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Local Bank Branch Closures

Volume 737: debated on Tuesday 5 September 2023

Motion made, and Question proposed, That this House do now adjourn.—(Andrew Stephenson.)

For being the party of the bank and the bankers, the Tories have a shocking record of keeping banks on our local high streets. It speaks to a pattern of this Government prioritising profit over people. This being my first Adjournment debate, I am proud to hold it on a topic important to my constituents, given the state of local bank branch closures in East Dunbartonshire, but I am frustrated and disappointed that this issue is on all our minds.

Despite the severity of the topic, I am very much looking forward to an intervention from the hon. Member for Strangford (Jim Shannon), the highlight of every Adjournment debate, as you will be only too familiar with, Mr Deputy Speaker.

First of all, I commend the hon. Lady for bringing this subject forward. The Scottish National party has been at the fore in headlining the issue of bank closures, and I wish to add my support.

It is an increasing problem back home—Northern Ireland has lost 27% of bank branches in the last three years, according to statistics from the Consumer Council. One of those was a Barclays bank branch in Newtownards, where I have my office. For rural constituents, it means they have to drive up to 40 minutes to the nearest Barclays in the neighbouring constituency, or take a taxi or a bus. Does the hon. Lady agree that bank branches are crucial to the economy, especially the rural economy, and that the frequent closures of local branches are doing more harm than good for customers? The hon. Lady is to be congratulated on bringing this issue forward.

I could not agree more. I welcome the hon. Member’s intervention—I kicked him into gear, didn’t I? It was much appreciated.

Local bank branches are closing right across Scotland, and at a higher rate than in the rest of the UK.

While avoiding the hon. Lady’s rhetoric in the opening of her speech, I agree that the closing of banks in localities—particularly in Dewsbury, Mirfield and Ossett in the area I represent—is a big issue. The banking sector is bringing forward a number of initiatives, one of which is a banking hub, which brings banks together in a town centre building. Has she considered that as an option, and would she be in favour of it?

I will answer the hon. Member’s question in a second, but it is certainly not rhetoric to say that the Tory Government have not stepped up anywhere near enough to support our communities and people who are struggling through the cost of living crisis. We need local bank branches. Hubs are an alternative, though they are not good enough, but I welcome his point of view.

We would be lucky to have as many bank branches open in our constituencies as have closed in the recent years. At least 265 local branches are set to close this year alone, and 62 parliamentary constituencies are down to one or no local banks. The UK has lost over half its bank network since 2015, which speaks volumes after 13 years of Tory rule. How many more banks do we have to lose before the Minister kicks into gear?

On the point about having lost over half the banks in the UK since 2015, I would like to go over the figures. Does the hon. Lady recognise that over 5,700 branches have closed since 2015 or are set to close, leaving only 4,000, at a time when banks are pulling in record profits?

What is most despicable about this situation is that banks have record profits, but are not investing them in our communities. Our constituents, particularly those who are vulnerable, need banks to maintain their presence on our local high streets. It is incumbent on Government to act and to incentivise banks to have a high street presence.

I thank my hon. Friend for securing this debate. The support she is getting from across the House is quite telling.

Rural Scotland has been battered by bank and post office closures in recent years. The Bank of Scotland plans to close its Dunoon branch on 5 December. We have seen how this works: the banks close a branch, they advise us to use the post office and, all too often, the post office closes. I have made my feelings very clear about that particular closure, but will my hon. Friend join me in congratulating the people of Dunoon, particularly Dinah McDonald, who from her shop Bookpoint is leading the community fightback by gathering 1,000 local signatures to petition Lloyds to reverse this ill thought out and ill conceived idea and decision?

I welcome my hon. Friend’s intervention and throw my full weight behind the campaign of the people of Dunoon. We know good folk come from Argyll and Bute, so I am very happy to support that campaign.

My constituents in East Dunbartonshire have suffered from this trend, watching bank after bank close its doors. Seven local banks have closed since 2020, most recently Barclays in Kirkintilloch and the Bank of Scotland in Bearsden—similar to my hon. Friend’s experience. Fortunately, a Bank of Scotland branch remains in Milngavie, but for how long? I will continue to set out the need for action and Government intervention as I progress my case for the continued need for high street banks, but I will start with a couple of questions for the Minister. I would appreciate some comment from him on them when he gives his response.

What are the Government doing to incentivise banks to maintain a high street presence? Do the Government recognise why that is important and necessary, and if they do, why the hesitance to intervene? That hesitancy is to the detriment of our constituents, particularly those who are vulnerable.

I am grateful to my hon. Friend for giving way. It is about eight weeks since I introduced my ten-minute rule Bill, the Banking and Postal Services (Rural Areas) Bill, to Parliament and the Government have done nothing. They talk about banking hubs as some kind of solution, but there are a handful of them only and delivery is absolutely glacial. The point my hon. Friend is making in her excellent speech is that these facilities for local people will be closed down, especially in rural areas, before there is any substitute for them to provide the services that people need. Does she not agree?

I completely agree with my hon. Friend, and I welcome that intervention. It is to the detriment of our constituents, because the banks and the Government are not stepping up quickly enough or at all to support those who need these vital services.

Many constituents have been in touch with me in the run-up to this debate flagging up the particular impact local bank branch closures have on those who are vulnerable. Elderly people and those with physical or mental disabilities may struggle with online banking, and will be particularly affected by having to travel greater distances to access in-person banking services.

I am very grateful to my hon. Friend for giving way when she is making such an excellent speech. On vulnerable people and their access to cash, does she believe that Government inaction is in part to blame for the hiatus that happens when the last bank closes, like the Bank of Scotland did in Brechin last year? The entire community then has to wait not to see when but if they will get a banking hub.

I thank my hon. Friend for that intervention. It is the hesitancy and uncertainty that has such a detrimental impact on communities such as Brechin.

For vulnerable people, the internet often feels like an unfamiliar and unsafe place to handle their money. For them, the advice and reassurance they can only get from an in-person bank teller is vital. For them, the extra miles to the next nearest bank branch might be too far to travel.

On the question of the additional distance to travel, may I flag up the experience of my constituents in Buckhaven when TSB closed a branch there a few years ago? It very kindly produced a wee map showing the location of the nearest TSB bank in High Street, Methil. The only problem was that it was not in High Street, Methil; it was in High Street, Leven—not only a different town, but a different constituency. The address it gave in High Street, Methil was part of the old high street that was demolished 40 years ago to make way for housing. Does my hon. Friend agree that it is just an insult to constituents and to communities when a bank that has taken the decision to close a service is so ignorant that it cannot even be bothered to send somebody to walk the distance to make sure the bank it is directing people to actually exists?

I thank my hon. Friend for that. That is a frustration we share. The maps sent out by many a bank branch are complicated and sometimes not relevant to the communities that they are being sent to, so I completely agree.

Just last night it was flagged to me that an elderly constituent of mine living in Kirkintilloch with a brain injury has been struggling to access banking services since the closure of Barclays in the town centre. The shift to centralised bank hubs like Barclays in Glasgow brings with it a litany of issues, such as the confusion and accessibility issues my constituent is experiencing.

With every local bank branch closure I am assured of two things upon meeting with the bank in question: there will be no forced redundancies, and all vulnerable customers have been contacted and bank staff will work with them to have a seamless transition to their next closest bank. But my constituency casework is proof that for far too many people, that is just not enough.

My hon. Friend is making an excellent speech, and is being extremely generous with her time.

The closure of local bank branches has an impact on Members in all parts of the House, as we have heard this evening and as I said when I spoke about the subject in my first Adjournment debate last year. On that day, HSBC had announced that it was closing 69 branches across the four nations. Since then the Government have introduced what is now the Financial Services and Markets Act 2023, but it has failed to address the issue of bank branch closures. I receive numerous complaints from my constituents about the fact there are no banks left, and about the limited access to free-to-use ATMs. In fact, just this afternoon I received an email about that from a constituent. Does my hon. Friend agree that more action must be taken to ensure that our high streets do not become banking ghost towns?

I completely agree with my hon. Friend. There are cash deserts across Scotland now, and the Government should reflect on that and take new action.

As my hon. Friend will know, the Bank of Scotland wants to close its branch in Glasgow’s Govan ward, which means that 30,000 people will be without a bank; but there is another problem. When a bank closes, its ATM closes as well, and in my experience when a bank closes its ATM, the other ATMs that were free start charging. That is another attack on vulnerable customers, is it not?

It is as if my hon. Friend had read my mind. That is exactly what I was about to mention. People on low incomes often use cash to budget, and more and more of our constituents will be doing so as the cost of living crisis worsens. Evidence from Which? indicates that there are 130 of those cash deserts in Scotland—places where there is no access to either a branch or an ATM within a reasonable distance.

I thank the hon. Lady for allowing me to intervene, and for initiating this important debate. It is clear that online banking is not for everyone, and that we must have physical banking services in towns. I am delighted that Stapleford, in my constituency, is to have a new banking hub, which is on track for delivery in January 2024, but there is concern about towns in Broxtowe such as Beeston losing these vital services. Does the hon. Lady agree that we must continue to ensure that communities have access to physical cash and banking services?

I agree that it is vital for communities to have access to cash and localised banking services. It is hardly surprising that a Tory MP has a banking hub coming to his constituency, but I thank the hon. Gentleman for flagging that up, because it is part of the problem that we are experiencing in Scotland.

Depriving people, many of whom may already be near the end of their financial tether, of access to cash heaps one more thoroughly unwelcome stress on their lives. It is entirely unreasonable to expect the entire population to bank online. There is also an argument to be made about fundraising charities and organisations, which often rely heavily on cash donations and payments. The lack of a local bank for cash deposits places an additional security risk on volunteers, causing extra pressure for both charities and individuals.

Given the finding of Citizens Advice that 90% of the population use a bank branch at some point and 40% use a local bank branch at least once a month, keeping banks on high streets should not be in question. With each closure come the expected platitudes and reassurances from the bank concerned. We, as constituency Members, engage in good faith and fight for our constituents to have access to local banking facilities, but the fact is that there is no incentive for banks to maintain a high street presence, and without that incentive, banks are gradually shifting to a far less localised business model.

I return to my earlier point that in the absence of a Government incentive, the number of local bank branches will continue to erode. Given that banks, and local bank branches in particular, provide an invaluable service for our communities, it is incumbent on the Government to act and ensure that banks do not entirely withdraw from our high streets. I have even heard from constituents across East Dunbartonshire who have switched banks so they can continue to have a local bank branch, only to find that their new bank has closed its doors months later.

The point that I and others make with each of these bank branch closures is that the banks’ suggestion of post offices and banking hubs replacing local bank branches does not stand up to scrutiny, as my hon. Friend the Member for Argyll and Bute (Brendan O’Hara) said in his intervention. Local post offices are under considerable pressure and are also exiting high streets and town centres at an increased pace, including the closure of our local post office in Milngavie precinct. Post offices are not banks; nor are they a suitable alternative to a bank. It is time the Government recognised that. Our constituents are going to great lengths to access local banking facilities, so why are the Government not helping them? Another issue relating to the closure of local banks is the notable decline in the provision of free-to-use ATMs. There are more than 14,000 fewer than there were five years ago—a steep decline of 27%—which again particularly impacts those who are vulnerable.

We all know the arguments that banks make for the closures. They say that cash use is down by 65% since 2015 and that that decline makes their cash access networks, including local branches and ATMs, less profitable. But I think we all understand that banks are not charities; they are extremely profitable corporations whose profits have increased by 87%, or £17.4 billion, since 2015. With that massive windfall they can easily afford to maintain a basic cash access network—a service that our vulnerable constituents cannot afford to lose—but that is exactly what we are seeing and the Government are doing nothing to stop it.

This is yet another in a long list of examples of how this Union is failing Scotland. We on these Benches look forward to Scotland regaining her independence—[Hon. Members: “Hear, hear!”] I thank Members for their support. Independence, when we will no longer have an unkind, uncaring Westminster Government, who we have not voted for, eroding our living standards and our high streets. Scotland’s streets and Scotland’s banks are safe in Scotland’s hands. The time has come for Scotland’s people to take back our self-government and build a brighter future.

I thank the contributors on both sides of the House, including my hon. Friends the Members for Dewsbury (Mark Eastwood) and for Broxtowe (Darren Henry), and of course the hon. Member for East Dunbartonshire (Amy Callaghan) for securing this debate, which has rightly given her constituents a voice on something that they feel very strongly about. I know there is real strength of feeling across the House about this subject, but it falls to me to be clear that the nature of banking is changing.

As in so many other areas of the modern world, the long-term trend, whether we like it or not, is towards greater use of digital or telephone services. According to UK Finance, last year only a third of UK adults had carried out any banking activities face to face in a branch. The hon. Lady talked about Kirkintilloch, but 94% of those who use that branch also use the app, mobile or telephone services. The bank asserts—whether this is right or not I do not know—that fewer than 10 people were regularly using the branch. In the same period of time last year, nine out of 10 UK adults banked online or through a mobile app. More than nine in 10 of us are now using contactless payment methods, including throughout this House, and only 6% of people are now solely using cash. That is not limited to any particular demographic: 80% of adults aged between 65 and 74 use online and mobile banking as well, and less than a third of that age group regularly use a branch.

Given that the Minister and most of his ministerial colleagues are so fond of online services everywhere else, can he explain why in these first two days back in Parliament Members have spent about three hours doing nothing while trooping through the Lobbies to vote when we could have on voted online in about two minutes flat? Why is doing things in person the right thing to do here but the wrong thing to do everywhere else?

In the interest of time I will stick to the topic, but I am delighted that the hon. Member is here in person, as indeed are you, Mr Deputy Speaker.

Change is not comfortable, but it does happen. Let us consider payphones. It would not surprise me if Hansard had records of similar debates about the decline of payphones. At one point, at their peak in the 1990s, there were almost 100,000 payphones in this country. Today there is just a fraction of that number. Technology has moved on, and nearly everybody has access to either a landline or a mobile phone.

By the same token, it would make little sense to force a business to keep a physical branch open when developments in the market mean that eyeballs and footfall have moved elsewhere. Nor would our high streets be particularly well served by bank branches gathering dust and lying essentially unused. We need to find new uses for them—perhaps the aspiration of the hon. Member for East Dunbartonshire for independence will produce new uses for these bank branches—in the same way that so many of our communities and villages today have a Blacksmith’s Arms public house.

What responsibility, if any, does the Minister think the Government have for these closures? This idea that we can all be digital by default might work well in London, Glasgow, Edinburgh or wherever, but digital by default does not work in rural communities. There needs to be a solution for those who cannot access these systems, as he would have us all do.

This Government take responsibility, and I was just about to explain how, for the first time, we have taken the statutory right to protect the use of cash. That has been on the statute book for a number of weeks after the House passed the Financial Services and Markets Act 2023. It is also why we support the very rigorous guidance given by the Financial Conduct Authority in cases where bank branches are closing.

Rural communities are probably the larger part of my constituency, and I have lost 12 or 13 rural banks. Every one of them was a focal point for customers, which hits on the important point made by the hon. Member for Argyll and Bute (Brendan O’Hara). At the same time, every one of those banks has made extra profit and extra fees, which just does not add up. Why not keep them open and share some of that dividend with all the customers who need the banks?

The hon. Gentleman is working his way towards one of the potential answers. Colleagues have mentioned the banking hubs. When a bank seeks to close a branch, the FCA process normally includes consultation with the local Member of Parliament. The financial sector now has a consumer duty to think about putting customers’ needs first, which is one of their weighty duties. As we deal with this significant change, a number of alternatives are in place. One is the local post office, and I believe there are still nine post offices in East Dunbartonshire. As the banks’ business traffic coalesces, they can help to support the economics of a post office in a particular area. That is one opportunity. Some 99% of personal banking customers can transact in their local post office, and there are over 11,000 post offices across the United Kingdom.

A few moments ago, the Minister mentioned the Government’s move to protect the right to use cash. What is the point of that right if people cannot access cash in their community?

I do not know whether the hon. Gentleman is deliberately failing to understand, but the protection of access to cash and the ability to deposit cash—that is important if we want businesses to continue to use and accept cash—has a requirement that people will have easy, convenient access to a free ATM within 3 miles in rural areas and within 1 mile in urban areas. That is the guidance we issued a matter of weeks ago.

I will take one final intervention, but hon. Members would learn more if they allowed me to make some progress.

I thank the Minister for being most generous; as he knows, I have been trying to intervene for a while. There is an important issue about free ATMs and those that charge. Is he monitoring that? When a branch closes, there is clear behaviour whereby the ATMs around and about start charging.

I would be interested to see evidence of that. The paid-for ATMs simply do not count in any way towards the provision of free access to cash. In the constituency of the hon. Member for East Dunbartonshire, there are 51 free-to-use ATMs. Only those, not the ones that charge for withdrawals, will count towards that condition of making sure our communities have decent and continued access to cash.

I understand that access to cash is just one thing and that an ATM does not provide the full range of banking services—the post offices do—but we have started to talk about banking hubs and more than 80 have been announced to date. I know that relatively few have been delivered but they are a relatively novel feature. If hon. Members who are to have a banking hub would like to see that delivery, they should work with their local planning authorities, as the biggest single impediment to opening these new banking hubs is getting through the planning process. I know that my right hon. Friend the Member for Pendle (Andrew Stephenson) is looking forward to a banking hub in his constituency. I made it a priority earlier this year to visit London’s first banking hub, in Acton, and I recently visited the Brixham hub. The hon. Member for Ealing Central and Acton (Dr Huq) is certainly not a Conservative, but I will be happy to work with colleagues to put in place these state-of-the-art hubs, which allow people not just to withdraw and deposit cash, but to carry out a much wider range of community banking services. That is very important.

If the Minister wants to grow the frustration, that is fine; it feels as though that is becoming a common pattern. It feels as though the Government and the Minister are trying to place this into the hands of everyone else to deal with and that there is a lack of Government intervention to try to solve this problem.

Nothing could be further from the truth. This Government have, for the first time in history, legislated for citizens of this country, including our good friends in Scotland, to have a legal, statutory right to access to cash. Moreover, we have brought forward the practical, sustainable alternative of banking hubs, to protect the ability of communities to access a wider range of banking services. We have conducted agreements for almost every bank in the country and in Scotland to be able to conduct their business through the post office network, thereby helping and saving the post offices in the communities too.

I think I have been clear. I understand that change is happening and people are not always comfortable with change. We are in the middle of a big technological shift. We all agree that people should have access to good-quality banking services. I contend that the Government are taking the appropriate action and taking this matter extremely seriously.

Question put and agreed to.

House adjourned.