Motion made, and Question proposed, That this House do now adjourn.—(Gareth Johnson.)
I call Ms Anum Qaisar.
Thank you, Mr Deputy Speaker. I am aware that it is not necessarily a requirement to thank the Chair in an Adjournment debate, but this is my very first Adjournment debate and it really is a pleasure to serve under your chairship.
The subject that I am raising today is so important and so topical: just today, HSBC has announced that it is closing 69 stores across the four nations. My constituency of Airdrie and Shotts is centrally located; in fact, the wee town of Harthill is pretty much halfway between Glasgow and Edinburgh. There is therefore an assumption that my constituents can travel around easily, so if a local service such as a bank closes, they can simply hop on a bus. That is not the case.
In September last year, Virgin Money announced that it was closing three of its Lanarkshire stores: Airdrie, Cumbernauld and East Kilbride. The Airdrie store closed its doors in January this year. My constituents were told that they could travel from Airdrie town centre to the nearest branch in Baillieston. That is either 20 minutes by car or a bus journey of an hour, and for that to work, we would have to assume that people do not live in places such as Greengairs, Petersburn or Chapelhall. Essentially, my constituents who do not live in Airdrie town centre have considerable journeys to make. That poses additional barriers to those who are either financially vulnerable or struggling with mobility.
When I spoke last year to officials from Virgin Money, which is the rebranded former Clydesdale branch, they told me that the closures were in response to changing customer demand and a reduction in footfall. That did not really make sense to me, because every single bank branch in the country saw a change in customer demand and a reduction in footfall. Why? Because we were in the midst of a global pandemic and in lockdown.
When we think of banking hubs, we also think of London, the big city. However, my constituency has a proud 181-year history as a banking hub, and Airdrie Savings Bank, founded in 1835, had its own long and proud history in north Lanarkshire and, indeed, throughout Scotland. It was a small commercial bank which operated on mutual principles and had no shareholders, being governed instead by a board of trustees.
I congratulate the hon. Lady on securing the debate. We have discussed banks here on many occasions. These closures affect the most vulnerable in society, the elderly and others who have no access to modern technology. They cannot simply jump online to do their banking. The banks make massive profits every year, and they have an obligation to look after the customers who have, in fact, built them up.
Those are important matters, and I will come to them later in my speech.
I vividly remember being dragged to the high street when I was a wee girl growing up in Motherwell. Adult Anum does not necessarily have to be dragged to the high street, but as a child I hated it. My mum had her routine: she would go to Asda and get her messages, and then she would pop into Airdrie Savings Bank. Popping into the bank meant that she could get all her banking issues sorted out, but bank branch staff tend to become known to locals, so Mum would often stand and have a wee blether with them. However, this small commercial bank ceased trading entirely and closed its doors in 2017. Royal Bank of Scotland in Graham Street closed its doors in 2018, and Barclays shut six years ago. As of today, Airdrie is serviced by only one bank, Bank of Scotland, and one building society, Nationwide. It is the same story in Shotts. In 2016 Royal Bank of Scotland shut down, and Airdrie Savings Bank closed its Shotts branch back in 2015. RBS does send a van to the Co-op car park once a week for an hour, but outwith those times people have to head for a nearby town such as Wishaw.
Does the hon. Lady agree that this is a national issue? We have experienced exactly the same problems in Reading and Woodley. Again, it is elderly and disabled people who are put under enormous pressure by these closures. It is really hard for them. Many are only familiar with banking through cheques, and they want to see a person: they do not want to have to deal with “online”, and, indeed, their families often worry about their using online banking. Perhaps the hon. Lady will join me in calling for wider national consideration of this issue, and, in particular, for the Government to put pressure on the banks to provide hubs.
I entirely agree. When banks decide to close, we as Members of Parliament rightly engage in meaningful discussions. We fight for our constituents and try our level best to ensure that they have access to the local branch for as long as possible. If a branch does close we will fight for those banking services, but the reality of these commercial decisions is that all too often such discussions do not end in a positive outcome for our constituents. I say to the Minister that, with only a handful of banks on our high streets, now is the time for Government intervention. The banking issues that my constituents are facing will affect people in all four nations. I would welcome the Minister’s comments on what work she plans to do to ensure that our high streets do not become banking ghost towns.
My hon. Friend said that there was “meaningful” engagement between MPs and the banks. It may be meaningful on one side—indeed, I know that it is—but it certainly does not appear to be meaningful on the other. The lack of proper consultation between the banks, the communities and their representatives is particularly unhelpful at a time when the banks are abandoning so many of our high streets.
I completely agree with my hon. Friend.
In 2018, a Scottish parliamentary inquiry into the impact of bank branch closures on local businesses, consumers and the Scottish economy highlighted a number of concerns. It stuck out to me that Pete Cheema of the Scottish Grocers Federation said:
“We need to go back and talk to the banks. It is very clear that the decisions are being made in London. Up and down the UK, 600 branches have closed, but part of Wales, the whole of Scotland and bits of the south-west of England have suffered the most. We need to take that in context; I wonder sometimes whether the banks understand Scotland’s landscape.”
Evidence from Which? indicated
“there are 130 ‘cash deserts’ in Scotland (places where there is no access to either a branch or an ATM within a reasonable distance).”
I will make some progress.
Banks are so much more than simply a place to deal with money. Age Scotland has argued:
“For many older people, going to the bank…gets them out of the house… This is an important component in addressing the…effects of loneliness”.
The stark reality is that bank branch closures deny vulnerable communities their right to independent living.
Face-to-face banking must not be lost. Will the Minister clarify what work she is doing to ensure the social inclusion aspect of banking is not lost for those who need it? Bank branch closures affect around 20% of small businesses with a turnover below £2 million, as they often use branches as their primary means of banking.
I remember working part time in retail as a university student and having to jump over to the bank with the takings of the day or to ensure we had enough petty cash in the register. Such access to banking and cash is vital, especially if we want to ensure that small businesses continue to hold a place on our high streets.
Will my hon. Friend give way?
I will make some progress, if my hon. Friend does not mind. [Interruption.] I am trying to be polite, Mr Deputy Speaker.
The concerns I have outlined also apply to charities and trusts, which often heavily rely on cash donations and payments. There is a security risk to volunteers, causing additional pressure, if they have to travel a distance to an alternative branch.
I congratulate my hon. Friend on securing this debate.
I am lucky that my constituency has the Cambuslang bank hub, which was part of a pilot scheme involving the Post Office and the high street banks to ensure locals have access to face-to-face banking services. Does my hon. Friend agree it is important that, where there are widespread closures, there is something to replace those services for the community?
I agree with my hon. Friend.
I was speaking about the impact on local businesses, charities and trusts. Can the Minister confirm what the Government are doing to ensure the safety of staff and volunteers? This is an important point, because they are often having to travel a distance when their nearest bank branch has closed. Although that is a commercial decision, we cannot have our constituents put in a precarious situation when carrying cash at the end of the day or after a fundraising event.
At the heart of this, banks tell us that the decision to close a branch is driven by customer behaviour and demand, but I would argue that banks are pushing this change. Speaking to branch staff and customers to examine the trends does not necessarily provide the full context of what is happening in a particular area. Does the Minister agree that the UK Government should consider introducing an independent body to conduct independent impact assessments, including of the impact on a local community, before a bank closes a branch? Such a localised assessment could ensure that decisions made in a local area are reflective of the needs of the local community.
Lanark serves a much wider rural area. Access to mobile banking and different types of accessibility is so important when rural communities are left without access to banking, as people are often told that their bank is 20 miles away, inaccessible and unavailable to most.
I thank my hon. Friend for her intervention, and Members will not be surprised to hear that I completely agree with what she has just stated.
At the onset of the covid pandemic so many businesses across the country literally switched overnight to cashless payment systems. The concerns about the move towards a cashless society have been raised numerous times by Members from across this House. However, the shift to digital banking has only been accelerated by the ongoing pandemic. While we continue to move away from cash and towards the digital era of banking, it is vital that we ensure that no one is left behind. I mean no disrespect to my colleagues, especially those on the SNP Benches, but there is a wee bit of an age difference between myself and some of the others. I am stereotypical of those young people who are more likely to use digital wallets, smartphone apps and online banking. Recent statistics show us that about 76% of people in the UK use some form of digital money management, and this trend is increasing, especially in the younger sections of society, with more than 50% of 25 to 34-year-olds willing to go completely digital when handling their finances. That does not translate throughout older demographics and more vulnerable groups in society.
As one of the older generation, I get my hon. Friend’s point: we absolutely are moving towards a digital economy. There is no doubt about that, but access to cash is absolutely required for the most impoverished in our society and, yes, some of our older colleagues. Does she agree that the banks and, importantly, the post offices have to look at this closely, because as high street banks close, the ATMs often go with them? They provide access to cash and, importantly, access to cash to the penny, which is still required.
I thank my hon. Friend for his intervention, and what he is saying is important. Of course, when I was talking about older Members, I was not referring to him at all. [Laughter.] At that point, I will swiftly move on.
Throughout the course of the pandemic, we have witnessed the need for a more digitally connected society, both for work and socialising. Banking, however, is not excluded from that. While there has been a sharp increase in the uptake of digital banking, simultaneously we have also seen a mass exodus of banks from our high streets. This poses huge concerns for those who are not digitally literate, have no access to technology or are simply uncomfortable with the transition away from cash. An important point to remember is that where some of these people are not using digital wallets, online banking or digital banking it is through no fault of their own; they might have financial struggles that mean they are unable to get access to mobile data or wi-fi. That is hindering their access and we are not necessarily talking about people from an older age demographic. The 2019 Access to Cash final report found that more than 8 million people would struggle directly as a consequence of a cashless society. Cash is therefore essential to ensuring that vulnerable groups such as older people or low-income households, who often have limited access to digital banking, are not excluded.
As the granny of the House, I have to say that I have an electronic wallet on my phone. However, does my hon. Friend agree that it is about time the Government brought forward their access to cash Bill, which has been promised for quite a long time?
I thank my hon. Friend and constituency neighbour for raising that important point. She has raised it on a number of occasions and I fully support her in all her comments.
While we are trying to become this more digitally inclusive and digitally literate society, there are projects going on in that regard. For example, in my constituency, a project funded by Connecting Scotland, a Scottish Government initiative, has been working alongside the community to help people to get online and into the digital age at Lorne Gardens retirement complex in Salsburgh. The project supplies elderly constituents with 200 digital devices and mi-fi boxes so that on Tuesday nights tenants can meet to share skills with an aim to building up relationships and increasing their confidence when using their devices. I am delighted that projects such as this are providing older constituents with vital digital skills that could be used for navigating online banking. However, this should not detract from the fact that many older people still ultimately prefer traditional methods of banking. The really important point about such projects is that they teach people transferable skills, because once they get online and are able to use digital banking, they can use those skills to navigate other websites—and maybe not become too addicted on online shopping.
In countries such as Estonia—I am delighted to be co-chair of the all-party parliamentary group—it is a constitutional right for all citizens to have access to the internet, and therefore the transition to the digital age is a far more equal process. Does my hon. Friend agree that this is something the United Kingdom needs to think about?
I thank my hon. Friend for his contribution. As I said, if we are able to help people across all sections of society to get online, even in just one aspect such as digital banking, these are transferable skills that they can then use in digital literacy. That is absolutely key and it has to be an initiative for the UK Government.
Although the move towards digital banking is happening rapidly, it is vital that we as politicians, banks and Governments make a conscious effort to ensure that everyone is included in this process. While 46% of Londoners are using digital-only banking, this is far from the reality for people north of the border. The responsibility of ensuring that everyone across the country is financially included therefore falls at the feet of this Government. It is imperative that we do everything we can to ensure that no one is left behind.
It is a privilege to respond to this debate on behalf of the Government. I congratulate the hon. Member for Airdrie and Shotts (Ms Qaisar) on securing her first Adjournment debate on an issue on which she has been vocal and campaigned hard. My hon. Friend the Economic Secretary to the Treasury takes the issue of bank closures very seriously, and he would have represented the Government’s position here today were he not on ministerial business abroad.
The hon. Member for Airdrie and Shotts talked about the importance of people going into banks. The reality is that the way that consumers engage and interact with their banks is changing, with increasing numbers using digital services to manage their affairs. It was interesting to hear her talk about her own experience and that of her generation in terms of how people are now accessing their money.
The reality is that the experience of those states that have moved to a digital framework, such as Estonia, highlights the fact that this transition needs to recognise those who find it most difficult. Therefore, we need to be in a position where people who still use cash are able to do so whenever they need to.
The hon. Member makes an important point. I will come on to the ways in which we are ensuring that those who need to access a physical location are indeed able to do so.
According to UK Finance, as of 2019, half of adults in this country used mobile banking. In the 12 months to February 2020, half of adults with a day-to-day bank account carried out their banking activities face to face in-branch, down from almost two thirds— 63%—just three years earlier. The Government want to ensure that people have appropriate access to banking services, and the transition towards digital banking brings many opportunities for individuals and businesses. It is our view that the Government cannot and should not seek to reverse the changes we are seeing in the market and in customer behaviour. Nor should the Government determine firms’ commercial strategies in response to these changes. Having the flexibility to respond to changes in the market is part of what made the UK’s financial services sector one of the most competitive in the world, and the Government want to protect that success.
While Governments should not be setting commercial objectives for the banks, I was told by a representative of a bank which had shut both a branch and removed the automated teller machine that it cost as much to keep an ATM as to run a branch, so I think we need to say to the banks—while not imposing any commercial criteria on them—that they should at least be honest about the reasons why branches are shutting.
I am confident that banks will be carefully looking at how much it costs to run an ATM versus a people-staffed bank and will make those decisions accordingly, but we recognise the impact of branch closures on people and their communities, and the hon. Member for East Renfrewshire (Kirsten Oswald) talked about the importance of engagement with communities. Since 2017, the UK’s largest banks and building societies have been signed up to the access to banking standard, which commits them to ensuring that they inform customers about any branch closures, that they explain the reasons for the closure, and that they clearly outline customers’ options for continued access to banking services.
Will the Minister give way?
I am going to carry on because the hon. Member for Airdrie and Shotts, who secured the debate, made many points and I want to respond to them.
The Financial Conduct Authority has also set out its expectations of firms when deciding whether to reduce the number of their physical branches or the number of free-to-use ATMs. FCA guidance states that firms are expected to carefully consider the impact of a planned closure on their customers’ everyday banking and cash needs.
The hon. Members for Strangford (Jim Shannon) and for Reading East (Matt Rodda) talked about the importance of going into a physical location for those such as the elderly and the disabled. As well as the innovations around mobile and online banking, there are alternative options to access everyday banking services via telephone banking and also, importantly, via the Post Office. The Post Office plays a significant role in servicing people’s everyday banking needs across the UK. The Post Office banking framework allows 99% of personal banking and 95% of business customers to deposit cheques, check their balance, and withdraw and deposit cash at the 11,500 Post Office branches right across the UK. As the hon. Member for Airdrie and Shotts pointed out, it is important that there is somewhere to take that cash, which is why the Post Office provides such an important service.
I am going to come on now to the point the hon. Lady made about access to cash. Access to cash is one of the services that bank branches and post offices help to deliver, but the Government understand the importance of cash to the daily lives of millions of people across the UK, particularly vulnerable people, which is exactly why we have committed to legislate to protect access to cash.
Last year, the Government consulted on further proposals for new laws to make sure people need to travel only a reasonable distance to pay in or take out cash. The Government’s proposals are intended to support the continued use of cash in people’s daily lives and help enable local businesses to continue accepting cash by protecting deposit facilities. We are carefully considering the responses to the consultation as we develop legislation and will set out next steps in due course. Encouragingly, following the Government’s commitment to legislate, firms are working together through the Access to Cash Action Group to develop new initiatives to provide shared services.
I wish to touch on another way for people to access the banking system in person. The hon. Member for Reading East mentioned banking hubs. The introduction of shared banking hubs is an exciting development. Last year saw the successful pilot of the initiative, with two bank hubs offering counter services run by the Post Office and dedicated spaces for customers to see community bankers from their own bank. The findings of the pilot revealed that, as of October 2021, £4.65 million of cash had been deposited at the two pilot sites. Almost a quarter of local businesses said the pilots meant they no longer needed to close their shop to get or deposit cash. As a result, the two bank hubs have been extended until at least the spring of 2023.
Building on the experience gained in the pilots, last December the industry announced its intention to introduce five more Post Office bank hubs in Acton, Brixham, Angus, Knaresborough and Syston. The bank hubs are a commercial initiative, meaning it is for industry to play a key role in the provision of appropriate facilities for customers.
At the beginning of her speech, the hon. Member for Airdrie and Shotts talked about HSBC’s announcement of the closure of some banks. I reassure her that all the branches that are to close have a post office within 1.5 miles for everyday banking transactions.
I am going to conclude because I fear I am running out of time.
The Government understand what is at stake here and are working hard to do right by communities up and down the country. Banking is changing in ways to which industry can and should respond but, as I have said, it is also right that the impact of branch closures on people and communities is understood, considered and, where possible, mitigated, so that everyone, whoever they are and wherever they live, continues to have access to the services they need.
Question put and agreed to.