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Local Bank Closures

Volume 661: debated on Wednesday 12 June 2019

[Joan Ryan in the Chair]

I beg to move,

That this House has considered the Government response when the closure of the last local bank is proposed.

It is a pleasure to serve under your chairmanship, Ms Ryan. I am delighted to have secured this debate, because the closure of our local bank branches in Moray has been an issue of significant concern for some time. I want to start with a roll call. Since 2015, we have seen 16 bank closures in the following towns in Moray: Cullen, Dufftown, two in Aberlour, three in Keith, two in Buckie, Elgin, a further two in Lossiemouth, two in Forres, Burghead and Fochabers. Those bank closures have affected communities in the north, east, south and west of Moray—no part of our area has been unaffected. The issue continues, with growing frustration for my constituents in Moray and constituents across Scotland and the UK.

In the UK, bank branches have reduced from 11,365 in 2007 to just 7,207 10 years later. In Scotland, between 2010 and 2018, a significant number of branches closed. RBS reduced its branch network by 70%, Clydesdale bank by 53% and Santander by 42%. Which? estimates that there are 130 communities in Scotland alone that are described as cash deserts. That means they do not have access to either a local bank branch or an ATM.

The banks have their reasons for doing this. They explain that footfall is decreasing, that more people are taking up online banking and that people can use different methods to deal with their banking needs. I disagree with that for a number of reasons, but an email I received from a constituent summed it up perfectly. The constituent comes from Portknockie, and wrote:

“I support you in calling banks to account. We know that bank closures in Moray have been severe and that banks have not even followed their own protocols when closing branches.”

She continued:

“I use online banking and am fortunate to have both the skills and fast broadband which make this possible, but I think that it is wrong that banks are acting on the assumption that everyone has these and increasingly that they have smartphones and good mobile signals. I have a smartphone but the mobile signal where I live in Portknockie is so poor that SSE were unable to install a smart meter.”

Yes, the banks do have many reasons for suggesting that these closures are the right way forward, but I believe that this constituent and many more who contacted me ahead of this debate are absolutely right. People are not unaffected by these closures. A large number of people in our communities either do not have access to fast broadband, to allow mobile banking, or simply do not want to use it, but wish to continue the face-to-face contact that they value with their banks.

I congratulate my hon. Friend on securing this debate. His constituent also raised the question of the procedures and processes that banks go through before they disengage with a community. In the experience of my constituents and my own experience in Bridge of Allan, that is a tick-box exercise and nothing more.

I endorse and agree with my hon. Friend’s comments. I want to focus specifically on how banks approach this whole process. It could be done far better—indeed, it could not be any worse.

My hon. Friend is making an excellent case for why it is wrong that these banks have been closed. In my own area in the Scottish Borders, we have lost many bank branches, which causes great anxiety to many of the residents. When banks shut a branch, they say that there are mobile or other banking options, but many communities do not have access to mobile phone signals or broadband. Does my hon. Friend agree that the banks should be doing more, before they shut the branch, to ensure that all residents and communities are properly connected? The Government may have a role in supporting that, too.

My hon. Friend’s seat in the Scottish Borders, my own in Moray and many others across Scotland do not have adequate broadband provision to allow a suitable online connection, to which the banks are directing so many people. I will be interested to hear the Minister’s response to the point made by my hon. Friend.

It is right that we should discuss bank closures in the round, but this debate specifically addresses the point at which the final bank branch in a town closes. Sadly, we have recently seen that in Lossiemouth. Lossiemouth is not a small town; it is a growing town. The population is increasing, largely due to the UK Government’s investment there. We are putting £400 million extra in RAF Lossiemouth, which will be the home of the P-8 Poseidon aircraft. With that, there will be at least an additional 400 personnel and their families coming to the town.

It is all the more bizarre and upsetting that now, when Lossiemouth has this huge investment and is preparing for an increase in population, the last branch in the town should have decided to go—it closed last week. This weekend was the first without the branch and, as I will mention later, the ATM was also removed. In the first weekend after the branch closed and the ATM was removed, a town with almost 8,000 residents was left with no cash whatever. The two remaining cash machines in Lossiemouth ran out of money.

I am sure that all of us here now have experience of towns with no banks in them. If a town known to be highly dependent on the cash economy, as many of our tourism towns are—this particularly affects bars and pubs—loses its last bank, people will be aware that cash is being kept on premises. To what extent have the Government considered the security of the towns and the threat of organised crime? Bars and pubs in particular—on bank holiday weekends, say—will no longer be able to deposit cash locally, so that cash will be held on the premises, which are not equipped and not necessarily insured to hold that level of cash. This is an aspect that we have not considered so far.

I am grateful to the right hon. Lady, because that issue came up when I held a public meeting in Lossiemouth, following the announcement that the final branch in the town would close. The local football club, Lossiemouth F. C., said that it had checked with its insurers, who said that they would either increase the premium to a level that it could not afford or simply not insure it at all, because it would now not be able to deposit cash at the end of the night: the cash would have to remain on the premises. I hope the Minister addresses that issue, but we also have to put it to the insurers, because it is no fault of the football club or other operators in these towns that the banks are now closed and people cannot deposit money.

I want to return to Lossiemouth, a huge town in Moray, being left without cash this weekend. Denise Bedson of the Lossiemouth Business Association told The Press & Journal:

“The situation at the weekend was disgraceful. A lot of small businesses can’t afford card facilities. I know there are cheaper solutions but the phone signal isn’t always the best here for them to work properly. We’re trying to get more banking facilities here because the situation is very difficult”.

It was so difficult that there were reports of people going into the local store to buy one tin of baked beans just to get cash back. They had to buy something that they did not want or need, simply to get money from the store, because the cash machines were not working. Councillor James Allan, my colleague, who represents Heldon and Laich, has been a great local champion for this cause for years. We have gone from four banks and seven ATMs down to just two ATMs. In a community the size of Lossiemouth, that is simply unacceptable. This is just the first weekend. We have serious concerns that this will go on further.

Mention was made of tourism and tourist businesses. Lossiemouth is a great attraction for tourists, with whom it is very popular. We have takeaways and taxi firms, which do not accept credit cards or debit payments. They will suffer as a result of this. Lossiemouth Community Council and its councillors Mike Mulholland and Carolle Ralph have been highlighting the bank closures for some time; they also held a public meeting about them, following my meeting. The issue has been of considerable concern since the announcement was made last November. We knew that this was coming, but the banks have deserted Lossiemouth and other communities across Moray, Scotland and the UK. I believe that they have to do more about it.

While I am speaking about Lossiemouth, the area in Moray that is most affected because it has no branch left, I also want to mention post offices. They play a vital role, but there are some limitations. I know how hard Tony Rook, owner of the post office in Lossiemouth, and his staff are trying—as he commented in The Northern Scot this week, they are doing their level best—but when there is a spike in use and they are away for the weekend, there is nothing that they can do to put more money into their cash machine. He has one of the two cash machines in Lossiemouth. It costs his business to have it facing outwards to the street, but he does it as a public service. It is a great service, but even with great efforts from him and his staff, we were still left without money in a Moray town at the weekend. That is something that we need to look at.

It is not just Lossiemouth that has been affected. At the same time as the closure in Lossiemouth was announced, there was another in Keith. I held a public meeting there as well; I was grateful for the attendance of local councillor Donald Gatt, as well as Paul McBain, representing the post office, and Pearl Hamilton from the Federation of Small Businesses.

When we consider the impact of branch closures or the reduction of ATMs, we often think only about the customers who want to take money out, but the small businesses in our communities suffer just as much, if not more. FSB Scotland retweeted my tweets about today’s debate because it has great interest in the matter. Small businesses are losing not only the branch that they bank with and deposit their takings at, but the opportunity for people to take money out and spend it in their shops. They are the lifeblood of our local communities, so it is unfortunate and deeply reprehensible that they are being drawn into this.

I also want to speak about the bank’s response. I have to say that its contempt both for its own customers and for local communities is disgusting. As the local Member of Parliament, I got a phone call about the Bank of Scotland’s closures in Lossiemouth and Keith, days before it even wrote to its customers; I know my MSP colleague did, too. It came to the politicians to tell us, “This is what we are doing—oh, and by the way, we will tell our customers after the bank holiday weekend.” It thought that they could wait a few days before even bothering to tell its customers about news of such magnitude.

The banks get involved in the process that has been laid down to consult and inform communities of their decision, but they never change their mind. It is a fait accompli—they have decided what they are doing. When communities rightly stand up against these cuts and removals to express their concern about how deeply damaging they will be, the banks turn a deaf ear: they are not interested, and they do not want to hear it. I have to say that I think their behaviour shocking and unacceptable.

The hon. Gentleman is making a most persuasive speech. When a local authority in Scotland wants to close a school, there has to be a proper public consultation process. Does he agree that something similar would be appropriate for proposed closures of bank branches?

The hon. Gentleman makes a valuable point with which I wholly agree. Like him, I have been involved with school closures as a local councillor, and they are not easy decisions to take. When we were proposing to close Cabrach Primary School in Moray, we had to have a full consultation, even though it had no pupils left at all—the final two, a brother and sister, had moved to another school. There has to be a full consultation with the community to close a school with no pupils, but a bank branch with so many customers that is so valuable to the local area can be closed when the bank comes in and ignores every view put to it.

My most abiding memory of Lloyds’s reaction to what it was doing in Lossiemouth and Keith was that it was not even willing to engage. I wrote to it when I quickly assembled the public meetings, which were attended by people from community councils, the post office and business associations. The meetings in Lossiemouth and Keith both had an empty chair for the bank; because it could not even be bothered to turn up and face the public about its decision, I thought it only right to show the public that it was absent by leaving a chair empty.

People wanted to challenge the figures about reducing footfall or the number of transactions. There were several people in the community who did not believe the figures that were put forward. The bank should have either substantiated its claims and stood up to support them, or gone back to the community and said, “This is where we were correct, and this is where you were correct.” That it was unwilling to do that demonstrates its whole attitude to this crisis.

The bank’s next response is, “Well, we’ll put in mobile banking.” A town the size of Lossiemouth, which has gone from four branches to none, now has a mobile bank coming for an hour or two a week. We have a great climate in Lossiemouth, but it is not always sunny and beautiful; it is sometimes cold and wet, and yet we expect elderly bank customers to stand outside and wait while others go in and carry out their business. There are also elements of privacy that a mobile banking service cannot replace. It is wrong that we should keep hearing, “We are closing your branch, but we will continue to have a presence.” That presence is pitiful, and it does not match the needs and aspirations of the community that uses it.

As I have mentioned before in Westminster Hall, in a debate about access to cash, RBS in Moray has a mobile branch van called the Moray Rambler. There have been so many closures of bank branches across the north-east of Scotland that the Moray Rambler now has to ramble into Banffshire and Aberdeenshire to cover areas outwith my constituency. Not only have we a poor service, but it is being stretched further and further and towns are getting less and less time with the mobile bank.

Post offices rightly have a role to play that we all value. Paul McBain represented the National Federation of SubPostmasters at my public meetings, and he did so well. Some tasks can be done at the post office instead of the bank, but some simply cannot be replicated: transferring money from an account, seeking advice about bank accounts, opening or closing accounts, registering a power of attorney or grant of probate, making complaints or inquiring about savings, current accounts, credit cards, mortgages, personal loans or investments. There is a role for the post office and there are tasks that it can do, but there are many that it simply cannot. It is wrong for the bank to say, “We’ll put in a mobile branch, or you can use the post office as an alternative.” It is not a like-for-like alternative; it is misleading and wrong to say so, and we will be in trouble if we go down that route.

Research into post office usage by Which? reveals that only 55% of adults are aware that they can use the post office for banking—almost half of the population do not know that—and that 47% are unlikely to use a post office for banking in the future. I hope that we can change those figures; as I said in an Adjournment debate in the main Chamber a couple of months ago, we need to encourage the public to use our post offices. However, many people out there do not want to use them for certain aspects of their banking needs. Some 42% of people did not want to go into a post office for banking because queues were too long, while 32% believed that they were not private enough.

The key thing is that post offices have to be financially viable. If they are to take on more services, they have to be able to make a living from them. That is a fundamental challenge to the existence of many sub-post offices.

I agree wholeheartedly. That is an issue for the Government, but not for the Minister; I know that the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Rochester and Strood (Kelly Tolhurst), has been discussing it. I want our post offices to be rewarded for doing the tasks that the banks are currently doing, because they are not being rewarded at the same level as banks for the jobs that they do.

My final point about closures goes back to the figures on footfall. In Lossiemouth, we have been told, “Your nearest branch is in Elgin, which is not too far away.” It is not far away in mileage, but getting there can be quite difficult because our bus services are not as good as they once were. People are expected to get the bus from Lossiemouth into Elgin, but ironically the branch there is not as accessible: people cannot park very easily on the high street, so they have to pay to use a car park and then troop round to the bank. Customers of the same bank used to go from Elgin to Lossiemouth because it was easier to park outside, and now we have closed the branch that they actually wanted to go to. Again, that shows how ill thought-out these plans are.

I know that many hon. Members want to speak in this debate, but I will just highlight access to cash. I have already mentioned the scenario in Lossiemouth where there was no cash available over the weekend. There has been a decline in the use of cash, but research undertaken in 2018 showed that 73% of people used cash frequently—that means once or twice a week.

The next figure that I will cite is interesting: 60% of 18 to 24-year-olds use cash frequently—again, that is once or twice a week. I am looking around me in Westminster Hall; before my hon. Friend the Member for Angus (Kirstene Hair) came in, I thought I was the youngest Member here, but she has beaten me to it. My hon. Friend the Member for East Renfrewshire (Paul Masterton) may have a complaint to make about that. Generally, we think that younger people—those in their thirties, or younger—are more likely to use smartphones, other technology or contactless payment, but we are told that 60% of 18 to 24-year-olds still use cash. Access to cash is not just something that affects the older population; it affects everyone in our communities. Industry figures predict that in a decade’s time, cash will still be the second most popular payment method.

A further concern that was mentioned today in a press release from Which? is that 7 million people were unable to use a payment card last year because of IT glitches. We can encourage people to use different payment methods and move away from cash, but people will still be affected if there are IT glitches, and such problems sometimes cost them money. We need to bear in mind that in the last year, 7 million people were affected by IT glitches.

The hon. Gentleman is making an important point. Access to cash machines is also important for people who are on a budget. They like to withdraw small amounts without being charged, to help them to budget, whereas better-off people may make one large withdrawal for the week.

The hon. Lady is absolutely right. Research into the issue shows that some of the lowest paid in our society will be most affected if there is an even greater reduction in access to cash.

My hon. Friend makes an excellent point about the importance of cash. There is a wider economic point, because many of the small towns that he represents, and many of those that I represent in the borders, are absolutely dependent on cash. In Coldstream, Hawick and other towns in my constituency, when the banks have shut and the cash machines have gone, many traders have noticed a significant decrease in footfall and sales. That undermines the economic viability of the high street.

I totally agree with my hon. Friend. As he mentioned Coldstream and Hawick, I am sure he will get two press releases out of that intervention—something he always does well in debates such as this. Our high streets are vital to our communities, but we have seen a reduction in the number of shops on them. If that continues, we will really suffer.

I will briefly mention banking hubs. They are an idea that we have to consider, and I want to hear what the Minister has to say about them. The idea is not a new one; I know that it was suggested as far back as 2002. Last year, I wrote to every bank operating in Scotland about the suggestion of looking further at banking hubs—I know it has been made by several politicians from different parties—and I have to say that the response was disappointing. Some of the banks ignored the suggestion, and others said that hubs were not right for them. Nationwide said that it did not believe it was in the interests of its members to enter into a branch-sharing scheme. Such a scheme might not be in the interests of Nationwide’s members, but it might be in the interests of our constituents and its customers.

We have to do far more to get the banks to work together. They may have some concerns, but if we cannot have the four branches that we used to have in Lossiemouth, let us at least have one hub where the banks can work together to ensure there is still a banking presence.

I thank my hon. Friend for giving way and for bringing this important issue to the House. We have seen the starting up of a pilot business hub in Birmingham, whereby four bank branches have come together to help businesses. Does my hon. Friend agree that that shows that there is a mechanism for banks to do this, and that they just need the will to ensure that they help their personal banking customers just as much as their business ones?

My hon. Friend makes the point that hubs have been created before and there should be no blockage. However, the banks seem unable or unwilling to move forward on the issue, and perhaps the Minister can use either a carrot or a stick to encourage them to do a little more.

I will end by putting some points to the Minister and asking him some questions, and then I will allow others to contribute to this debate. I was interested to read a report from July 2018 by the Scottish Parliament’s Economy, Jobs and Fair Work Committee, which was chaired by my colleague Gordon Lindhurst. The report contained a number of key points, including that there will be an indefinite ongoing need for cash and universal face-to-face banking provision; that the access to banking standard, with its post-closure-decision consultation, is failing and a binding pre-decision consultation is needed; and that there is a need for the UK Government to research the issue properly and come up with binding statutory and regulatory conclusions.

I know that the Minister listened intently and understood the concerns of Scottish Members when he addressed this issue at the Scottish Affairs Committee this morning. I hope that, with some of the asks from me and other Members, the UK Government can make some progress on this issue.

I hope that the Minister will look at the access to banking standard and toughen it up, because some banks are not part of it. As I said when I read out communications from a constituent and others, there are concerns that banks are not adhering to the standard. I also hope that he will engage with the banks about banking hubs; the banks have too easily written off that suggestion rather than engaging properly on it. Although I accept that there are commercial reasons why banks choose to leave towns, I hope that the Minister will accept that the situation is different when a bank branch is the last to leave a town or village, and that that has a far greater impact than earlier closures.

To conclude, there has already been a devastating reduction in the number of branches across Moray, across Scotland and across the UK. We almost always lose ATMs at the same time, and therefore access to cash as well. We need to reverse that trend. Banks can improve their image—it is not always the most positive—by listening to communities and working with them, and not by simply leaving towns and villages. To date, I do not believe that the Government have done enough. We can also improve our image on this issue by working with communities and ensuring that they retain the banking presence and bank branches that they so greatly need.

I intend to start calling Front-Bench spokespeople at 3.27 pm. That leaves roughly between four and five minutes if each Back-Bench Member who wishes to speak is to have an equal share of the time that is left; I leave Back-Bench Members to manage their time themselves.

It is a pleasure to serve under your chairmanship, Ms Ryan, and I congratulate the hon. Member for Moray (Douglas Ross) on securing this extremely important debate.

This is not the first time that I have spoken in this Chamber on this subject area. Last Thursday, we discussed a Treasury Committee report; the hon. Member for Oxford East (Anneliese Dodds), who is the Labour spokesperson this afternoon, also attended that debate. The issue cuts across two Government Departments and I hope that they will soon get their heads together and sort it out.

As has been said, Scotland has lost more than a third of its bank and building society branches in the last eight years. New analysis from Which? shows that 610 branches in Scotland closed between 2010 and 2018, and Santander’s recent decision to close 15 branches in Scotland will have a devastating impact on staff and local firms.

As we have heard, communities are devastated when local bank services close, and when the last bank goes it can have an unacceptable effect on local communities. In its report, the Treasury Committee said that

“there are still large sections of society who rely on bank branches to carry out their banking needs.”

As the hon. Member for Moray said, it is not only the elderly who need cash; everyone seems to need cash at some point during the week. If they cannot access it, there are real problems, and there is a deleterious effect on our local high streets and our local businesses.

The UK Government must step in and act; they can no longer argue that they cannot intervene. They made a similar argument about Royal Bank of Scotland closing branches, but we now know that the Treasury thought that it was okay to force RBS to pull finance from customers through the asset protection scheme.

The view of the Treasury Committee is that

“the Government should make changes to competition law to allow banks to share facilities in order to maintain a sustainable branch network”

and that

“intervention by Government or the FCA may be necessary…to provide a physical network for consumers”,

which is extremely important. We need people to be able to access cash. Perhaps we need the Lending Standards Board to be involved in this as well, to increase transparency and the potential for external scrutiny over branch closures. It could publish examples of non-compliance when people do not do the right thing through their annual reports.

Post offices are a subject in which I have taken a great deal of interest; I secured a backbench business debate on the sustainability of the post office network. Post offices have lifted a heavy burden when banks in their vicinity have closed. One sub-postmaster in my constituency told me that because of the closure of local banks, he was now having to work extremely hard simply counting cash, and he worked out that in one week his take-home pay was £1.37 an hour. I am aware that Post Office Ltd has increased the rates it pays sub-postmasters, but that increase will not come into effect until October of this year. It is extremely important for local authorities, communities and businesses that where the last bank closes, the Government do what they should be doing: supporting banks through banking hubs, charging banks to use those hubs and using any other means that they can find to do a good job and keep cash going in local economies.

I thank my hon. Friend the Member for Moray (Douglas Ross) for having secured today’s debate. This issue is of real concern to my constituents, who have been hit by a number of closures of bank branches in recent years. I am a member of the Scottish Affairs Committee, which has done a lot of work in this space: we have done a bespoke short inquiry into RBS’s significant run of bank closures, and we are going to do another one into access to cash. I am sure the Minister will be sick of the sight of me, since he was in front of the Committee this morning.

I will touch a lot on some of the points that our Committee has drawn out through our inquiry, and focus in particular on the impact of bank branch closures—especially the last bank in town—on the local post office network. That network is often used by banks as a justification for abandoning a community and a high street. It seems to me that banks effectively want post offices to do their work for them, often at a loss, as the hon. Member for Motherwell and Wishaw (Marion Fellows) has explained. From evidence given to my Committee, we know that banks do very little to ensure the longevity and sustainability of the post office network on which they rely so heavily. In East Renfrewshire, half a dozen post offices have closed over the past couple of years for a variety of reasons. Just about every single one of those post offices was included in the so-called consultation documentation produced by a local bank as the nearest place for customers to carry out their transactions.

The Government need to set out a clear policy paper on how to tackle this issue, and reform the access to banking standard from a voluntary agreement into something with more legislative backing. They also need to do more to facilitate genuine alternatives to banks using the post office as a quick fix when closing branches. Post offices are not a replacement for branch services, and their staff do not have the training to act as banking specialists; my hon. Friend the Member for Moray ran through a whole range of things that they cannot do and explained well the lack of awareness about the post office. However, it is crucial to ensure the post office network is receiving adequate funding to deliver banking services, rather than post offices subsidising bank branch closure programmes, which is effectively what is happening at the moment.

I agree that banks need to look seriously at sharing space to keep a local presence; that is particularly important when the last bank leaves. If those banks still want to pass the buck to the Post Office, the Government should explore making them responsible for setting up and funding banking hubs. Such hubs could be located or co-located in post office branches in certain instances, but the post office branches themselves and the services currently available through them should not be seen as a replacement for banking services. The Government could raise the bank corporation tax surcharge and the bank levy to fund the provision of banking services in the post office network and a network of community banking hubs, especially when it comes to staff training. In 2019-20, those two taxes are forecast to raise over £4 billion. Of course, funding should also be available through fines collected for non-compliance with the standard.

My constituents living in Neilston saw their post office suddenly closed in March, leaving that village without any banking services whatsoever. The same has happened in Eaglesham, at the other end of the constituency. Post offices that banks used as excuses for why their branch was no longer needed are gone. Where are the banks? They simply do not care; as far as they are concerned, it is now the Post Office’s problem. Their responsibilities to the communities they used to serve are, in their view, over.

Surely, the least we can expect is that if banks want to pass the buck to the Post Office, they ensure that post offices are sustainable alternatives to bank branches in the long term. It is quite clear that for my constituents, they are not. As I told the executives of RBS, Bank of Scotland, TSB and Clydesdale Bank when they appeared before the Scottish Affairs Committee, it is completely unacceptable for high street banks to rely on the post office network as a justification for abandoning local communities while doing nothing meaningful to ensure the continued survival of that network.

It is a pleasure to speak in this debate, Ms Ryan, and I congratulate the hon. Member for Moray (Douglas Ross) on having secured it. While I am always pleased to support any debate that the hon. Gentleman secures, I have a deep interest in this particular topic.

I used to come to these debates and talk about my rural areas and social isolation. As I did that, bankers nodded at me, all the while pushing on with their plans to close rural banks, which succeeded. The last banks in the Ards peninsula in my constituency closed over a year ago, although to give a bit of credit to Ulster bank, I highlight the fact that it provided a mobile bank and a customer adviser on a weekly basis. That has been useful, so some of the banks—one of the banks, anyway—took the opportunity to do something.

These closures mean that much of my constituency has no local branch. When that is paired with the fact that some areas of the peninsula are using dial-up internet, the isolation becomes incredibly clear. However, according to the banks, the numbers did not tally, and the customers could be relocated to another branch—how frustrating it was to watch that. It was fine until the closures started hitting the main town, Newtownards, which has a population of some 30,000 and serves the Ards peninsula. We saw the First Trust bank close, as well as the Bank of Ireland branch. Someone from Portaferry, some 30 miles down the road, has to travel to Bangor or Belfast simply to speak to their local bank.

I thank God for Danske bank, Ulster bank, Santander and Nationwide, which have carried out enhancements to their Newtownards branches. Those enhancements show their dedication to the local area, and I highlight them to anyone who asks me about those banks. I much prefer to work and do business with those who are prepared to have a local branch, paying rents and providing a service. Most people now are doing things online, which is phenomenal for the people whose lives are made easier by doing a lot online. My parliamentary aide is at that all the time—she is always on the app, moving her money around to cover bills, which is great—but at lunch time she goes down to Nationwide to lodge money in the children’s accounts; she has access to the banks and can do transactions there. How much more is this a case of enforced technology for people my age or older?

I will give Members a real example: in the six months before the consultation on closing one of the banks in Newtownards, a staff member had been designated to stand in front of the counter and ask people in the queue if they could help get them online and do their transactions online for them. The bank then raved about the uptake of online banking. That is a slight false economy when a staff member had to stand patiently with the customer, who got to jump the queue and get what they wanted if they had talked to that staff member. In addition, the banks began to say, “We have to charge a fee, but if you do it online yourself, it is free.” Explaining all that to the customer took longer than carrying out the transaction would have done, but that would not provide the same excuse to say that the branch had become obsolete.

I read a story in the paper at the weekend, which is a true story. I am rather loath to use the bank’s name, although anyone who reads The Mail on Sunday can find out which bank it was. The headline states:

“As banks continue to axe branches around Britain and force firms to go cashless, this furious baker”—

who is one of the bank’s customers; not a banker, but a baker—says that her bank

“‘talked me into a pricey card reader…then shut down my branch’”.

Wow! Listen to this one: she pays £39 a month for a debit card reader, and 1.85% of every transaction goes to the bank. If cash disappears, there is a danger that contactless card payment fees will soar. That is the bottom line and the unwritten rule: whenever they get control of your assets, they will screw you a wee bit more.

The next one comes from a lady in a village—this is an absolute cracker. Her bank boasts that it is “by your side”. It was so much by this person’s side that it closed down her branch last year. That illustrates what the issues are.

I have constituents who do not know how, or have the facilities, to carry out their banking online, and even those who do still frequent their bank regularly. People need that service and pay for that service; that must be the priority, not simply giving shareholders a bigger dividend. No one expects the banks to be charities, but providing a service to those who pay is not being charitable. Let us bring back the banks, the local branch manager and the forgotten ideal of being part of a local community. That is what banks should be, and very often now they are not.

It is a pleasure to serve under your chairmanship, Ms Ryan, and I thank my hon. Friend the Member for Moray (Douglas Ross) for securing this important debate.

It is all very well for the banks to say that people are required to move with the times, but there is a generation out there who came through school having been taught mental arithmetic, not IT skills. Not all members of that generation will be fortunate enough to have children and grandchildren fluent in IT speak, with a knowledge of apps and so on, to act as trusted advisers and able to direct them through the technological maze. Not all have good memories for the passwords required, and it is a regrettable fact of life that our faculties fail us with age. I am testament to that.

On a brighter note, I congratulate staff and pupils at Kyle Academy in Ayr in my constituency, whose pupils are learning about cyber-crime and passing on that skill to others, including small businesses and the elderly in the Ayr community. I congratulate them.

Online is a modern maze where, on occasion, even the most skilled might fall victim to scams. At a rural crime event in my constituency, it was highlighted how a farmer had been scammed when purchasing and paying via an online bank account for expensive agricultural equipment. Might it have been different had there been a bank branch open to conduct that business? The banks and the Government need to instil confidence in the user of digital banking services, whether that is in relation to the availability and basic reliability of the internet in the first place, or protection from the cruel, heartless scammers who appear to be able to read bank cards or secure an individual’s bank details. Is it any surprise that, until the banks and Governments robustly and timeously minimise, if not eradicate, those known risks, the public will remain averse to bank closures and feel that they are being pressured to move online?

The banks place great emphasis on the fact that shared facilities exist through post offices by virtue of the Post Office banking framework, which is an agreement with around 28 high street banks, supported by the Government. However, stand-alone post offices are virtually a thing of the past as well. Most are incorporated into stores and, again, privacy is often an issue. Worryingly, some postmasters have contacted me, and I am sure many others throughout the UK, regarding the profitability of their business being driven down by the Post Office itself. Thankfully, the Post Office has been listening and in October we should see changes that afford greater support to sub-postmasters, which is to be welcomed.

I am delighted that a bank—the TSB, I believe—in the seaside town of Girvan has survived the closures, having stated that it was determined to make significant efforts to keep branches with low footfall open by reducing opening hours. A face-to-face presence remains, at least for the time being. Perhaps that is a model worth considering. On the negative side, the nearby village of Dailly no longer has a visit from the mobile bank, which appeared there for a couple of hours a week. I understand the Government acknowledge the valuable role of credit unions. However, I have constituents who remain aggrieved that banks are permitted to provide services through post offices while credit unions are not permitted to co-locate with post offices. Hopefully, the Minister will be able to review that somewhat restrictive practice.

The Government refer to the access to banking standard and have said that the decision to close a branch is a commercial decision for the management team of the bank, and the long-time policy of successive Governments has been not to intervene. Yet Members will remember that in 2008 the Government of the day chose to intervene when banks’ management decisions nearly brought the banks to their knees, so why not consider their stance and intervene now to extend the presence of the last bank in town?

It is very important that we endeavour to avoid financial exclusion and age discrimination. We still see ATMs and Link is working on initiatives to preserve access to cash, despite the reduction in the use of cash by some groups in society, but, as has been said, for those living on a pension, benefits or lower incomes, dealing in cash sometimes makes financial management easier. Too often, tapping a card or entering a four-digit pin number fails to register in the mind of the purchaser the actual spend building up until it is too late and they are plunged into unaffordable debt.

Will the Minister assure us that personal customers—particularly, although not exclusively, the elderly—and small businesses will not be prejudiced by the continuing bank branch closures and that choosing to use internet banking will be better protected from the impact of cyber-crime?

It is a great pleasure to serve under your chairmanship, Ms Ryan.

I want to draw Members’ attention to the county of Sutherland in the highlands, which is part of my constituency. Since 2005, eight branches have shut. With the recent announcement that the Clydesdale is going to shut its branch in Brora, we will be left with precisely one branch, the Bank of Scotland in Golspie, in a very large county of 2,028 square miles, with a population of some 13,500 who will have only one branch left. For some people that means a 150-mile round trip to get to the bank, if someone lives in Durness in the upper north-west—a three and a half hour bus journey for my constituents. And it gets worse. We have talked about post offices and how the banks say, “Go online or use the post office,” but Clydesdale bank seems to have conveniently forgotten that the post office in Brora has been shut for some time, making a complete mockery of that.

I and other Members have always said that the point of having a real branch is to have a human face behind the counter. Even if people can go online—not a lot can in my constituency—if someone has a big payment coming along but they do not know what it is, which can be a real worry for people, old and young, it would be better if they could go into a branch and see somebody who would say, “This is what it is,” or, “This is a scam.” That is why we want the human face, which is very hard to replace.

In my huge constituency, we are told to use mobile banks, but it is not awful funny going to a mobile bank in Wick if it is sleeting in January. The weather in good old Wick can sometimes be very inclement.

My contribution is short, but the matter of Sutherland serves the purpose of helping all Members here today, because it provides such an extreme example: one branch in a vast county of 2,028 square miles, which is astonishing. However, I give credit where it is due to the Minister. He has met and listened to a cross-party group of MPs, and I think he has taken the issue on board, but I say to him from the bottom of my heart that we have to get something together. The hon. Member for Moray (Douglas Ross) made a superb speech. This is about getting the hubs to work. Where there is a will, there is a way before us. If we could get those hubs to work together that would not solve the problem, but it would make things a heck of a lot easier, so I say to the Minister, “Go and bang the banks’ heads together. Tell them to get off their backsides and get the show on the road!”

It is a pleasure to serve under your chairmanship, Ms Ryan, and I congratulate my hon. Friend the Member for Moray (Douglas Ross) on securing the debate. It provides me with an opportunity to review the position just over a year since the last bank branch closed in the market town of Bungay in my constituency, where there had been a bank branch since 1808 when Gurney’s, the predecessor of Barclays, opened one of its first branches.

Looking back over the past year, I shall highlight three issues. The first is the pace of change in the transition to what I would term an almost cashless society, which has been much quicker than anticipated. Very often when I am in a queue for a sandwich or a newspaper, I feel self-conscious as I get out my wallet. Invariably, particularly in London, I am the only person paying by cash, and I sense that eyes are gazing at me with a sense of bemusement. The transition is happening much quicker in metropolitan areas than in market towns and the countryside. The breakneck pace of change causes difficulties for the elderly, the disabled and, particularly, those on low incomes for whom cash provides the best means of managing a very tight budget.

Secondly, having ready access to cash is the main challenge that has arisen out of the Lloyds bank closure in Bungay last May. There are no longer 24/7 cashpoints available in the town centre. There is a cashpoint in the post office, but it is not accessible all the time, and when the extremely popular Sunday street fairs take place, there is a major drawback for traders without card machines.

It is also appropriate to highlight the emergence of a postcode lottery along the Suffolk-Norfolk border. In Bungay, there are no 24/7 cashpoints. Likewise, 9 miles away in Halesworth in the constituency of my hon. Friend the Member for Suffolk Coastal (Dr Coffey), there are no such facilities. However, if I go 8 miles west to Harleston, in the constituency of my hon. Friend the Member for South Norfolk (Mr Bacon), there are three such cashpoints within 100 metres of each other.

That revolution is happening when high streets and town centres are under pressure and face the challenge of reinventing themselves. For that to be done successfully, it is important that business should not unwittingly be diverted elsewhere. Bungay and towns like it serve a large rural hinterland, from where many residents, once a week, come into the town to shop, go to the bank and socialise over a coffee or a meal. Take away the bank and they might go to another market town instead. To adopt the practice of King Canute and try to stop the change would, I sense, be futile, but we can manage that change properly, so that the vulnerable are not compromised and towns such as Bungay can compete on a level playing field with their neighbours.

It is a pleasure to serve under your chairmanship, Ms Ryan. I congratulate my hon. Friend the Member for Moray (Douglas Ross), who gave an excellent speech, logically and rationally explaining a situation that we face in many parts of the United Kingdom but which, speaking parochially, is very much an issue for Scotland. If my hon. Friend the Member for Waveney (Peter Aldous) thinks that people look at him strangely when he uses cash in London, I encourage him to try using a Royal Bank of Scotland £20 note. Recently I was refused the opportunity to spend my money in London—an issue that I took up with WH Smith. I got a good apology, which is only appropriate.

Since I was elected to this House, I have been involved in many campaigns to fight unwanted and unnecessary branch closures. In my constituency, Balfron, Bannockburn, Bridge of Allan and St Ninians have no bank branches at all, owing to recent branch closures, and Callander is down to its last branch. When a town is down to its last bank and that bank is threatened with closure, I strongly believe that it is right for the Government to act—and I say that as a Conservative Member of Parliament.

We had an anomalous situation in Bridge of Allan, which may be of interest. Clydesdale Bank and the Royal Bank of Scotland both closed their branches at the same time. Each bank justified its closure by citing the existence of the other branch. How ridiculous is that? They have now both closed leaving the people of Bridge of Allan without a bank branch, despite both banks stating that there would be one. That situation must not be allowed to happen. The Government must be prepared to act to remove that kind of justification, when two bank branches announce their closure at the same time. When Royal Bank of Scotland closed its Bannockburn branch, it justified it in terms of proximity to city centre premises—but guess what: it then moved those premises further from the customers. The branch in question happens to be very plush, but there are a few obstacles to getting there in the first place.

It is important that the consultation process that banks are required to go through should not just be a tick-box exercise. I am fearful that it is exactly that—a fait accompli from the point of announcement—and that any consultation is a completely pointless exercise. I might add that that could also be true when post office closures are announced. They are also, I think, nothing more than a tick-box exercise. I should like to hear from the Minister what the Government plan to do. I know him, and he is a very good fellow. There have been many representations, debates and speeches on the subject, and it is time for the Government to produce some kind of policy initiative, to do something about it.

The Treasury Committee has been referred to, and post offices are not a fair substitute for a branch of a bank. It is very unfair: many sub-postmasters in my constituency do not have the facilities or resources to become an alternative to the bank branch that once existed next door to them, or on the same street. It is not fair on the customers, or on the community that those branches served.

Another suggestion that has been made—and it is a fair one—concerns banking hubs. I strongly believe—as, I say again, a Conservative—that the banks should be encouraged, and perhaps more than encouraged, in the light of the earlier reference to carrots and sticks, to come together and fund the creation of a community banking hub. Perhaps that could be done in conjunction with the Post Office, but I do not think that just taking a laissez-faire approach to the facilities will hack it. The banks have said that the Post Office should be encouraged to take up the slack, and they have said they will support local post offices, but I asked one postmaster in my constituency what support the bank gave him when it moved out of town. He said, “I got a bundle of leaflets, so I could put them out on my counter.” That was the sum total of the support.

When bank branches are closed and the community is told that the banks will support it through local post offices, what is the mechanism for delivering that support? What positive encouragement is there for the bank to deliver on that? What will the Government do about the situations that I describe? Is it not time we came up with a policy to deal with the situation? I hope that the Minister will be able to describe fully what the Treasury will do—because this is not any old Minister of the Crown replying to the debate: he is a Treasury Minister, so we have great expectations. We need radical ideas now to make sure that vital banking and community services will be available across the villages and towns of Scotland and the whole United Kingdom. The Government have a role in enabling and supporting that, and a responsibility to do so. I urge them to do it.

I cannot sit down without mentioning the people of Dunblane, who were told they would have a mobile banking service for a few minutes every other week. That is not a replacement for a bank facility. However, it is the kind of support and recompense that communities have been offered by banks that have deserted them, although the people of this country were not slow to step up to the mark and bail them out of the mess they had made. My colleagues and I will not forget that in a hurry.

I thank the hon. Member for Moray (Douglas Ross) for bringing this important debate forward. Moments of agreement are rare, so when they happen they should be celebrated in a mighty fashion—[Hon. Members: “Hear, hear!”]—although the debate is not over yet.

I feel that I spend half my time in this place—I do not exaggerate and I know that others will share this view—bemoaning the stampede of banks out of our communities without so much as a backward glance. I represent a constituency where several towns have no bank at all. They are Ardrossan, Stevenston, Kilwinning—a town of 21,000 people—West Kilbride, Dalry and Beith. Kilbirnie’s last bank is having its opening hours reduced, and that is the only bank left in the entire Garnock valley, where there are three distinct towns with a collective population of more than 19,000 people.

My constituency has been hit particularly hard, so I fully appreciate the similar concerns expressed by the hon. Members for Caithness, Sutherland and Easter Ross (Jamie Stone) and for Stirling (Stephen Kerr). In Scotland we have lost one third of our bank branches in just eight years. Research from Which? has shown that 610 branches closed across Scotland between 2010 and 2018. The recent Santander announcement of closures is the latest in a long line of such announcements from banks across the board.

The hon. Member for Stirling talked about consultation on bank closures being a tick-box exercise, and that is true. I remember the same thing happening in 2007-08 when there were, in my constituency anyway, mass post office closures. Perhaps naively and innocently—this was long before I was elected to this place—we had street stalls and went door to door with petitions to move the banks and Post Office, but nothing changed.

This has to stop. The Minister will be aware that the Treasury Committee concluded that

“there are still large sections of society who rely on bank branches to carry out their banking needs. A bank branch network, or at least a face-to-face banking solution, is still a vital component of the financial services sector, and must be preserved.”

The Minister will probably not agree, but I genuinely believe this: there was no UK Government intervention when RBS, which was owned by us, the taxpayers, announced a significant—eye-watering—closure programme, and I believe that the fact that nothing was done emboldened other banks, with no element of public ownership, in their closure programmes.

If the Government were willing to accept the closure of RBS branches, which they owned on behalf of the taxpayer—I listened carefully but did not hear them condemning those closures—then closing local branches seems to have been an option that other banks could employ almost without consequence. As a result, communities have suffered for want of a bank, and they continue to do so—we have heard much about that today. Mobile banks are not disability compliant, and their reliability is questionable at best.

The Government said that they could not intervene in the RBS closure programme—as the Minister will know, that rankled with many of us—and they insisted on leaving all operational decisions to RBS throughout the closure programme. As my hon. Friend the Member for Motherwell and Wishaw (Marion Fellows) pointed out, the Government apparently pressured RBS to pull finance from customers through the asset protection scheme. If the Government had tried to use whatever influence they could in the original RBS closure programme, I am curious to consider what effect that might have had. Would we still be where we are now? I think we might not be.

RBS is not the only bank to have closed branches, but it has certainly emboldened the others. As the hon. Member for Moray set out, the gaps left by banks cannot properly be filled by post offices, regardless of what we have been told. The Treasury Committee concluded that post offices

“should not be seen as a replacement for a branch network, but as a complementary proposition”,

and we have heard similar sentiments from every Member in today’s debate.

Over the past two years, I have corresponded with the UK Government and Post Office Ltd about the poor rates of pay for postmasters, and I am delighted that some action has been taken. We cannot have a situation where banks abandon our towns and the provision of some banking services is carried out by post offices, but those post offices are not properly paid by banks, which then rake in huge profits while some postmasters do not even earn the minimum wage—the hon. Members for Stirling, for East Renfrewshire (Paul Masterton), and for Ayr, Carrick and Cumnock (Bill Grant), and my hon. Friend the Member for Motherwell and Wishaw also made that point. Such a situation is simply not acceptable.

We are witnessing the demise of free cash machines—3,000 in the past 18 months across the UK—and 32 free cash machines a month are closing in Scotland. There is a stampede to charge people to use cash machines. The ATM Industry Association has warned that one fifth of Scotland’s free ATMs will start charging consumers in the next year, which can only be seen as a cynical move to force us to become a cashless society.

Just as bank closures have, in my view, been a tool to force people to bank online, so are banks now cutting the fees that they are willing to pay machine operators to provide bank customers with access to cash. Banks are attempting to put pressure on customers who are not acting in a way that they find convenient. What happened to the customer being king? Going cashless and banking online is the preferred option for some, but although some of us do not wish to go down that route, there are increasingly aggressive efforts to force us to do so at breakneck speed, as the hon. Member for Waveney (Peter Aldous) pointed out. I and my constituents who do not favour those options will not be forced to do that—the hon. Member for Strangford (Jim Shannon) also made that point—and we will not be bullied into going cashless and digital. In any case, those options are not available to some people for a variety of reasons.

We need to move from a commercial model of access to cash to having a more utility approach, and keep cash sustainable for longer. Our cash infrastructure matters, and we cannot sleepwalk into a cashless society without serious consequences for many of our constituents and small businesses, which already face challenges if they are unable to bank takings or customers cannot access cash in order to shop on their premises. Not everybody has a debit card; as the hon. Member for Berwickshire, Roxburgh and Selkirk (John Lamont) said, not every small business is equipped to take plastic. This issue therefore affects the footfall and sustainability of those small businesses.

I have corresponded with the Minister, and he accepted that broadband access is not good enough for everyone to rely on digital banking. I know he wants more banking services to be provided by post offices, but that is not the issue at hand. The Government, and the Access to Banking standard, must ensure that banks have a social responsibility to provide banking facilities to all our towns. Such services could be provided relatively easily through banking hubs, and there is no discernible obstacle to that option except—I am sure the Minister will correct me if he thinks I am wrong—a lack of political will, and the arrogance and intransigence of the banking industry. Our communities and constituents deserve better. Banks must face up to their social responsibilities and get their heads together to create banking hubs. There is no real impediment to that, and it is what customers want.

I urge the Minister to use his good offices to bang some banking heads together and ensure that their customers’ voices are heard. The Government have a role to play when the last bank in a town is closed. The Government have said repeatedly that these are commercial decisions, but this is not just a commercial matter. This is about social responsibility and financial inclusion, and I urge the Minister to reflect further on the strong feelings and concerns expressed today. Will he consider legislative proposals to ensure that our banks live up to their responsibilities to our communities?

It is a pleasure to speak with you in the Chair, Ms Ryan, in this interesting and well-informed debate, and to sit across from the Minister. I was starting to get withdrawal symptoms because there have not been many statutory instruments recently, although I am sure the Government will rectify that.

I congratulate the hon. Member for Moray (Douglas Ross) on securing this debate, as I know that the issue has seriously affected many of his constituents and local businesses. For those without an intimate knowledge of north-east Scotland, let me underline that the communities we are talking about are often far apart. They either have next to no public transport, or it is of poor quality and very expensive. Local facilities are therefore incredibly important.

As the hon. Member for Motherwell and Wishaw (Marion Fellows) rightly said, we had a debate on a similar topic just a few days ago. It was mentioned that in certain circumstances an ATM might close on a high street that still has a number of different facilities. We are not talking about that in this debate; we are talking about situations where few facilities are available. This is not about duplication; it is often about the last services moving away. As the hon. Member for Strangford (Jim Shannon) said, this is about social and rural isolation.

High street banks are an essential part of our financial infrastructure and they help to support local economies and communities. The bank branch network has been shrinking at an accelerating pace. Many statistics have already been given, but the UK has lost nearly two thirds of its bank and building society branches over the past 30 years. In 2018 and 2019, banks and building societies will have closed, or planned to close, a total of 1,080 branches, and 3,318 branches have shut in the past four years. Banks have been closing at a rate of nearly 70 a month. Overall, a fifth of the population lives more than two miles from their nearest branch—and a good deal further away in some of the situations that have been mentioned.

The debate has focused particularly on Scotland, where there have been a large number of closures, with RBS alone closing more than 200 branches—a 70% reduction in just five years. There have been similar developments across the country. In the north-west, 425 bank branches have closed since 2015, and even in the south-east—I represent a south-east constituency—more than 410 branches have closed since 2015, including one in Headington in my constituency. Such closures occur everywhere, and they often have a particularly significant impact on the most disadvantaged people.

The recent debate on the Treasury Committee’s report on consumer access to financial services emphasised the importance of local banks at a time when many people are not able to access basic financial services. That disenfranchises them from many different activities.

Research shows that in 2006-07, more than 1 million people had no access to a bank account in their household. Although that fell to 660,000 in 2012-13, it increased to 730,000 in 2013-14. We are going in the wrong direction in terms of access to basic financial services. We need to be clear that in many cases the process is leading to people who are already digitally excluded being financially excluded. That point was very well underlined by the hon. Member for Berwickshire, Roxburgh and Selkirk (John Lamont).

There are also impacts for businesses, particularly small and medium-sized businesses. A YouGov poll showed that more than 68% of SME customers said that a branch was important, and 66% said they needed the bank branch because of the need to discuss issues face to face. The Federation of Small Businesses has done some interesting work on this. The situation in Lossiemouth when the town ran out of cash has happened in other places as well—it is not the only instance of that occurring. As the right hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) said, bank branch closures put a burden on businesses and organisations. Sports clubs were mentioned. They might be collecting a large amount of cash and want to be able to get rid of that cash to a bank branch, but they are not able to.

Worryingly, the situation is also leading to issues with SME lending. For example, the British Bankers Association pointed out that bank branch closures dampen SME lending growth by 63% on average in postcodes that lose a bank branch. That figure rises to more than 100% when an area loses its last bank in town. This is not just about inconvenience. It is a much bigger issue for many businesses, and is arguably part of the reason why we have not seen investment come back to the level we want.

The Opposition acknowledge the importance of dealing with this issue and have set out plans for a radical shake-up of the UK banking system, which needs a change to the law so that banks cannot close a branch where there is a clear local need. We believe that the duties of the Financial Conduct Authority need to be broadened, and that amendments are needed to the Financial Services and Markets Act 2000—particularly part 4A, which authorises banks to carry on regulated activity: the banking licence.

We would seek to amend the process substantively. I was pleased to hear a number of Members mention that, including the hon. Member for Stirling (Stephen Kerr). I will not go through all the details on how it should be amended, as others need to speak, but it is important that we see meaningful consultation. The hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) also rightly underlined the fact that local authorities are often not part of the process, but they need to be.

The hon. Member for Moray and many other Members referred to the role of the post office network. There are strong grounds for believing that that role can be boosted, but not simply through it becoming the default option for offering services without any extra support. That is simply not sustainable. The Labour party has commissioned research to look at how a proper postbank network could be set up, how it could be financed and how it could operate. I hope the Government will look at that. The current approach is just not working, and we cannot rely on sub-postmasters who are already overburdened to deliver the services. A big part of the answer has to be to boost credit unions, as mentioned by the hon. Member for Ayr, Carrick and Cumnock (Bill Grant). I know the Minister is interested in that, but we need to do more.

As the debate has highlighted, it is becoming increasingly clear that we need to take action to deal with the shrinking bank branch network. The Government need to do more to invest in our communities and to support local high streets. Strengthening their approach to bank branch closures would be a straightforward way to deal with a number of issues. We need to take immediate action to preserve and build on our banking infrastructure to create a system that works and that serves a diverse range of customers and communities.

It is a pleasure to serve under your chairmanship, Ms Ryan. I congratulate my hon. Friend the Member for Moray (Douglas Ross) on securing this important debate. I acknowledge the contributions of all who have spoken this afternoon. I have listened carefully to the speeches, and it is good to have seven of my hon. Friends from north of the border here. I will endeavour to answer the points substantively.

I gave evidence to the Scottish Affairs Committee this morning on this very issue. Straight after this debate, I hope to make a speech at the Which? cash summit, where I will set out the work being done by industry, the Government and regulators to ensure that access to cash is safeguarded. I recognise that this is a very important issue for many of our constituents. In my own constituency of Salisbury, I have seen bank branches close and I understand how difficult that is for communities. We have heard some specific examples this afternoon of the distress that can be caused when the process does not go smoothly. I recognise there are different opinions across the House about how the challenge should be met, and I will address those shortly.

Undoubtedly, the fact that the retail financial landscape is changing rapidly, as more consumers and businesses opt for the convenience, security and speed of digital payments and digital banking, is a significant factor. Ten years ago, cash accounted for more than three fifths of all payments in the UK; today, the figure is less than three in 10—and that is anticipated to fall to less than one in 10 in nine years, by 2028. In 2017, debit cards overtook cash for the first time as the most frequently used payment method in the UK.

I am very sensitive to the point made by the hon. Member for North Ayrshire and Arran (Patricia Gibson) that debit cards are not everyone’s choice; it is really important that we keep in focus the need to maintain access to cash. In 2018, two thirds of UK adults used contactless payments, 72% of UK adults used online banking and 48% used mobile banking. How we use financial services is changing and consumers have more choice than ever. It is an exciting time, but it is also a disruptive and potentially confusing time for our constituents.

Closing a branch is never an easy decision, but the decision will ultimately be a commercial one for the bank. The Government have been clear that we do not intervene in those decisions because industry is best placed to know what works best for its customers. I recognise that branch closures can be very disappointing for customers and the impact on communities must be understood, considered and mitigated where possible. I will therefore set out some of the ongoing work in this area—in particular, access to the banking standard and how it might be enhanced.

The Minister says that closing a bank is a commercial decision and the banks are listening to their customers. How can they be listening if they take those decisions prior to any consultation and if, when they are encouraged to engage, they do not even turn up?

That behaviour that my hon. Friend experienced in his constituency is not best practice. It is not acceptable. It is very unfortunate when that happens. My job is to try to ensure that there is a systematic upgrade to the quality of the consultation and engagement from the banks, and I will now set out what is happening.

The access to banking standard has been noted by a number of colleagues today. Since May 2017, the major high street banks have been voluntarily signed up to the standard, which commits them to work with customers and communities to minimise the impact of branch closures. The standard ensures that banks keep customers informed about branch closures, and that the bank sets out its reasons for closure and the alternative options for continued access to services. How meaningful that consultation process is has been raised, on the basis that it happens when a decision has been made and not prior to the decision. I am looking into that. I have written to the Lending Standards Board and will be meeting its representatives to discuss the matter further.

The options for continued access should include specialist assistance for customers who need more help. For example, the Lending Standards Board, which monitors and enforces the standard, has told me it sees evidence of support from firms to assist customers in understanding and using alternative banking options. I recognise that that happens in some, but not all, cases. Such support might include digital experts being placed in the relevant branches to demonstrate how mobile and online banking works and assisting those customers who wish to use that functionality, as well as making introductions to nearby post offices and retained branches.

I continue to be very supportive of the access to banking standard and I value the commitment it places on banks to communicate the next steps for customers when the decision is made to close a branch, but I am aware of the concerns that colleagues have expressed about the standard. I confirm that I recently wrote to the Lending Standards Board to seek reassurances that the access to banking standard remains fit-for-purpose, and I intend to meet the chief executive to discuss matters further, drawing on the meetings I have had with various groups from all parts of the House and on the representations made so forcefully by colleagues this afternoon.

I turn to the Post Office. I was pleased to see the successful renegotiation of its commercial agreement with high street banks. That will enable 99% of personal customers and 95% of small and medium-sized enterprise customers to continue to carry out their everyday banking at one of the UK’s 11,500 post office branches; that is 91 more branches than there were in March 2018. I acknowledge the point that my hon. Friend the Member for Moray made about functionality and how not all functions can be carried out at the post office. That could evolve, but we already see aggregation of banking services at the sub-regional level when more specialist advice is required. The issue is about working out ways to solve that challenging problem. I am engaged in that work and am happy to explore that further with him.

As a result of the renegotiation, postmasters will see a considerable increase in fees for processing deposits, and the fees will rise further if transaction volumes continue to grow. An increase in fee income will help the Post Office and its network become more financially sustainable and will allow for investment in automation, training and security in post offices. Some £2 billion has been invested by the Government since 2010.

It is essential that more people know about the banking services offered by the Post Office, which is why I asked it to work together with UK Finance to raise awareness. According to a survey by Which?, only 55% of UK adults are aware that they can use their post office for banking services; that statistic was made clear this afternoon by my hon. Friend. The point he did not make was that 77% of those who had used the post office for banking said they would do so again. We are on a journey of understanding, as people become familiar with what can happen in a post office. After that work, UK Finance and the Post Office found that awareness had increased and committed to using community outreach to further improve awareness. I will continue to take a keen interest in the progress of that work.

Although many customers are satisfied with the Post Office’s banking services, I am aware that there are still some outstanding concerns—they have been mentioned this afternoon—such as with privacy and queueing. I have therefore written to my hon. Friend the Member for Rochester and Strood (Kelly Tolhurst), the Minister in the Department for Business, Energy and Industrial Strategy responsible for postal affairs, to request that our officials continue to work closely to explore the issues.

My hon. Friend the Member for Ayr, Carrick and Cumnock (Bill Grant) made a point about credit unions and post offices. I welcome any feasible innovations in that space. The main trade body for credit unions is conducting extensive UK-wide consultation, and it will come back to the Government in September. I would be happy to explore with it how the solution he suggested might be acted on.

Related to bank closures is the issue of continuing access to cash. It is clear that for some people, cash remains their preferred, or only, method of payment for a variety of reasons. My hon. Friend the Member for Waveney (Peter Aldous) set out his experience, and that situation remains true for many people out of choice. Our financial system needs to cater for everyone in our society. Although it is exciting for many consumers, technology must not come at the expense of choice. There will therefore be no changes to our current system of notes and coins. We want to ensure that cash is available for those who need it, when they need it.

In 2015, we established the Payment Systems Regulator, a powerful economic regulator of the payments industry. Its objectives balance the need for competition and innovation on the one hand with the protection of consumer and business interests on the other. Through the creation of the joint authorities cash strategy group, we are acting to ensure a comprehensive approach to regulation in light of changing trends and preferences for cash. The Payment Systems Regulator is already examining the factors that affect the distribution of ATMs across the country. I was concerned by what happened in Lossiemouth: it is a good case study for the regulator to be examining during the early weeks of its work.

I welcome today’s announcement by UK Finance, the trade body for banks, that it too intends to explore key issues around access to cash, including the role of local areas and communities. The industry must continue to play its part, and developers should consider the needs of all customers as they design new digital banking products and forms of payment. We are seeing companies such as Square trying to increase the use of card payments in small towns. No one should be locked out of the benefits that technology brings.

I recently concluded a Westminster Hall debate speech with a call to arms to the industry to think about all consumers when developing its services, and I re-emphasise that here this afternoon. I welcome the innovations that banks are introducing to respond to changes in customer behaviour as more of us choose to bank on demand online or via an app, rather than visiting a branch. We cannot reverse digital innovation, and nor should we, given the benefits it brings to our constituents—I acknowledge once again the point made by the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) about his constituents’ experience of connectivity—but we need to find solutions for the whole of the United Kingdom. Improving digital and financial inclusion is key to ensuring that vulnerable customers are not left behind.

I will keep pushing the industry—someone mentioned the carrot and the stick: both are required—to move forward and do more. I hope Members will recognise that I have responded thoroughly to the points made. I am happy to continue the dialogue, but I am working to engage on the specific issues raised and to secure the improvements needed.

First, I thank you, Ms Ryan, for how you have chaired this debate; there was a subtle change in your demeanour indicating that I had spoken for long enough, and that ensured other colleagues were able to speak.

I am grateful to the hon. Members for Motherwell and Wishaw (Marion Fellows), for Strangford (Jim Shannon) and for Caithness, Sutherland and Easter Ross (Jamie Stone); to my hon. Friends the Members for East Renfrewshire (Paul Masterton), for Ayr, Carrick and Cumnock (Bill Grant), for Waveney (Peter Aldous) and for Stirling (Stephen Kerr); to the hon. Members for North Ayrshire and Arran (Patricia Gibson) and for Oxford East (Anneliese Dodds), the Opposition spokespeople; and to the Minister for a constructive, detailed and hopefully positive debate—not only for Lossiemouth, Moray and Scotland, but for communities across the United Kingdom that have been affected in this way.

The Minister said that the Government have made progress, which is welcome, but we can also agree that there is more to be done after this debate. His constructive response shows that the Government are listening. I have written down the actions that he is taking at the moment and that he will take going forward, but he will be left in no doubt by today’s debate that there are still major issues in all our constituencies that need to be tackled. There was mention of banging heads together and carrots and sticks: we have to use any and all means to find a solution to the problem. Although it is useful to have had this debate, talking only goes so far. We need action, and we need it now. I am encouraged by this debate that that will happen, but the pressure will remain until we can ensure that our communities can continue to be served by the banks they need.

Question put and agreed to.


That this House has considered the Government response when the closure of the last local bank is proposed.