anyway. The people using bank branches these days tend to be older people, who do not necessarily have access to technology or are not as good at using technology as others, and retailers, especially the independent retailers that I was talking about that are still cash-heavy and need to bank their cash.
For the two branches that are closing in my constituency, the alternatives to Cheam are 1.3 miles and 3.3 miles away, and the alternatives to Worcester Park are 1.8 miles and 3 miles away. For a small business that wants to pay cash in at the end of the day, if there is no post office near enough, that is some distance to go with what might be quite a lot of cash, which is not very secure.
I support the hon. Gentleman’s point about the distance for small businesses. We have that issue in my constituency with the post office closure, which relates to the bank closures. There is a village a mile away from Reading town centre, a separate entity, where three banks and a post office have closed. That is a considerable amount of travelling time for a small business trying to bank cash. We have lost other banks in locations near Reading University and we have lost further facilities in other areas too.
The hon. Gentleman makes a good point about the need to look holistically at the whole parade of shops, the needs of vulnerable local people, particularly the elderly, and the needs of local small businesses. I urge him to raise with his hon. Friends in Government the possibility of an area-based approach, whereby those different needs are taken into account as part of banking or post office regulation.
In Reading, as in Sutton, the difference in mileage is relatively small, but congestion and extra traffic mean that it represents significant travel time. We cannot compete with the 15 miles that people have to travel in the constituency of my hon. Friend the Member for Angus.
I will make a final point and then let other hon. Members speak. When banks decide to close, we have to make sure that there is still access to a cashpoint network, so people who rely on cash—although that is dying down a bit—have access to it. When I was a local councillor in the neighbouring constituency of Carshalton, I spoke to a baker who had been badly affected when Barclays and its cashpoint closed there. That village relied on its independent shops, but after the cashpoint closed, people tended to turn left, towards the larger supermarkets, rather than right, where the smaller independent shops are. Previously, people had walked past the independent shops to get their cash and would spend money in the bakers and the other smaller shops on their way to do their main shop. Branch closures have a detrimental effect and we need to look at the issue holistically to make sure that we have a thriving, albeit changing, high street.
This is an important issue for me. I thank the hon. Member for Glasgow East (David Linden) for securing the debate and thereby giving us a chance to contribute. Let me also put on the record my congratulations to Scottish National party Members for continually raising issues about bank closures. Every time they have brought such debates to Westminster Hall or the main Chamber, it has come from their constituents. I thank them for highlighting bank closures, because, in doing so, they illustrate how important the banks are, including in my constituency.
I have a real issue with banks closing branches and leaving the most vulnerable in our society without access to their cash and savings. It is all well and good to say that the number of transactions carried out at Santander branches fell by 23% over the past three years, while transactions online and on mobile phones soared by 99%, but that does not say that staff members have been pushing to get that figure up, as I am sure they have.
In the last few months, the Santander branch in Newtownards, which is the major town in my constituency, moved less than 100 yards from Conway Square in the centre of town to the High Street. It has a considerable customer base and very good connections and contacts with the commercial sector. At a Santander event at the branch before Christmas, I met a young lady who was there alongside Santander to state how well it had helped her to start her business from home. That is an example of how things can be done. I put that on the record, because Santander in Newtownards is obviously in touch with its customer base. It is not one of the three branches closing in Northern Ireland.
On bank closures, the fact that a large amount of people use internet banking tells a story, but does it say that they will cease to use their local branch? I do not believe it does. They will still use the branch for all the necessary things, but now they will have to go for miles to find new branches.
The hon. Member for Rutherglen and Hamilton West (Ged Killen), who has left, unfortunately, tabled early day motion 2057 on access to cash. I was more than happy to sign that early day motion, as I always am on important issues. As I have said in other debates here and in the main Chamber, I understand how important it is to have access to cash. I am one of those old-fashioned guys who likes to pay their bills by cash—perhaps that is the economy in Northern Ireland.
The hon. Gentleman is doing himself down. It is not just an old person thing—not that he is old. Perhaps I should not be saying this from a security point of view, but for about 10 years, since I have been married, I have operated on a jam-jar basis where I take my money out at the beginning of the month and then I have my shopping budget and my fuel budget. I wanted to put that quaint point on the record.
I do not feel old, but perhaps I am of a different generation. As always, I thank the hon. Gentleman for reminding me that such things start young, as it did with my mum and dad as well. As an Ulster Scot, as I have said in the Chamber before, and perhaps in the main Chamber, “Every pound’s a prisoner.” Well, it is to me, and it probably is to the hon. Gentleman as well.
I thank the hon. Member for Rutherglen and Hamilton West for tabling the early day motion on access to cash, because it is important to have it recorded. There are 23 signatures to it so far, which indicates the deep interest in the issue.
I remember when First Trust, a local bank, hired a special adviser to get people out the front of the bank au fait with online banking—the hon. Member for Angus (Kirstene Hair) referred to the online banking issue. Within six months, the news was out that the branch was closing due to an uptake in specialist online banking. Hon. Members can draw their own conclusions about how and why that happened. That was the third bank to close in the main town of Newtownards and the sixth to close in my constituency of Strangford; I have had a lot of bank closures. That is why every time SNP Members have raised issues with bank closures, I have wanted to make sure that I was in there fighting for my constituency as well. As I say, over time we have had a number of banks close.
I am really quite intrigued by what the Library briefing information that we have received says, statistically and factually. Page 3 of the briefing says:
“The only region or country of the UK in which the number of bank and building society branches increased between 2010 and 2018 was Northern Ireland”.
There must have been a lot of other constituencies getting lots of banks, because I was losing them all while they were getting them all. I am not quite sure if the statistics are correct—no, I am sure they are. I am not saying they are not true; I would not say that for one second. The briefing continues on page 3:
“Northern Ireland has 405 branches, 21.6 per 100,000 residents—the highest rate of any region or country in the UK.”
That prompts the question of what is happening in my constituency in Newtownards? Why have seven bank branches closed over the past number of years, including Danske Bank, Bank of Ireland, First Trust, and Ulster Bank?
According to Which?, the consumer group, nearly two thirds of the UK’s bank branch network has been lost over the past 30 years. The number of bank and building society branches stood at 20,583 in 1988, according to our own parliamentary records, but an up-to-date analysis by Which? of current account providers suggests that that figure has dwindled to 7,586.
I understand, again from the Library information, that three Santander branches will close in Northern Ireland: in Antrim, in Ballymoney, and on Newtownards Road in Belfast. Those branches are not in my constituency, but this year Santander is due to close 140 branches in the United Kingdom of Great Britain and Northern Ireland, and the reason given is that there has been a marked decrease in the number of transactions. I must say that I do all my banking in the bank or on the phone, and by physical means—using banknotes—on most occasions. That is not simply to keep business in our local branches, although that plays a part. It is also because—honestly—I do not fully trust online banking security. The hon. Member for Glasgow East referred to this issue at the very beginning of the debate and I agree with him, and some of my constituents do not trust it either.
I thank the hon. Gentleman for giving way, and no one can doubt how hard he fights for his Strangford constituents. To justify the closure of its branch in Helensburgh, Santander’s review said that 59% of its customers have used online banking, mobile banking or telephone banking, which means, by its own calculation, 41% of its customers have not. My constituents are predominantly elderly and they are being completely left in the lurch by this branch closure in our town. That is why on Saturday I will be outside the Santander branch in Helensburgh collecting names on a parliamentary petition asking Santander to reverse this deeply harmful decision.
I thank the hon. Gentleman for his intervention, and I commend him for his industry and for the fact that he will be there on Saturday. He will have no bother getting the signatures for that petition; I have no doubt about that whatsoever. However, I hope that Santander is listening to what he says, because that situation clearly illustrates to me that his bank needs to be there and the customers want it to be there, and we are all here for the same purpose. That is the critical issue for me and for others who are here in Westminster Hall today.
I often think that if the Independent Parliamentary Standards Authority can allow my staff members’ names and addresses to be released by accident, or whatever way it happened, what chance does our money have of withstanding banking attacks? That did happen—it was an oversight, it was a mistake, but it still happened. Honestly, that is why I just have this wee doubt about online banking and other things.
I thank the hon. Member for Strangford (Jim Shannon) for giving way; I usually get his constituency the wrong way round. After some of the scandals that we have had with TSB and others locking their customers out of their online banking, is it not the case that for all this digital innovation we are nowhere close to it being reliable?
The hon. Lady is absolutely right. In my first year and a half here in Parliament, there were a number of banking breakdowns—one would say—within the Ulster Bank. It happened not once, but twice, and perhaps even three times. Honestly, customers could not access their accounts by any means and it was absolutely ridiculous.
I am coming to an end, Mr Davies; I am very conscious of the time. Santander will retain a network of 614 UK branches, with its customers also having the option to bank using more than 11,000 post office sites across the UK. It is very important to have the post office. I have to say that the post offices in my constituency have been geared up to fill some of the gaps—in Ballynahinch, Killyleagh, Portaferry, Kircubbin and in Newtownards town—where there are post offices. Credit unions have also filled some of the gaps; it has been incredibly important to have the credit unions, as well.
I still have a real fear that this consolidation of banks to cities further isolates rural communities and adds to people’s sense of being alone, with no one to talk to and no one to help, and I believe that we are further isolating an older generation, which cannot be acceptable. That is the critical fact for me. I look to the Minister, as I always do, for a comprehensive response to the issues that we are all bringing collectively to his attention today.
I conclude by saying that I believe we must put in place a minimum expectation of service provision for customers, and if we do not ask the financial institutions to step up and step in, the service provision will continue to dwindle, jobs will be lost and the only winners will be the shareholders and those who get the dividends. I believe that reform must take place and that banks must fulfil obligations to people, and not simply to profit margins.
It is a pleasure to serve under your chairmanship, Mr Davies, and I thank the hon. Member for Glasgow East (David Linden) for securing the debate.
I want to speak first about Santander in particular and then I will have a general go at the banks, because I will feel much better when I have done that. Being a farmer, I have always had very mixed views about banks, one way or the other. They can offer someone an umbrella when the sun is shining, but they are very good at taking it away when it starts to rain.
On Santander in particular, I have had a letter from the Axminster branch—in fact, it is interesting, because I have not actually had it from the Axminster branch but from the “Head of Branch Interactions”, which is one of my points. The letter says that the Axminster branch will close on 2 May, which is a great shame for the staff, a great shame for people in Axminster and a great shame for the businesses there; naturally, Axminster is famous for its carpets, but there are also Axminster Tools and Machinery, and many other businesses. There are also lots of surrounding farms and businesses in lots of villages, with lots of people coming in to Axminster. There is no sort of local manager in Axminster; there is no local anything, is there, anymore? That is partly the trouble.
What I have been sent about the reasons why Santander is shutting the branch is quite interesting. First of all, the letter says that
“89% of customers transacting at Axminster branch already use a variety of ways to complete their banking”.
That is an interesting way to run a business, is it not? Santander is actually saying to people, “Well, because you haven’t done all your business with us, we’re going to close the branch down.” I mean, I do not think that supermarkets or anybody else would go in for that line of business.
The letter also says that
“38% of Axminster branch customers also use an additional Santander branch.”
I might occasionally visit Sainsbury’s, I might occasionally visit Tesco—I occasionally visit a number of supermarkets, in a number of towns and in a number of places, but I would not necessarily expect to hear, “Well, because you’re a loyal customer to Sainsbury’s all over the country, I’m going to shut that branch down, because you’ve used another one.” Again, the logic is somewhat odd.
Then the letter goes on to say that
“54% of customers have transacted using our Online, Mobile or Telephone Banking services”.
That is great, but of course what banks have done—have they not?—is to make it more difficult for customers to get cheque books, or anything physical from them, and therefore they drive more and more people online. When people have gone online, they say, “Well, that’s great. You’ve all gone online now, so we’ll close the branch.” This is happening everywhere and although I am having a particular go at Santander today, it is a general malaise in the banking system.
The reasons that Santander gave the hon. Gentleman for the closure of its branch in Axminster are the same reasons it has given for the closure of branches in the market towns of Otley and Yeadon in my constituency. I would like Santander, and the other banks and building societies, to look at the Yorkshire Building Society model, whereby it has co-located with estate agents. Branches can co-locate with other businesses if there is not sufficient footfall. Before banks start closing branches, they need to look at all the options and not just close branches.
I could not agree more with the hon. Gentleman, because I just do not think that enough thought is being given to this process. Naturally, it says in this letter I received from Santander that its customers in Axminster are able to go to the post office for cash, to put in cheques and to make withdrawals. Again, however, it is not like having a banking service. That is the other reason that I wanted to speak in this debate.
My hon. Friend the Member for Carmarthen West and South Pembrokeshire (Simon Hart) made the point that we should not just highlight Santander. If I go back to the issues in Axminster, we have had branch closures there for Barclays and NatWest, and the one we have left is Lloyds. Let us hope that Lloyds stays in the town and indeed I hope that all the Santander customers pile along to Lloyds. As Members well know—putting my farming hat back on—it is not always easy to change banks. I used to have a very large overdraft with NatWest, and they did not always want me to transfer it. When a person has a business, they want some personal attention; they want to be able to see somebody; and they want to get some sort of decision on not only their everyday banking, but their business building or their business. That is just not there anymore.
I wonder, as the banks contract, whether there is one bank out there—they all advertise that they are going to listen to us more and have more local services, but they all close them—that will listen to this debate and think, “Perhaps we can work in the other direction. We will offer some sort of personal attention and look after people and businesses, and actually be there. We might open on a Saturday morning after 12.30.” Most of us work, but the banks close their branches at 12.30. Some of my Axminster constituents can go to Honiton, which is quite difficult to get to but is not that far away, but that branch will be closed at 12.30. What is the point? If a bank is going to provide a service, why does it not open and provide it?
I thank the hon. Gentleman for making that point, because we did have a network: it was called the Crown post offices. They are closing them down. If the banks want to shut down, give us work in the post offices. Let us stop the closure of Crown post offices, get them reopened, and give the Communication Workers Union the work.
The hon. Gentleman is attempting to entice me down a route that I do not quite want to go down, but I agree with him in many respects. Post offices provide a great service, and if we are to lose them as well, that is a real problem. However, at this moment in time I am in full flow about the banks, so I ask the hon. Gentleman not to put me off that particular subject.
I want to pick up on the comment that the hon. Gentleman made about people going to another town. If someone goes to another town on a Saturday morning to get their money, that is where they are going to shop. That is exactly the impact that bank closures have on our small towns and independent shop owners.
The hon. Lady is absolutely right. There no longer seems to be any strategy among individual banks that would allow them to work out that closures affect not only their business, but many others. The more branches they close down, the more they will lose business, and other people will also lose business.
I am privileged to have quite an elderly population in my constituency, and that population is getting older all the time. Many country towns and rural towns in Devon are in the same interesting position, because people are getting older, and older people do not necessarily trust online banking. They like to be able to bank physically: going back to my previous comment, they like to see a person occasionally, not a machine. I am making light of these issues, but they are not really light, because so many of the older generation think that they can never see anybody or get an answer, and that everything is put in their way to stop them getting anything. We are working hard to get broadband and internet connection in rural areas—in particular, in the Blackdown hills in my area, around Axminster—but it is quite difficult. We will get there, but it is taking time.
I would like to see a strategy, not only from Santander but from all of the banks. Can we have a hub? Can we have something that actually works? Can we have a facility to which people can go? Banks might be prepared to let post offices do a certain number of transactions, but they do not like other banks doing them, yet they close their branches down. If they want to keep their competitiveness and—for want of a better way of putting it—their intellectual property rights, they should not close their branches and make it more difficult for the population to transact with them.
As I have said, I support this afternoon’s debate. It is quite difficult for the Minister, because he cannot say to banks, “You must put a branch there and keep it there.” However, what we must do as a Government, and what I ask the Minister to do, is ask the banks generally, “Do you have a policy that means that you look after people, get people into your branches, and create a business model that works and encourages people to bank at Santander, or any other bank that happens to be in a town?” I do not see anything at the moment that is proactive: everything is rather negative, and that is a great shame. It is our older population, in particular, that will suffer.
Businesses also suffer. I probably had too good a relationship with my local bank manager, because he probably lent me too much money, but a person should be able to actually see somebody and get a decision. If someone goes to a bank now, they will not see a manager: the decision will be passed up the line, and they may or may not get an answer. All of this is holding business back, not driving it forward. This is not just about customers, although it is very much about elderly customers: it is about business, and keeping the economy thriving. Those bank closures, and generally making it difficult to get answers about borrowing and other things that keep the economy stimulated, are real problems.
After that, Mr Davies, I feel much better. Thank you very much.
It is always a pleasure to serve under your chairmanship, Mr Davies. I congratulate the hon. Member for Glasgow East (David Linden) on securing this debate, and I thank the Backbench Business Committee for granting it. The hon. Gentleman was right that the motion should be about not just bank closures but their effect on local communities. It has been interesting to listen to the contributions that Members have made, because bank closures rip the heart out of our communities.
I have been here long enough to see a trend develop over many years. Like the hon. Member for Tiverton and Honiton (Neil Parish), I received a letter from Santander saying that it is going to close down a branch, and that letter could have been cut and pasted from any other bank letter over the years. The bank says it is a very difficult decision, but, frankly, it is a corporate strategy now; it is a policy. It is part of their toolkit to say, “It is a difficult decision,” but they go ahead and do it anyway.
The letter that I got is, as the hon. Member for Glasgow East said, a desktop exercise. Mr Davies, as an expert on unitary authorities in Wales, you will know that I represent a constituency that is coterminous with the county of Ynys Môn, the isle of Anglesey. However, the address given for Llangefni, the main market town, says it is in the county of Gwynedd, so there is an error there to begin with. Santander has not done due diligence in its exercise to close down these branches; it has done a central allocation of closures right across the country, and the brunt of that is felt by rural and periphery areas. This has an impact on the whole of my constituency.
Closures, as I have said, are done by stealth. The hon. Member for Tiverton and Honiton, the Chair of the Environment, Food and Rural Affairs Committee, is quite right: first, the hours are altered so that they do not suit customers, and then, when those customers go in, they are encouraged to bank online. I have experienced that myself: whenever there is a temporary assistant in my local branch of Lloyds bank, they say to me, “Mr Owen, would you like to move to online banking?” and I say, “No, thank you.” Then they are told who I am, and they discreetly go to the back and say, “Oops, I’ve made a mistake.” I have been arguing for frontline services for many years, because people need that interaction. They need the privacy of speaking to somebody they know when dealing with sensitive financial issues.
Santander has shot itself in the foot with this exercise, and it is going to get no credit here for the way it has gone about it, but it is not alone. We do not have accurate figures about bank closures—there has not been a central source of data about them since 2014, and maybe the Minister can help me—but we all know they are real and they are in our communities. There should be a central source of data, because we should have facts and figures about financial exclusion. Which? is very good at helping us out and has said that there has been a decline of around 35% in banking since 2014. I did some research in my own periphery constituency, and more than 46% of banks have closed in the area—nearly half in two and a half years. That is the trend.
I am not a luddite. I can download an app and use an Apple phone, but like many of my constituents I choose not to. Broadband is not as great in my area as it is in central cities, for example, so it is difficult to use alternative banking methods. I do not want to make a bank transaction and then go offline and become stuck, or to do one draft and then another. It is a serious problem. I think the hon. Member for Angus (Kirstene Hair) mentioned that the broadband distribution in her area is not suitable. There needs to be some joined-up thinking here.
The Government have played a role in the trend I mentioned. Colleagues have rightly mentioned the shrinkage of the post office network over many years. Yet the standard letters that Santander and other banks have issued say, “Go to your nearest post office,” without the banks’ having researched whether there is a threat of closure to the Crown or sub-post office in that area. That illustrates the lack of joined-up thinking.
The central negative element is the reduction of our town centres, with footfall seriously affected. I have seen it in the towns in my constituency. Llangefni is a market town. Farmers used to go there, although, unlike the hon. Member for Tiverton and Honiton, not to pump up their overdrafts. They used the banks regularly, as well as the shops, cafés and pubs.
Footfall is also being reduced in Amlwch, a town at the northern tip of my constituency that now has no bank at all. It has a sub-post office in a retail shop that is not as effective—no disrespect to the staff—as the post office that was closed. There is also a lack of cash machines. A lack of access to such machines has already been mentioned. I was given a letter by a very able councillor who pointed out that ATMs are often broken, and the ones that work make a charge. The surcharge is 95p on a transaction. The reason given for that is that banks now give less money to the LINK fund for ATM operators. Not only are banks closing branches, but they are cutting the money they put towards running ATMs. I am sure I am not the only one experiencing that.
I should have mentioned in my earlier contribution that ATMs in Northern Ireland have been targeted by criminals and thieves. We have the largest number of ATM break-ins and thefts across the whole of Northern Ireland, and the Police Service of Northern Ireland has set up a taskforce to take that on. It is happening with regularity. The people who run the ATMs then say to themselves, “Why should we bother putting an ATM there at all if it’s going to be broken or stolen from?”
That is a very strong point, but I think the banks themselves are ripping people off if they are not giving money. Cashzone machines are charging 95p per transaction. Often they are in poorer communities. The Which? research I referred to earlier highlights that almost two thirds of bank closures have been in the poorest areas of our country—those with an average household income of less than £26,000—so the closures affect our poorer constituents.
We need to look for solutions. We have heard a few ideas about financial hubs, for example. I seriously put to the Government the proposition of using Crown post offices, because we need to look for solutions. They are closing down these buildings, which they often own and which often lie empty for some time, as in Holyhead in my constituency. Such buildings could be used as financial hubs.
I am sure my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) will be very happy that I agree with our Labour party policy to re-establish a Post Office bank—a people’s bank—and to have regional banks so that regional business can benefit. We need to go beyond just blaming the banks; we need to have a proper Government policy and framework.
We used to have the Girobank, and people’s “giro”, as their unemployment benefit or pension was called, used to be paid through it. The Government’s policy is that people receiving social security need to have a bank account. They then get sent back to the post office. Is that not Kafkaesque?
I absolutely agree. The role of the Post Office is important, and the Government are the owner. We are the shareholders, and we need to look at this in the long term. Banks, whether Santander or any of the other major banks, think in the short term; they look at their shareholders and at cutting costs. If we had a people’s bank—a Post Office structure and network across the country that had the same rates—it would be fair and even for all our constituents across the country. They would have better access, and we could invest as a country in the infrastructure and the broadband. In the digital age, it could be as modern as any other bank.
That is the way we need to move. I am pleased that the Opposition Front Bench will agree with me, but I want the Minister, who is very diligent, and who looks for solutions—I am trying to help him in doing so—to stop closing the Crown post offices that we own. He should use them as major financial hubs across the United Kingdom, so that when banks are closed, we do not get bog-standard letters telling us to go to a nearby post office that is also closing down. We need a people’s bank. I say to my constituents who use Santander in Llangefni: “Don’t travel 15 or 20 miles to your nearest post office. Change banks. If Santander won’t stand up for you, stand up for yourself.”
I pay tribute to the staff who work in banks across the country. They are the face of the banks. During the banking crisis, they took a lot of flak. It was nothing to do with them. They are diligent workers, but I am afraid that, when it comes to these large banks, these staff are just pawns in the game. They will lose their jobs, and people will lose their financial services. I want the Government and all of us to work together to stop that.
It is an honour to serve under your chairmanship, Mr Davies. I congratulate the hon. Member for Glasgow East (David Linden) on securing a really important debate, as has been shown by today’s speeches. He opened it with a fantastic, detailed explanation of why it is so important to talk about how our communities will be affected by what is happening. The Backbench Business Committee must also be thanked for allowing the debate.
Last month, like everyone else, I was disappointed to receive a letter from Santander telling me that it had taken the difficult decision to close its branch in North Shields town centre on 9 May and that it was writing to all branch customers to let them know of the closure. Santander was keen to point out that it had reviewed the usage of the bank, quoting figures on the various other types of banking facilities of which customers who use the branch avail themselves. Sadly, it was clear from the letter that, without any prior customer consultation, Santander had decided that the North Shields branch did not fit in with its future plans for small digital branches or with the focus on larger community branches.
The letter went on to explain that, in accordance with the access to banking standard, the branch team, whose jobs we must remember are now under threat, will be advising branch customers about their options and, in particular, helping vulnerable customers to find alternative ways to bank locally. I am not sure that customers will be happy to learn that they have to change their banking habits. Many people do not trust online banking, as has been said, or telephone banking, because they do not see it as secure. Moreover, I do not think many people want to join the already long queues in our town centre post office, which is in the Co-op, to do their banking business over the counter. The case has already been made about the sensitivity of banking business.
The message in the letter is far from what is conveyed in Santander’s statement of vision and strategic priorities for 2016 to 2018, which remains on Santander’s website. Perhaps the bank changed that two-year vision at midnight on new year’s eve, but the statement, which I recommend that colleagues look at, is still there in black and white. It states:
“Our purpose is to help people and businesses prosper. Our aim is to be the best retail and commercial bank, earning the lasting loyalty of our people, customers, shareholders and communities. The Santander Way is how we do things in a Simple, Personal and Fair way.”
Importantly, its list of laudable strategic priorities includes communities. The bank states:
“We provide support to communities around the UK because we believe it helps us to build a successful business. By being deeply engaged in the communities where our branches, banking centres and offices are located, we can better understand and serve our customers.”
The customers of the 140 branches earmarked for closure may take that with a pinch of salt. Given that the Government supported the access to banking standard, will the Minister comment on whether the bank has shown that it is merely a tick-box exercise that is of little help to the people who are about to lose personal access to their bank?
[Andrew Rosindell in the Chair]
I accept that fewer people use banks and that many people trust them to operate their accounts online, which has affected banks’ decisions to close branches in recent years. However, Office for National Statistics figures cited by the Library reveal that my area in the north-east has the lowest number of bank and building society branches in the UK and the second-lowest number of branches per 100,000 residents. That is of great concern to me, as I hope it is to the Under-Secretary of State for Housing, Communities and Local Government, the hon. Member for Rossendale and Darwen (Jake Berry), in his role as Minister for the northern powerhouse.
When I consulted the very proactive North Shields chamber of trade and commerce about the branch closure, it made the important point that the town has a fairly high percentage both of customers who do not use the internet and of elderly people. Those are not necessarily the same community, but in both cases they rely on being able to go into the branch to conduct their banking business. The closure will result in significant difficulties for them, especially if they want to continue using counter services at Santander. They will have to travel either three miles up the coast to Whitley Bay or eight miles west to Newcastle city centre—and that is as the crow flies. Access to transport may be another problem in terms of their ability to bank locally.
The chamber also points out that the many local businesses that have to deposit cash regularly will now have to move bank or travel to another branch. When Santander leaves North Shields, we will be left with only two banks in the town centre. The chamber, which represents a number of businesses in the town, makes the solid point that closing a branch of a national bank has a disproportionately adverse effect on town centres. Sadly, a small shop whose owner has no other resources may have no choice but to close, but banks are bigger. They should avoid sending the message that they have lost interest in a community and that they prefer to support other places.
Bank closures are affecting our already suffering high streets and town centres, which should be helped to remain the hub of our communities, as every speech in this debate has pointed out. We must stress to the Government the need for their support. My plea to Santander is to work to its own values in relation to the proposed closures of the branch in North Shields and the other 139 branches. I hope the Minister will do all he can to urge the bank to reconsider its decision. If Santander truly wants to be
“the best bank in the UK”,
as it says it does, it should deliver on its own “Simple, Personal and Fair” culture and keep those branches open.
It is a pleasure to see you in the Chair, Mr Rosindell. I thank the hon. Member for Glasgow East (David Linden) for securing and organising this debate, which I was happy to support.
To strike a note that may be slightly discordant with the speeches of other hon. Members, I must say that I really value online banking. It has been transformative for me personally in terms of ease of access to finance, and we should not forget how many people’s lives it makes easier. I am cautious about unduly amplifying people’s fears about the security of transactions. Yes, there is clearly a big problem with online fraud—I myself was recently a victim to the tune of several thousand pounds—but it is a very small percentage of the overall number of transactions, and the risk lies squarely with the banks themselves. A genuine and proportionate look at the risks associated with online banking suggests that they are often outweighed by the level of convenience that it can bring if we increase people’s online access and computer literacy and ensure that they have a proper understanding.
It is ultimately futile, although it may be gratifying, to rail against individual banks every time they pull out of a high street. I am deeply disappointed that Santander is pulling out of Ulverston, especially given the track record of other banking institutions that have said they foresee only one set of closures, but then, a couple of years down the track or even sooner, close other branches as well. I am waiting for the figures that Santander said it would try to get for me about the busyness of the Barrow-in-Furness branch that customers will be transferred to.
The hon. Gentleman is making a good case. Given the nature of his constituency, which in some ways is very similar to mine, does he agree that the branch network is particularly important to rural areas? In places such as St Andrews and Ulverston, having that rural network goes beyond the personal banking that people can do online; it connects small businesses.
It absolutely does, and let me say a little more about that point before I go in what may be an unexpected direction and ask whether beating up the banks will really work. The banks on our high streets in communities such as the hon. Gentleman’s and mine are so important for individual customers and businesses. Businesses need access to cash. At the meeting we had last week on the closure in Ulverston, I resolved to help the local business improvement district to survey its businesses about their priorities and needs.
Businesses report a loss of footfall every time a high street branch goes; the evidence is anecdotal at the moment, but we want to put more data behind it. There is also a community aspect. Every bank has a cohort of relatively vulnerable people who rely on it, not only for financial transactions but because it gets them out of the house and, basically, enables banking staff to check that they are okay. As those things are eroded, our communities themselves will bear the brunt.
We will not get anywhere if we do not properly acknowledge the drivers of change within our communities, where people increasingly go online. We have to see what genuine levers we have to change things. That does not mean coming into the House of Commons and shouting at institutions; none the less, we do have levers if we are prepared to come together to demand that the Government use them. For private sector institutions, of course we can do our best to promote the business value of a high street presence. I said last week and I say it strongly again, let us be loyal to the banks that choose to be loyal to our areas.
At the meeting I mentioned, I was impressed to hear from individuals such as the mayor of Ulverston, Dave Webster, who says he has tracked his finances over the years as more and more banks have closed, and will do so again as a Santander customer moving to a branch of a bank that is prepared to have its roots in the town centre. It is good to have the Cumberland Building Society there, which prides itself on keeping footfall in the area. Let us vote with our feet and for institutions that are prepared to root themselves in our areas.
Ultimately, it will be down to the Government to respond. Some Members have rightly mentioned the Post Office. We were pleased and proud to be able to save Ulverston post office from the threat of closure. My goodness, how much more important it will be now as Santander becomes the latest branch to pull out of Ulverston. We require a loss-leading investment in communities and I suggest the Government should ultimately be the guarantor of financial services in an area through an expanded post office network.
I very much add my voice to those speaking out against further branch closures, but I want to add two more elements. First, we have the Post Office card account. I realise that primary responsibility for that lies with the Department for Work and Pensions, but I remember my time in the Department, where I was an adviser to the Secretary of State between 2005 and 2007. Back then, the civil servants, whom we generally worked with very effectively, made the tactics of “Yes, Minister” look timid as they tried to bounce through a policy that radically reduced reliance on Post Office card accounts. Frankly, in the first drafts that we saw, they were not being straight with Post Office card account customers and what their options were. The Minister might like to correct me, but I understand that that process has resumed.
It is outrageous if Post Office card account customers are not clearly told in their advice from the Government and the Post Office that they can maintain a Post Office card account. What was put to us back then and I understand may be being put to the Minister now is advice to customers on how to change from a Post Office card account to a bank account, without telling them explicitly that they have the ability to stay.
Secondly, if the policy is be loss-leading, we cannot just rely on the good will of private banking institutions. Let us put in place an ongoing levy for high street banks to make sure that an institution is rooted in communities, guaranteed by that, and let us strongly consider that institution being the Post Office.
It is a pleasure to speak in this debate, Mr Rosindell. I congratulate my fellow Instagram lover, the hon. Member for Glasgow East (David Linden), on securing this debate. We have more in common that just posting fun pictures.
Banks are a really important part of our communities. When they close they leave a hole not only in our high street, but in our community as well. The reasons for that have been stated to a considerable extend in this debate already. I am deeply concerned about Santander’s decision to close branches at the scale proposed. In the area that I represent, it intends to close the New George Street branch on 5 December this year, which is quite some Christmas present for local customers, and it is not good for the staff who will lose their jobs just before the festive season.
In Plymouth we like to think that we have a special connection with Santander because we are one of only two places in the country where you can actually get a ferry to Santander, so to see the closure of branches in Plymouth is deeply worrying, and what that means has not been lost on the good folk of Plymouth.
Who do we need to aim this debate at? The remarks made by Members of all parties have been focused on the banks, but I want to focus on the Government, because the banks have had a good kicking already and certainly my fellow Devon MP, the hon. Member for Tiverton and Honiton (Neil Parish), did a very good job of explaining why banks deserve a good kicking at times. However, we need to be cautious about what can be done to reverse the decline in branches on our high streets.
We need to make sure that people can access the services they need and that the personal touch is there, but I believe that there is something missing from this debate so far: consideration of the social purpose of banking. Banking has a financial purpose: it enables us to trade, to borrow, to invest, to save, but the social purpose is also important. It is about pooling risk, coming together, having access and being able to speak to someone to get advice on borrowing, investment and saving, and making sure we get the best financial products, but all that diminishes hugely when branches close.
I am a big fan of online banking and challenger banks. I really like my hot coral Monzo card. I like the way that I can access financial services online and in many cases get a better and faster service than I can get elsewhere—but I am not the same as everyone. We need a market within our financial services that recognises that online banking and quick dynamic services in the modern age need to sit alongside traditional high street banking that is fit for purpose. There is no better example of that than on Mutley Plain in Plymouth. I use Mutley Plain as an example because I know that the Minister was a Conservative candidate in Plymouth before he found his current seat, so he will know Mutley Plain well. When he was a candidate, Mutley Plain was full of banks. It now has hardly any banks. We have seen HSBC, Halifax, Lloyds, Barclays and NatWest all leave Mutley Plain, effectively leaving the entire community without banking services.
Not only has the community been left without the ability to access a cash machine or to get advice, but people have been left without the ability to go in and speak to someone. That is why we need to look at the importance of local banks and local services. The banks need to rediscover their social purpose. It is not sufficient to have social purpose in PR and marketing if it does not extend from the communications department through to the boardroom and the branches themselves.
The hon. Gentleman is making a poignant and strong speech. I could not agree with him more about spending corporate social responsibility funds to support the communities and customers that the banks are meant to serve. Does he agree with me that they should spend less money on fancy advertising and sports sponsorship and more money on keeping branches open in rural and deprived urban areas?
I am grateful for that intervention. We should ask the Minister to look at that suggestion. The Government have the power of regulation in legislation, but they also have strong soft power in terms of encouraging the banks to do the right thing. We need to recognise that customers—each of us as a customer of a bank and the people we represent—also have soft power in relation to where we choose to bank and who we choose to bank with.
When we talk about what options are available to us, it is important to recognise that the post office is an option only when we have a post office. Equally, internet banking is only an option when someone has access to the internet. There is sometimes an assumption in this place that everyone has access to the internet. That is not true. In places such as Plymouth, where we have high levels of poverty and deprivation, not everyone has access to the internet. Not everyone has a mobile phone with data allowance that allows them to access data. With the closure of libraries in recent years, free access provision through library services is also not always available. If the Post Office network and the library network is to be a genuine and meaningful alternative, we need to make sure that they can be accessed. We must not fall into the middle-class trap of thinking that everyone has the same as the people who largely populate the House of Commons. That is certainly not true in Plymouth and it is a point that we need to address.
I asked people on my Facebook page a few days ago about their experiences of banks closing. The most powerful testimonies come from people with disabilities, for whom the ability to access a local banking service is not just about the service they should have as a normal human being, but is about the additional support that they need and deserve to access those services, which cannot be provided by someone at the end of the phone or a few clicks away on the internet. They need a real human being to interact with. That was the case for so many people who spoke to me and gave me their stories and views about what we need to do. I turn back to the Minister. Where do we go from here?
There is a real risk that whole communities will lose access to banking services, because banks are closing progressively. Today’s debate is about the decisions of Santander. A few months ago, it might have been about other banks, and in a few months’ time, it will probably be about other financial service providers. What is the safety net? What is the minimum guarantee that the Government believe that we should have?
The idea about banking hubs is a good one. In Plymouth, we are doing something similar in bringing together health and wellbeing services. City centre hubs will bring together all the aspects of the public estate that need a front door in the city centre, and I hope the Department of Health and Social Care will fund that. The principle applies to financial services, just as it does to dentistry, GP services, sexual health and mental health provision, and we should look at that.
One element of hub services is about using empty buildings. My hon. Friend the Member for Ynys Môn (Albert Owen) talked about empty buildings. In many cases, the buildings left vacant by banks still have an ongoing lease—they are still paying for the lease of the buildings. There should be questions about the social purpose of an empty building, and about how we as parliamentarians can put pressure on, as we have done on empty homes, to rediscover the social purpose of empty buildings with an ongoing lease.
The post office network has been mentioned, which reminded me of a visit I made to the Efford Road post office in Compton ward in my constituency, just before Christmas. I spoke to Michael Zheng, the postmaster of that small but well-loved post office. He described how since the banks have closed locally, he has taken on the financial transactions for local shops and has huge amounts of cash deposited with him, but the contract for local post offices for processing cash transactions has changed recently, which means that in many cases it is not viable for him as an employer to pay someone to spend the time processing the cash in and out and providing banking services for local businesses; the agreement between his local business and the Post Office no longer makes that worthwhile. That needs to be looked at.
The health of our high street depends not only on shops where people want to spend their money, banks where they can access their money, borrow and save, a culture where people can enjoy shops, and restaurants where they can eat and drink. We need to look at how we repurpose the high street in those terms, but there are also regulatory protections that deserve consideration. We are not in a normal time for Conservative party thinking in respect of allowing the free market to do its thing on high streets, where financial services can come and go as they please. We are now seeing the forced financial exclusion of people in our communities because banks are exiting our high streets. That demands a different approach, which we need to identify before we get to the point where we have lost banks entirely from our high streets.
There are alternatives and there are models of investment in our high streets. I mention in particular South West Mutual, a co-operative that has formed in the four counties of the far south-west to provide high-street banking services on a mutual model. As the big multinational banking giants are exiting our high streets, in many cases, it is the small mutuals—the people with social purpose—that are coming to replace them. I commend the work that South West Mutual is doing. I love it when it says:
“We believe that bank managers who know their communities well make the best lending decisions, and we are committed to providing branch facilities so that you can choose how you want to bank.”
That is precisely the type of ethos we need to see lived and breathed by those big financial giants, not just the mutuals. If we keep seeing TV adverts from big banks telling us just how much they care about us and our communities at the same time as they close our banks, more people will take their custom away from those banks, and rightly so. We deserve better, they deserve better, and our high streets and our communities deserve better than the high PR spend trying to tell us something different from the lived experience of far too many people in our communities.
It is a pleasure to serve under your chairmanship, Mr Rosindell. I am pleased to follow my hon. Friend the Member for Plymouth, Sutton and Devonport (Luke Pollard), who always speaks with so much authority on matters not just in his own constituency, but across the piece.
The Santander branch in Crouch End in my constituency is one of the 140 scheduled to close. One hundred and forty is quite a large number and I am pleased to see how well attended the debate has been. I have heard from elderly constituents who are devastated by the news that the Santander branch is going to close. One constituent who got in touch is 88 years old. He is uncomfortable using computers and prefers to do his banking in the branch rather than online. He said that it is always busy when he goes there, but now he will be forced to get on the bus and travel all the way up to Muswell Hill. His friend changed her bank to Santander because her local bank branch had closed, and now Santander is doing the same. She is elderly and disabled and feels betrayed and let down.
I met with Santander bosses this week to express my opposition to the plans. At the meeting, I asked about the impact on staff. I was told that the branch has 10.8 full-time equivalent staff, and while they hope to redeploy some, there are no guarantees. In the meantime, the bank has put new staff on to short-term contracts, so that when those contracts finish, other staff can be put into those roles. That leads to lack of security in the workforce, something that many of us have campaigned very hard to counter.
The Communication Workers Union is working hard to defend its members nationwide. It says that the reductions to the Santander UK branch network place 1,270 workers at risk of redundancy and the bank expects to be able to redeploy only around a third of those affected, so hundreds of qualified hard-working employees will be out of work. Elderly and disabled customers will have to travel further to access vital services. Crouch End will also lose its ATM, so thousands of shoppers, workers and local residents will be inconvenienced.
Bank branches are disappearing at an alarming rate—a whopping 40% have closed since the Conservative Government came in in 2010. That is symptomatic of a wider problem in the banking sector, and is a quiet scandal that has seen many people lose their local services.
All too often, big banks have put their own profits above the needs of their customers. Think back to the origins of banking, with good banks, originally run by Quakers such as the Barclays; then look at the recent stories of Barclays, where the chief executive was forced to pay fines to the Financial Conduct Authority due to bad behaviour. Look at the banks flogging dodgy mortgages, a major cause of the crisis in 2008. Look at the LIBOR scandal or the exorbitant fees. We used to have bank robbers; now the banks rob us. We had foreign exchange manipulation. We had overdraft charges, ripping off customers. We had the payment protection insurance mis-selling scandal, which has been going on since 2005 and which I believe is at £40 billion so far—the shadow Minister may correct me. Furthermore, there are charges on withdrawing cash from ATMs, and operators fail to repair ATMs in a timely manner. Just how low can the banking sector get?
What can the Government do? Well, they could do much more. They are being a bit too laissez-faire, considering that closures of bank branches are landing blow after blow on the high street. The Minister will correct me if I am wrong, but I think there have been three reviews of the high street since 2010. Rather than launch just another review, why not play a key co-ordinating role between banks and stop the closures of Crown post offices, or at least support credit unions? I believe that another credit union has gone out of business this year because it was slightly overleveraged, and because so many people cannot afford to pay back very small loans. A number of small loans have led to certain credit unions not being able to survive. What are the Government doing proactively to support credit unions in areas where we know they can do so much good?
I would like to see a much more proactive approach. My colleagues mentioned the Labour approach to regional banks, which is a very good idea. I had a good look through the Minister’s written parliamentary responses to Members’ questions on bank closures and I have to confess that I found them mealy-mouthed—“Well, it’s the commercial decision of banks. We haven’t got anything to do with it.” Is that not the attitude that has got us into so much hot water since 2008? Have we learned nothing about the attitude of banks? Do they care about their customers? No, otherwise Santander would not be closing 140 branches. It might be acceptable to close a few, or to close the same number at a slower pace, but there will be 140 bank branch closures. Despite being in a different party, I completely agree with the hon. Member for Tiverton and Honiton (Neil Parish) on the dreadful treatment of customers, the fact that there is no personal approach to banking anymore and the fact that so many customers are being let down. I very much look forward to hearing some really innovative, far-reaching and radical suggestions from the Minister.
It is a pleasure to serve under your chairmanship, Mr Rosindell. I pay tribute to my constituency neighbour, the hon. Member for Glasgow East (David Linden), for securing this debate. He spoke very powerfully about the impact that these bank closures will have on the city of Glasgow and further afield.
As I listened to my constituency neighbour’s comments, I reflected on the picture in Glasgow. By my calculation, there are five Santander branches in the city of Glasgow, yet the two that have been earmarked for closure are in Springburn in my constituency and in Parkhead in the hon. Gentleman’s constituency. They just happen to be the two worst areas of Glasgow for social multiple deprivation, which leads to me to look at the wider programme of branch closures. In the last four years there have been four branch closures in my constituency, including two run by the Royal Bank of Scotland—one in Dennistoun and the other in Possilpark, directly opposite my constituency office—and the Clydesdale Bank in Springburn, just around the corner from the Santander branch that is earmarked for closure. The only branches left will be the TSB in Dennistoun and in Springburn. We are down to some of the last banks in the poorest communities in Scotland, which is a great tragedy. What does it say when we extrapolating that observation across the country?
Of the five branches in Glasgow, the ones in Shawlands, Byres Road, Argyle Street and Sauchiehall Street are staying open. They are in quite prosperous parts of Glasgow, and I think they are staying open simply because the current accounts held at those branches are much more valuable to the bank. It is profit-seeking behaviour, and there is no legislative imperative for the bank to correct it. The bank will therefore seek to maximise profit at the expense of its customers.
There was a point that I omitted from my speech due to time constraints. One of the things that I learned from speaking to the staff was that we had a mortgage adviser in Parkhead. Given that they were not doing a roaring trade, apparently they were taken out six months before the decision to announce the plans for closure. That absolutely backs up the hon. Gentleman’s point: these decisions are made entirely on the basis of profit rather than on serving the people who live in those communities.
I accept that observation. To be fair, my interaction with a physical branch is limited, because I have adopted new technology—I suppose it is because I am a millennial. I use the banking app for TSB, despite some recent difficulties with the transfer from Lloyds TSB using the banking technology. The only time I visited a branch for any substantial business was when I took out a mortgage in Dennistoun about three years ago. The hon. Gentleman makes the point that if we are going to cut the cloth, we will create almost a self-fulfilling prophecy by stripping out key banking services such as mortgage provision, which is a great problem.
The hon. Gentleman is making a very solid point about deprivation. Some of his branches, and my branch in Alloa, are in some of the most deprived parts of our country, yet they are having services taken away. When Santander and other banks consider branch closures, they look at levels of deprivation in a constituency and they have an index. Does the hon. Gentleman agree that the index should be made public and that we should put the access to banking standards on a statutory footing, so that these closures can be subject to real consultations and be far more transparent?
A rare collegial moment for the Chamber, perhaps. I agree entirely, and I was just about to come on to that issue.
When I met with Santander management last week to discuss the closure of the Springburn branch, I made the observation, “I recognise exactly why you’re doing this.” They did not deny it. I also said, “Yes, there needs to be total visibility about the economic impact and the disparity in terms of the demographics of where these bank closures are happening, because there is no visibility of that pattern.” This was recognised long ago: in the 1970s in America, there was a practice called red-lining, which involved American banks deliberately blacklisting poorer communities and withdrawing banking services.
In 1977, the Carter Administration passed the Community Reinvestment Act. As a result, commercial banks in America are obliged to redistribute their profits into sponsoring co-operative banking services and mutuals, and to promote credit unions. There is therefore a much more diverse range of banking services as a result of direct Government intervention to redistribute those services, which dates back to the 1970s. As a result of the Community Reinvestment Act, Santander will invest £11 billion in sponsoring co-operative banking, mutuals and other sustainable banking activity. That is a hefty redistribution and is in stark contrast with what happens in the United Kingdom, where there is no legislative imperative for banks to do it. We need to address that yawning chasm in legislation.
I made the point to the Santander management that the root cause of a lot of these problems is the increasing monopolisation of the banking sector in the UK. We have five major clearing banks, which hold 85% of all current accounts. By comparison, in Germany there are 400 local Sparkassen banks and over 1,000 co-operative banks. Clearly the picture there is very different, because there is legislation in place to redistribute the holding of capital in the banking system, so it is done more sustainably and is more responsive to local communities and to sectors of industry. As a result, Germany has a much healthier and more balanced economy.
I also made the point that Santander’s origins lie in the Abbey National, which was demutualised in 1989, the year I was born. We have seen a pattern of demutualisation across the banking sector, which has been negative for the UK economy. I would seek legislation to reverse the demutualisation of the British banking system.
Absolutely. It is a stark example of the exploitation that we see on multiple fronts. We see it not only in universal credit, jobcentre closures and post office closures, but in things such as fixed-odds betting terminals and bookmakers being concentrated in poorer communities and high streets. We also see a stark contrast in microcosm in Springburn shopping centre. Right next door to the Santander branch is a branch of BrightHouse, which is a rapacious lender exploiting the poorest communities in our country. In my opinion, its practices should be illegal. It is just as bad as the payday loan lenders. That is a good example in microcosm in Springburn of what is wrong with the British economic system, writ large. We need to address that.
I hope the Minister will reflect on the reality. He is welcome to come and visit my constituency and see what it looks like on the ground. If we do not fix it, we will entrench economic division, alienation and the sort of social tensions that exist in our country, and which might have erupted as the reason why so many people voted to leave the European Union. A source of their frustration was an economic system that does not serve their interests. This is all connected; there is a complex interdependency. We need to address the wider tensions in society. This is yet another example of what is wrong with the state withdrawing from regulation and permitting neo-liberal practices to prevail. It is a major concern and needs to be addressed.
In the case of Springburn, the bank justified its closure programme by saying that there was a 25% reduction in footfall. I accept that the industry is subject to disruption due to changes in technology, as the hon. Member for Barrow and Furness (John Woodcock) said. However, the curve is way ahead of where people are at on the ground. The Government should be involved in closing down that gap, so that it reflects the real transitions that people make, particularly elderly people and disabled people.
It was claimed that 91% of people use a variety of other ways to engage with the bank in Springburn, but that includes phoning up the local branch to make an enquiry and using an ATM. Those are not mutually exclusive activities, so that is a questionable statistic. A minority of users—only 46%—use another Santander branch. The nearest branch is in Glasgow city centre, which is an expensive bus ride away for many people, particularly given that the community has a very low car ownership rate. A minority of customers—only 49%—use online or telephone banking services.
The Springburn branch is proposed to close in June this year, yet Santander’s lease will not expire until December, so for six months it will be a blight on the community with boarded up frontage. I want the bank to address that, as a minimum. If it is going to close the branch, it should ensure there is a transition. I appeal to it to realise its social responsibilities.
Ironically, at 2 pm today the Springburn Regeneration Forum kicked off across the way from the Santander branch in the Springburn shopping centre that is proposed to close. It is a community-led approach to bring together the council and other stakeholders to plan the regeneration of Springburn. What a blow that on the same day that that is happening the bank across the way in the Springburn shopping centre has announced that it is pulling out of the community. That is a sad illustration of our commercial banks’ lack of social conscience. That should be addressed. If the banks do not do so voluntarily, it should be done through legislation.
In a nutshell, that is what I think is wrong with the UK banking system and what the Minister should reflect on. I am sure our Front Bench team will do so, too. I am a Labour and Co-operative Member of Parliament. We are committed to a massive restructuring of the UK banking system in favour of co-operative banking, mutuals and a more equitable form of financing our economy. That is what we are supporting.
It is a pleasure to serve under your chairmanship, Mr Rosindell. I thank my constituency neighbour, the hon. Member for Glasgow East (David Linden), for securing this debate.
In my constituency of Coatbridge, Chryston and Bellshill, we have seen the loss of local branches in recent years. Recently, Stepps, Tannochside and Bellshill have all seen their local Royal Bank of Scotland close down, despite the fact that the Government own the majority stake in RBS and could have kept some of those branches open and protected those jobs. We have also seen the collapse of Scotland’s oldest savings bank, the Airdrie Savings Bank, which led to the loss of branches in Coatbridge and Bellshill.
The loss of those branches in my constituency are just a snapshot of what I have heard today and what is happening throughout the whole country. I repeat that the rot started with the Crown post office closures. Now Santander says, “Let’s turn to the Post Office. It can help us.” Too little, too late.
My hon. Friend is making a very important point about the post offices. One of the justification for the Santander closures was, “Don’t worry. The bank service can transition over to the post office.” The Springburn post office has been put up for franchising and will be in the back of a grocery store somewhere. That is hardly a place that someone is going to go to take out a mortgage, is it?
That is exactly what is happening up and down the country. I have seen many fighting for people’s jobs in Crown post offices, which have good terms and conditions that are not matched by WHSmith.
I asked the Chancellor in a written question whether the Treasury had made any assessment of the impact of Santander’s decision to close branches on consumers’ access to money. I received a reply from a Minister, who stated that the Treasury had made no assessment, and that it was a commercial decision for Santander. How often have we heard that? I would like the Chancellor and his Treasury Ministers to tell the affected communities that the Government have made no efforts to determine the impact of the proposed branch closures on their ability to access their money. That is their written answer: no effort, no access. That is shameful, but it is an all-too-common attitude for this Government.
The impact of the branch closures has been worsened by the loss of cashpoints. Figures released this week by Which? show that 280 cashpoints were lost across Scotland in 2018, 203 of which were free to use. Despite the growth of online and telephone banking, 73% of the public continue to use cash frequently to pay for goods and services. My children still use cash; the elderly still use cash. This is not a cashless community yet. The branch closures and the loss of cashpoints only make it harder for people to access their money. The branches and cashpoints are being lost in the poorest and most vulnerable communities in the UK, as my hon. Friend the Member for Glasgow North East (Mr Sweeney) pointed out, and as many others up and down the country know.
Which? has asked the Government to appoint a new regulator with sole responsibility for cash infrastructure. I think that is a much-needed step forward to ensure that consumers and businesses can continue to access cash. I urge the Government to take action by creating a regulator, so we can begin to reverse some of the devastating effects that our communities have experienced because of the branch closures and the loss of cashpoints. If they are not listening today, when will they start listening?
It is a pleasure to serve under your chairmanship, Mr Rosindell. I, too, thank my hon. Friend the Member for Glasgow East (David Linden) and the other Members who supported his bid for this debate. It is great to see this Chamber so busy, as it often is not. That shows the strength of feeling and how much the closures will affect our communities.
The letter that I received was sent to me as a customer. That was the first that I heard that our Santander branch in Troon was closing. I was previously a customer of RBS, and, like some other hon. Members, I moved my custom to Santander. I am not really sure where I am heading next. That is one of 140 closures—one fifth of the Santander network—15 of which are in Scotland. Some 1,300 jobs are now under threat, and only one third are likely to be redeployed. In the meeting, we were told that a third of those staff are looking to retire, get a package and get out. Have those discussions taken place, or is that a presumption?
Does the hon. Lady agree that it is inappropriate for an organisation to put staff on to less secure contracts in the knowledge that it will make 1,200 staff redundant, and might need those jobs later? It is not just a slap in the face to customers but to the staff who work hard in those branches.
I absolutely agree. I pay tribute to the staff in my branch, who were very helpful when we opened our account and are always cheerful. They are not about to retire. They are young working people who are not looking to take a package, but will need a job. They are being made unemployed, and they are deeply shocked by that.
There have been 3,000 branch closures since 2015, 230 of which are in Scotland. Two thirds of branches have been cut since the end of the ’80s. By the end of this year, we will have fallen from 21,000 to less than 7,500 across the UK. That is an incredible change. I totally accept that banking is changing, but, like many others, I use mixed banking. I will use an ATM, go into my branch and do online banking, but it is important that I have that choice. We are talking about choice being taken away.
This change is 20 years too early; we are not yet cashless or online. My mum, who is 84, and most people over 70 are not happy to do banking or any sensitive financial transactions online. My mum has her iPad and can do emails. It is not stupidity. She simply does not trust it. In making this change, we are leaving two decades’ worth of older citizens feeling uncomfortable and like they have had things taken away from them.
When banks move out, they do not leave their ATMs behind, which means that there is less access to cash in community after community, and the ATMs that remain are running out. Troon has already lost three banks. This is our fourth. I went through all this with RBS, which tried to use a unique customer identifier. It told me that only 97 customers a week went into the branch. I found that really strange, because every time I went in, I was in a queue. It only counted people who only went into that branch and went into the branch every single week. As was said, no other business would count custom in that fashion. When I finally got the correct figures out of RBS, that number was 10 times as high. Yet the bank would not reconsider its decision.
Although my hon. Friend the Member for Glasgow East has highlighted the issue of vulnerable people who have poor internet access, in Troon, a place to which many people retire, the issue is the elderly. In the impact assessment, it says that 58% of people have, on at least one occasion, used online, mobile or telephone banking, meaning that 42% have never used those methods. There is no quantification, so we do not know—as the hon. Member for Glasgow North East (Mr Sweeney) said—whether someone simply phoned the branch to ask what its opening hours are or when they could go in to get a statement. The idea that that means someone is suddenly ready to manage all their finances by phone or online is just a fairy tale.
The problem we have is that our elderly population is suddenly being told, as I was assured, that the closest branches are within a 10-mile radius—it is seven miles in one direction and 11 miles in the other—and for most of the elderly who live in Troon, however, that means taking two buses and more than an hour’s journey on a bus that is not frequent, so a visit to the branch could mean a three-hour round-trip. As was highlighted earlier in the debate, that also takes footfall out of Troon’s town centre, because if someone takes the trouble to go to Ayr, the chances are that they will shop in Ayr. They will not come back, go in to the middle of Troon, shop, and then get a bus home. That is gradually killing our high streets.
The access to banking standard and the need for an impact assessment were mentioned. We have all been sent little infographic-laden impact assessments, but it strikes me that they are largely about the impact on the bank. They are not really about the impact on customers, staff or our high street. The hon. Member for Ynys Môn (Albert Owen) mentioned the idea of having a hub. The obvious way to do that would be to bring back Crown post offices, but why do we expect post offices to co-locate with other businesses, but not banks to co-locate with each other or with post offices? It is absolutely vital that communities have some form of safe and secure access to financial services and advice.
Post offices are proposed as the answer to everything, but we cannot use them to open new accounts, carry out bank transfers or, if trying to manage our money, get full bank statements—only a balance. We certainly cannot arrange loans. Many of us used to go into a bank to speak to our bank manager, who was very strict about the income that we needed to obtain a mortgage. Part of what led to the 2008 crash was random decisions to lend people three, four, five, six or seven times their income so that they could get a mortgage, instead of giving them the chance to sit down and talk with someone who could see their financial performance. That applies to business customers who, at the early stages of development, need really personal input from someone who manages their service.
Quite apart from being the answer to all those problems, post offices are struggling financially. Previously, postmasters would get a fee, but funding for that is being cut from £210 million to just £70 million. As this is the fourth bank to close in Troon, all of that work is going to the post office. It has the same number of counters that it has always had, and it had a two-year gap of struggling to find a new postmaster when our previous one was ill and found it frankly all too stressful. In the Which? survey, 42% of those not happy about the move to the post office were concerned about queues. If the post office has the same number of counters but is suddenly doing the work of four banks, queues are inevitable.
Our closest town, Prestwick, has also lost three banks. When I met our postmaster after the most recent closure, he was initially quite positive, because he saw it as a business opportunity. I met him recently, however, and the bank transactions actually take money out of his business. Cash deposits are time consuming and he has had to take on an extra part-time member of staff. He does over 500 extra banking transactions a month and takes in £1 million a month. While Santander charges £7 per £1,000 deposited, the postmaster is paid 37p per £1,000 deposited. The Government subsidy for the 3,000 community post offices that are protected as the last shops in the village will end in 2021. We will literally have dead and empty communities with no access to anything and nothing to maintain footfall in a town centre.
We need to reward and support the post office. Santander is one of the biggest users of post office services, because it makes its business customers deposit cash in the post office. The fee paid to post offices for those transactions is currently being renegotiated. It is critical that that fee be fair, because otherwise we will see the last remaining Crown post offices not redeveloped as banking hubs, but shut down. Frankly, post offices wedged in corners of shops are not always accessible, are often cluttered and do not offer privacy to carry out financial decisions and management.
That is the problem. We almost have that tumbling effect—the work is just passed to someone else, who cannot maintain it, and it is passed on again. It is important that there is a different way of looking at the issue. I agree with the hon. Member for Glasgow North East: it is down the Government to look at innovative approaches across the world, see how such banks are expected to behave in other countries, and, perhaps, to learn from America—not in all things, but in the idea of having regulation to ensure support for financial facilities in all our communities, and not just the leafy streets of middle-class suburban areas.
I thank the hon. Member for Glasgow East (David Linden) and the Backbench Business Committee for enabling us to have this debate on a topic that is clearly vital to many communities.
We have heard some very good speeches today from the hon. Member for Angus (Kirstene Hair), my hon. Friend the Member for Heywood and Middleton (Liz McInnes), the hon. Members for Sutton and Cheam (Paul Scully), for Strangford (Jim Shannon) and for Tiverton and Honiton (Neil Parish), my hon. Friends the Members for Ynys Môn (Albert Owen) and for North Tyneside (Mary Glindon), the hon. Member for Barrow and Furness (John Woodcock), my hon. Friends the Members for Plymouth, Sutton and Devonport (Luke Pollard), for Hornsey and Wood Green (Catherine West) and for Glasgow North East (Mr Sweeney), the hon. Member for Central Ayrshire (Dr Whitford) and my hon. Friend the Member for Coatbridge, Chryston and Bellshill (Hugh Gaffney). That is quite a coalition, by any measure of parliamentary activity. Each of those speakers articulated very well the impact of bank branch closures—not just by Santander, but more widely—on their communities. Each speech raised several issues of public policy that I certainly agree need to be addressed.
The debate has shown that the challenge to maintain a banking sector that works for everyone at a time of rapid technological change is not being met and that the balance between digitisation and traditional banking models is not being got right. I want to say a few words to concur with the sentiment in the room today, but also a little about some possible solutions to these problems.
In advance of the debate, Santander provided some statistics on how people use its services and how that has changed. It said it has experienced a decline of about a quarter in branch transactions over the past three years, including for branch ATMs. It went on to say that that trend is expected to continue, with a projected 37% decline in branch visits across the industry in five years’ time. That is an empirical case for branch closures. We understand that—it is based on numbers and projected future demand. Those numbers alone, however, do not tell us the real story of how people depend on some of those services.
Today we are here specifically to debate the impact on local communities, and to do that, I want to share with colleagues and with industry, which will listen to the debate, the experience of my constituents and what bank branch closures have meant for them. Thankfully, the Santander branch in Hyde is not earmarked for closure in this round, but in recent years my constituency has lost branches of RBS, Lloyds, HSBC and Yorkshire Bank. Yesterday, on my Facebook page, I asked my constituents to share with me some of their direct stories of what that has meant for them. The first comment was:
“Losing the Lloyds in Stalybridge has been a blow. Yes there is one in Ashton”—
the town next door—
“and there is online banking. But there is no substitute for making an appointment you can walk to, talking to an actual human being.”
Another constituent, from Droylsden, which is just outside my constituency, said:
“Here…we now don’t have a single bank! We’ve gone from having Lloyds, NatWest, Royal Bank of Scotland and Halifax to having none!!! Our infrastructure dwindles by the day.”
The problem is even more acute for colleagues in more rural constituencies.
For businesses as well as individuals branch closures have posed particular challenges. One business owner—an existing Santander customer—said:
“You can do banking at the Post Office but, in order to pay things in, you have to get in touch with your bank first and get paying in slips sent out. Santander would only send me 5 and I have run out now. It means that I can’t accept cheques for my business easily, and I don’t have time to keep ringing up for more paying in slips.”
Someone else said:
“It’s a killer for small businesses, who have to close their shops to go and stand in a queue for a lengthy period of time just to get change.”
I agree with my hon. Friend. She is right to highlight—she did so in her speech—the many difficult issues with conduct in the UK banking industry, and specifically the abuses of lending to small businesses, which we have had many debates about in this Chamber and the main Chamber. Such abuses are particularly difficult to hear about—people have suffered some real abuses—and compounding them makes things especially difficult.
I have heard some particularly moving stories from those who care for others, who have borne the brunt of some closures. This comment choked me up:
“My mum with Alzheimer’s relied on her Lloyds branch in Droylsden before it was shut. The staff knew her well and helped her. They knew her condition and if she was in a bad way they would phone me and give her a cup of tea while they waited for me to arrive. The staff said there were lots of other people like my mum. The closure really affected her.”
Such stories show that we are talking about real people and the impact on their lives. Those are real experiences. The data do not always reveal that. The banks, of course, have the right to present that data to us, but our job is to tell the human side of the story.
We cannot hold back the tide of technological change—like some of my colleagues, I am not a luddite, and I love technology—but we can stop to think about how to make it work for us, not the other way around. Without protection the move to online as a default option will risk leaving the most vulnerable and marginalised in our society without services that work for them.
As we have seen in the debate around ATMs—which were raised several times in this debate—the risk is that we will sleepwalk into a society without access to cash at all, with the industry realising that we need those safety nets only when it is too late. Access to cash is becoming an increasing challenge for people, following bank closures and the decline in our high streets. The chair of the Payment Systems Regulator, Charles Randell, was right to ask in a Treasury Committee evidence session earlier this week whether access to ATMs should be seen as a universal service. I am sympathetic to that.
No one wants to prevent innovation. Indeed, some technological advances, such as remote video appointments or audible speaking ATMs, could for the first time help to include people who have historically had trouble interacting with traditional banking. Our objective, however, must be to use technology to benefit all customers, rather than creating a pared-down, automated banking sector that leaves people without the support they need.
The bank 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. Banks stopped publishing data on closures in 2015, and there is now no central source for it, so the exact number of closures becomes more and more difficult to find out. Since those figures were published, however, we have seen multiple further closure announcements from banks, including Yorkshire Bank, RBS, Lloyds and now Santander.
The scale of the closures seems disproportionate and does not necessarily match how people want to use their bank branches. Also—this has come out in the debate—some of the modelling around the closures does not reflect the fact that branches are all closing at the same time. That was particularly the case in Scotland with RBS. Research conducted by the Social Market Foundation in 2016 found that strong consumer appetite remains for a physical presence. Nearly two thirds of consumers would prefer to talk to someone face to face when making a big financial decision.
A report by Move Your Money, published in July 2016, made the damning assessment that, far from responding to market pressures, the major UK banks are simply closing branches in poorer areas and opening or retaining them in more affluent ones. That is simply not acceptable. The same report mapped bank branch closures against the postcode lending data from the British Bankers Association, which is now UK Finance, to show that bank branch closures dampen SME lending growth significantly in the postcodes affected. The figure grows even higher for postcodes that lose the last bank in town. At a time when we all want to stimulate more lending to SMEs and to encourage growth, a sustained programme of bank branch closures risks taking us in precisely the wrong direction.
Labour’s answer to that is a proposal to change the law regulating banks so that no closure can take place without a real local consultation or the Financial Conduct Authority approving the tranche of closures. A future Labour Government would obligate banks to undertake a real consultation with all customers of the branch proposed for closure, including local democratic representatives on the relevant local council. The bank would be mandated to publish details of the reasons for closure, including the financial calculations showing the revenues and costs of the relevant branch. The share of central costs such as accounting systems, IT, cyber-security and personnel would have to be identified separately, because many of those costs are relatively fixed and not proportionate to the number of branches. The FCA’s approval would be needed for any bank branch closure. We think that is the right balance. It accepts that, as technology changes, there might be some closures, but it would ensure that customers are not forgotten about or taken for granted.
That is our policy on closures, but as my hon. Friend the Member for Ynys Môn said, we wish to go further. The Post Office is often referred to as the solution to bank branch closures, through its relationship with the Bank of Ireland. That is better than nothing—something like £14 billion in deposits is held in accounts linked to the Post Office—but there are clearly shortfalls. The hon. Member for Central Ayrshire highlighted some of those in her speech.
The potential exists, however, to build on that model and to create a genuine Post Office bank, which would ensure universal access to banking services for every part of the UK. It would be a standalone institution; it would pay the post office network for use of those branches, and it would therefore replace the network subsidy payment. It would offer a future for the Post Office, as well as for financial services in every part of the country. It would be held in a public trust model, with 100% of the shares held in trust for the public benefit, ensuring that no future Government could seek to privatise it. I plan to develop those plans and to present them in more detail in the near future, alongside our plans for the future of the public stake in RBS and other measures designed to increase plurality in the banking sector, including the return of new post offices to the UK.
Is not one of the problems—perhaps a future Labour Government could address this—that so many different Departments are involved? We have heard about the Department for Work and Pensions and about the Department for Business, Energy and Industrial Strategy, with its responsibility for the Post Office, and the Treasury Minister is responding to the debate. Would my hon. Friend include in his plans a responsible Minister so that there is accountability to Parliament?
That is an interesting submission. Ultimately, if we wish to see the kind of developments that my hon. Friend and I would like to see, we have to have the Treasury behind them, in whatever way Whitehall responds to that. Clearly, there are lots of different aspects; some are about the legislative environment, some about the regulatory environment and some about the spending decisions that need to be made if we are serious about ensuring universal access to financial services.
In every debate such as this, we all recognise that the financial crisis has had a severe and long-lasting impact on communities in Britain. That fallout has damaged the banking sector in the public’s eyes—we cannot get away from that—but banks must not compound that damage with an overly aggressive and sustained programme of closures, which risks being another step in leaving the high street as an empty shell. Regulators, banks and policy makers need to work together to build a viable banking infrastructure that works for all customers and all communities in a way that will ultimately restore trust and confidence in the UK banking sector.
May I say what a pleasure it is to serve under your chairmanship, Mr Rosindell? I commend the hon. Member for Glasgow East (David Linden) for securing this debate and the 28 colleagues across the House who have made speeches or interventions in what has been a thorough examination of this important issue. As well as a Minister I am a constituency MP, and I recognise the pressure on us when our constituents are not happy with decisions.
Since taking up the position of Economic Secretary last January, I have become well acquainted with branch closures. They can be very difficult for the communities affected and, as we have seen this afternoon, they arouse strong passions across the House. I have taken time to speak with affected customers and businesses, including on my visit to Scotland last August, in order to really understand the concerns. I frequently raise this topic in my regular meetings with banks and the Financial Conduct Authority.
I will seek to address the points made by the hon. Member for Glasgow East and others across the Chamber. He referenced his community in Parkhead and the issues of staff, the impact assessment, the limitations of the relationship with the post office network that many Members have mentioned, and access to cash, which falls under the Treasury’s remit, although the Exchequer Secretary is responsible for that.
Closing a branch is never an easy decision, but it is one that banks take based on their assessment of current and future branch usage and customer behaviour. It is an assessment that they, as commercial businesses, are better placed to make than Government. That is why the Government do not intervene in individual branch closure decisions. However, the Government should not abdicate responsibility for some of the issues that arise.
In his reply to a written question by my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders), the Minister said:
“the Treasury does not collect data relating to bank branch closures or related job losses.”
Does he believe that is an adequate Government response to 1,200 job losses and the closure of 40% of bank branches? Does the Minister believe that the Treasury should collect that kind of data?
As I was going to respond to the hon. Member for Ynys Môn (Albert Owen), who also raised that point about bank branch closure figures, the FCA, which is the regulator responsible for regulating banks, did some analysis of branch closures as part of its “Strategic Review of Retail Banking Business Models” published in December last year. The full research can be found in an annex to the review. The analysis looks at the number and pattern of closures, how they affect urban and rural areas, the age of the customer, the level of deprivation and income levels. It is a thorough analysis across multiple banks and it very much informs Government policy.
How much do the Government ask the banks to co-operate with one another, so that there is some sort of service from whichever bank denomination it might be? At the moment, they are just closing and there does not seem to be any pattern to help our constituents who want to receive financial services.
My hon. Friend’s intervention picks up on the point made by my hon. Friend the Member for Angus (Kirstene Hair) and others about hubs. The hon. Member for Ceredigion (Ben Lake) raised it to, and I think in his maiden speech he talked about the need to bring banks together. There is no regulatory bar to that and it might be a model that banks will wish to reflect on. As has been pointed out, representatives from Santander are in earshot—that may be a model they wish to take forward.
I am very grateful. The idea of banks collaborating and having hubs that would be the joint front end of their back-office functions comes up time and again, but it has not happened. There is no work being done to deliver that. Surely, there are issues to do with competition law, regulatory compliance and liability for mis-selling that simply make it quite unlikely. That is why a serious alternative is required.
I respect the concern that the hon. Gentleman has raised and I will respond to it.
Before I get into the detail into what I am trying to do as the Minister with responsibility in this area, I want to reflect on some of the facts of changing banking practices. More of us choose to bank online or on an app, but the point made by the hon. Member for Central Ayrshire (Dr Whitford) about a mixed appetite for banking services is important, as is the intergenerational point. Between 2011 and 2016, branch usage declined by 42% whereas mobile banking usage increased 354% between 2012 and 2017. Cash was used in 61% of payments in 2007, but it is projected that by 2027—in just eight years—it will go down to 16%. There is a significant and rapid change.
I was laying out the statistics to show the rapidity of the direction of change. On the point made by the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), we must look at alternative provision. I recognise the point made by the hon. Member for Plymouth, Sutton and Devonport (Luke Pollard) about South West Mutual. I will meet Tony Greenham, the executive director of South West Mutual, on 26 February, to discuss regional mutual banking in the era of expansion of alternatives. I will attend the Annual Conference of the Association of British Credit Unions Limited on Saturday 9 March, to look at how to expand the role of credit unions. When I visited Glasgow I met the 1st Class Credit Union and saw its appetite to develop new delivery models. I recognise it is an area we must invest in.
The hon. Member for Plymouth, Sutton and Devonport made the point about learning from overseas; I recognise that is important, too. That is why the Chancellor’s Budget of 29 October included pilots for interest-free loans. We looked at the way credit unions function so they can be given more freedom to develop an alternative presence and range of services. At a micro level, that will sometimes be a relevant alternative to provide for communities in difficulties.
It is really good news that the Minister will meet South West Mutual. It is important that credit unions and new regional co-operative banks are seen not just as a nice periphery exercise in corporate social responsibility, but as a genuine mainstream alternative to financial services, and they need to be structured as such in Government policy.
I am grateful that the Minister is talking about credit unions. The only major job I have done other than being a politician was to work in a credit union. On Monday I have a meeting with a local credit union that is pretty much on the brink of bankruptcy. Part of that is because of a lack of succession planning in the credit union movement and a culture issue about governance. If the Minister is so keen on working with credit unions, what practical support will the UK Government provide, specifically for governance and succession planning issues that challenge them? It will not be just that credit union in my constituency.
I am anxious not to make my response completely about credit unions, but the 146 credit unions that exist have a whole range of governance models and levels of confidence about the future. I do not think it is my role to dictate how they change, but I am trying to find a model—there are many in Northern Ireland, as the hon. Member for Strangford (Jim Shannon) will know—that can be used as a viable alternative.
I want to move on and make a little progress if I may. I said I would respond to the hon. Member for Barrow and Furness (John Woodcock).
I hope the hon. Gentleman will forgive me, but I want to focus on the thoughtful point made by the hon. Member for Barrow and Furness. He referred to his time as an adviser in the Department for Work and Pensions, and to joined-up Government and the Post Office card. It is true that universal credit will have to be paid into bank accounts, but basic bank accounts, which do not involve any fees, are available. Those a viable and accessible alternative. I am happy to take up any further points he wants to make about that, and to learn from his experience in government.
It would be useful to understand why universal credit is not being made available for payment into Post Office card accounts, but I wanted to intervene on another issue relating to the Post Office. The Minister said the Treasury has a policy on access to cash. One of the big issues with Santander going from Ulverston and, I imagine, other areas is that the cash machine will go as well. We have a post office without a cash machine. That will really damage Ulverston, which is a fabulous market town. On festival days, there are huge queues at the existing cash machine. Can the Government direct the Post Office to increase its cash machines in such areas?
I am very happy to look into that. On access to cash machines, as I mentioned in the Adjournment debate last Thursday, we set up the payment systems regulator, which is responsible for overseeing payment systems. The regulator is closely monitoring the situation with LINK and the commitments it has made to maintain the spread of ATMs across the UK. I recognise that the pressure on that network is growing. However, I need to reflect on the relationship with the Post Office rather than trying to answer the hon. Gentleman’s question now.
I am going to make some progress, because I need to leave time for the hon. Member for Glasgow East to respond. Given unparalleled consumer change, the banks have adapted to keep competitive, including by taking some of the decisions we have discussed. That has meant investing unprecedented amounts in digital development, financial capability and tailored support for vulnerable consumers so banking is more personalised, on-demand and flexible, which many people expect in the modern world.
Let me address the impact on the franchising of Crown post offices, which a number of Members raised. Prior to finalising its plans for franchising, the Post Office runs local consultations to engage the local community and help shape its plans. That is in line with its code of practice and has been agreed with Citizens Advice. Indeed, Citizens Advice reported that the Post Office’s consultation process is increasingly effective, with improvements agreed in most cases, demonstrating its willingness to listen to the community.
The Government acknowledge that the post office plays an important part in the lives of customers, and accessibility of post office services is a key Government priority. That is why we have set specific access criteria, requiring 99% of the UK population to be within 3 miles of their nearest post office. Despite the point made by the hon. Member for Heywood and Middleton (Liz McInnes) that legislation does not impose a specific requirement for Post Office Ltd to undertake an equality impact assessment, the Post Office considers the impact of proposed changes to the network on its customers, and the Post Office and all its franchise partners, including WHSmith, are subject to all relevant accessibility legislation.
I will take that matter away and respond to the hon. Lady by letter.
The Government recognise that there are people who are struggling to adapt to new ways of banking or just prefer to carry out their banking in a more traditional way, over the counter. Members made powerful representations on behalf of constituents who find the closure of their local branch an inconvenience at best and a severe obstacle to their daily business at worst, so I want to take the time to reassure them that there is support available to minimise the impact and disruption of those changes.
I recognise the points made by the hon. Member for Ealing Central and Acton (Dr Huq), the hon. Member for Argyll and Bute (Brendan O’Hara) and others about the access to banking standard, which I mentioned in a previous debate. The access to banking standard is an important tool for ensuring that customers feel informed and supported when a branch closes, and all major high street banks are subject to it. It is my view that Santander adhered to the letter and the spirit of the standard when providing support to customers. I cannot account for every individual branch, but I am sure Members will be able to take that up with Santander, who were here to hear their representations.
I recognise that it is important that the standard is adhered to in both letter and spirit, and that support is given, but the Post Office’s commercial agreement with 28 high street banks and building societies enables 99% of personal banking customers and 95% of small business banking customers to carry out their everyday banking at one of the Post Office’s 11,500 branches, which provide an excellent alternative to a bank branch. Everyday essential banking services, such as cash withdrawals and deposits, cheque deposits and balance checking, are all available in every Post Office branch, including those located in retail facilities. Since 2010, the Government have invested close to £2 billion in the Post Office, and we have provided an additional £370 million from April last year until March 2021 to ensure the network can continue to modernise and maintain suitable coverage across the UK. That has meant post office numbers have been at their most stable in decades.
This issue is not just about individual customers; it is about businesses, too. Santander has long had an arrangement with the Post Office for its business customers, who currently cannot deposit cash at a Santander branch and must use the post office instead. Indeed, a third of SMEs visit post offices every week, highlighting the Post Office’s value for business banking. The Government believe that too few customers know about those excellent services, so, at my predecessor’s request, UK Finance and the Post Office worked together to launch an action plan to raise awareness of Post Office banking services. I encourage every Member to support their local post office and make their constituents aware of those banking services.
I also hear Members’ concern about the depletion of the high street. That is why, in the last Budget, the Government introduced a £675 million future high streets fund—not another review but a fund—that seeks to make high streets and town centres fit for the future. Alongside that, we are helping smaller retailers by cutting their business rates by a third for two years from April 2019.
I am conscious of the time, so I thank all Members for taking the time to speak in the debate on behalf of their constituents and local communities. I fully respect the fact that bank branch closures are a symptom of wider changes in our economy. It is important that, in response to those changes, we strike the right balance between promoting a dynamic and competitive financial services sector and ensuring that customers are treated fairly. I take my responsibility for supporting the development of alternatives to banks across the United Kingdom very seriously.
Thank you very much for calling me, Mr Rosindell. You have taken over in the Chair since I opened the debate. It is a pleasure to see you in your place; thank you for chairing the remaining proceedings.
Westminster Hall debates on a Thursday afternoon tend not to be the best attended, so the fact that no fewer than 29 Members took part in this debate highlights the seriousness of this issue. I was reflecting that when the votes are called in a little over half an hour, we will return to the main Chamber and go our separate ways into different Division Lobbies. The fact that we have come here on a completely cross-party basis and spoken with one voice is incredibly powerful. The House is at its best when we come together and speak with one voice, and I am pretty certain that today we have spoken with one voice. I know that Santander are in the Gallery. I hope not only that have they been listening but that they will act and save our Santander.
Question put and agreed to.
That this House has considered the effect of Santander branch closures on local communities.