PARLIAMENTARY DEBATE
Banking Services: Rural Northumberland - 2 September 2024 (Commons/Commons Chamber)

I thank Mr Speaker for granting this debate.

The Minister will know as well as I do, and as well as Members on both sides of the House do, that there are banking deserts across the country, with many people shut off from accessing very basic face-to-face services. The figures merely hint at the crisis in my constituency. Northumberland has lost more than half of its bank branches since 2015, and figures from Which? show that Hexham has lost over 70% of its branches, with only five branches remaining in the constituency.

Five bank branches would sound almost luxurious to many colleagues, but Hexham is the largest constituency in England, reaching from Throckley on Newcastle’s western edge to Gilsland in Cumbria, and from Blanchland on our border with County Durham to Byrness, which is a stone’s throw from Scotland. These bank branch closures do not just mean an inconvenience to my constituents; they present a toxic cocktail that both damages quality of life and holds back the growth of our rural economy.

The services that bank branches provide to our constituents are wide-ranging and impactful, and many rely on these services during life’s big moments. Obvious examples include help with large payments and support with mortgages, but there is also help during life events such as bereavements or securing power of attorney. The compassion, expert support and guidance that bank branches provide to our constituents cannot be allowed to disappear as an inevitable consequence of having better digital services. Closures let down our young people who want to start businesses but find it hard to do so due to their inability to have face-to-face discussions, as well as our older people who find access to cash hard to come by; in some cases, they have to trek across rural Northumberland on public transport to reach their closest branch.

I commend the hon. Gentleman for securing this debate. He is absolutely right that everyone in the House tonight will have experienced bank closures. I have lost 11 branches in my constituency. Does he agree that before a bank decides to close a branch, it should have an alternative in place, such as a banking hub, an ATM or alternative services through a post office?

I very much agree that before a bank branch closes, we need to mitigate the consequences. We need to make sure that the rural economy has space to grow, so that people like my constituents do not face such long journeys, which are particularly hard to navigate on public transport.

I congratulate my hon. Friend on securing this important debate. Northumberland is a wonderful county, but does he agree that it is not just rural Northumberland that is suffering? We have banking deserts in Bedlington, Blyth, Ashington, Newbiggin and other areas. Vulnerable people are suffering greatly where the banks have just up and left without any accountability. Does he agree that we must take immediate action to look after these vulnerable people?

My hon. Friend is absolutely right. I know how hard he fights for his constituents across Blyth and Ashington, and I know how much bank closures have impacted his part of the world, and more urban parts of Northumberland. I completely agree that we need to fight for these services in all our constituencies. I am reminded of a 74-year-old constituent who was forced to travel from Wark to Morpeth on three separate occasions in order to have a face-to-face conversation.

I thank my hon. Friend for securing this incredibly important debate, and for the powerful arguments he has made. In my constituency, the impact of bank closures is felt acutely in the Seaton Valley area. People from villages such as Seghill, Seaton Delaval, Seaton Sluice and Hartley have to travel on several buses to find the banking services to which they so desperately need ready access. Does my right hon. Friend agree that it is unacceptable that the vulnerable and elderly residents he described have to travel, sometimes for hours on multiple buses, to access such services?

I agree with my hon. Friend, and I thank her for giving me an unintended promotion. It may seem like we are just saying names on a map, but consider the vast scale of my constituency in our wonderful county of Northumberland. These places are separated by huge distances, and have a public transport system that does not always seem to work as it should. It is simply not fair that vulnerable people in my constituency are forced to travel for as long as an hour by car or 90 minutes by public transport, either way. It is unfair to expect our constituents to put up with a second-class service because they live rurally. Unfortunately that has been the case in large parts of our county. It is incredibly important that we address these issues.

We all recognise that many of these communities, particularly in my constituency and in that of my hon. Friend the Member for North Northumberland (David Smith), have historically voted Conservative, but they put their faith in the Labour party for the first time at the last election. We were elected to deliver meaningful change for our constituencies. I applied for this debate having spent my time as a candidate listening to the concerns of people across the constituency, but there is one area I wish to highlight. In Haltwhistle, and the towns and villages around it, the loss of Barclays last year is still damaging the local economy. I have been in touch with the chair of Haltwhistle chamber of trade, Ian Dommett, who told me directly that the loss of banking facilities in rural towns such as Haltwhistle has had a negative effect on every business. His members have been affected; most had accounts at Barclays because of its presence in the town.

The replacement of an active branch with a peripatetic community hub has removed the relationship between business and branch. Many businesses deal in cash—Ian’s business is a bed and breakfast, with many guests paying in cash, and a lot of Haltwhistle’s passing trade is from tourist spend on Hadrian’s wall—but they have lost the ability to pay directly into the bank, with the nearest Barclays’ branch being 20 miles away. Haltwhistle businesses say that the bank has simply told them to use the post office, a separate business over which it has no control.

I thank my hon. Friend for securing the debate on an issue that is important in both his constituency and mine. I draw attention to the correlated issue of post offices. In Wooler in North Northumberland, where there are no bank branches, the post office, which provides the only banking services for that community, is also at risk of closure. Thankfully, an incredible community response, led by the Glendale Gateway Trust, is fighting to retain it. I will do everything in my power, too. Does my hon. Friend agree that banking hubs more generally, and the Post Office specifically, must be part of the solution to the lack of access to banking services in Northumberland?

I completely agree with my hon. Friend. For many businesses and constituents, the post office represents a lifeline, albeit one that unfortunately for many businesses is accessed far too infrequently to operate with security. The decision to close rural branches is taken in head offices, with little or no understanding of the rural economy and the impact that such decisions have on our constituents, their businesses and their daily lives.

I thank my hon. Friend securing this important Adjournment debate. Whitehaven in my constituency, not dissimilarly from Haltwhistle, is on the brink of becoming a banking desert. Does my hon. Friend agree that we should not have to wait for towns to become banking deserts before banking hubs become an option? A better system would be to change the rules for banking hubs, so that they are a “last plus one”, rather than there having to be a complete banking desert before the option becomes available.

I very much agree with my hon. Friend. We have seen far too many rural towns and rural economies facing a precipice when a bank closes. Businesses are left to deal with uncertainty and a deprivation of banking services, which has an ongoing effect on the economy, before anything else comes in. I hope that we can consider taking any steps necessary to mitigate the impact of those closures, and I agree that a move to a “last but one” system may be a more efficient way of dealing with things. Whitehaven on the Tyne Valley line is a town that shares many of the challenges that I am talking about, and that demonstrates the incredibly important nature of this debate.

In constituencies such as mine and those of my hon. Friends, many residents and businesses already travel out of town for banking. When they are there, they do other shopping. They shop in the major towns or the cities, where they have access to other shops or services. That has a massive impact on the passing trade in Haltwhistle and other towns across the Tyne Valley. Ian Dommett, the chair of the chamber of trade, said:

“For Haltwhistle, this has meant that every shop in the town has lost this trade and everyone of the Chamber of Commerce members who are retailers say they have seen a decline in business as it is now done in towns with functioning banks.”

I would argue that Haltwhistle as a town has been and continues to be let down by the Conservatives. This is a stunning indictment of policy failure. The businesses that want to drive economic growth are being hamstrung. In some cases, shops have stepped up by offering some elements of consumer banking, such as cashback services and having ATMs in store, but they should not need to do so. Businesses should not be deprived of business banking when, ultimately, it is they who are the engines of our rural economy. We need to move away from the significant economic disruption that towns such as Haltwhistle have experienced for 12 months, since August 2023.

I was incredibly proud this summer to be asked to become a patron of the Northumberland Domestic Abuse Services. Speaking with the staff there, I mentioned that I had secured this debate and was told that access to in-person banking services can be a lifeline for victims of domestic abuse. In a rural setting in particular, this can be absolutely vital. I urge the Minister to consider introducing plans for banking hubs in Haltwhistle in my constituency to ensure that residents can access in-person banking services, and to work with organisations to explore the impact that banking deserts can have on acute domestic violence.

I was proud to stand for election on a manifesto prioritising rolling out banking hubs to banking deserts, but banking hubs should not be seen as a replacement for bank branches. They should not be seen as an opportunity for bank branches to be shut down, leaving others to pick up the pieces in our communities. When decisions are made far from the communities that they impact, those decisions are inevitably worse. One of the most meaningful ways that we can support towns to grow economies, and provide opportunities for young people and security for elderly residents, is to make sure that, at the very least, they have a banking hub in place—one that does not just serve one town, but that serves communities across the rural hinterland. I ask the Minister to ensure that the Treasury strongly considers and prioritises Haltwhistle as a location for a future banking hub, to reflect the opportunities and investment that that could bring, and to provide the opportunity for businesses to grow.

I represent a thriving market town in Somerset called Frome, and even there it was announced in May that we would lose our last bank. Given that banks play such an important role in our communities and our businesses, does the hon. Member agree that there should be some obligation placed on banks to ensure adequate provision across communities in any given constituency? We can see from the discussion this evening that it is critical to so many aspects of our public life that we have proper banking provision.

I agree with the hon. Lady. It is important that banks recognise the almost unique role that they play on our high streets as anchor institutions; they need to be far more responsible when conditions dictate that bank branches need to close. This is not about asking them to play a charitable role; it is about asking them to play a responsible role in our economy and our society. As an MP for many picturesque market towns, I recognise the problems that the hon. Lady is having in her constituency.

It is important that we represent the impact that the infrequent availability of post office services has had on individuals in my constituency, and in particular on elderly customers, who now have to use the post office as their primary banking facility. It would be great if the Minister could join me in encouraging the Post Office to expand its participation, particularly as I know that the Government are looking to expand the pension credit take-up campaign. Finally, will she comment on how the Government are working already, and will work in future, with our fantastic North East Mayor Kim McGuinness to improve economic prosperity across some of the most rural and remote areas of our incredibly proud region?

I commend my hon. Friend the Member for Hexham (Joe Morris) for securing this important debate, which I think is his first Adjournment debate. I also congratulate him on being the first Labour MP for Hexham. His Wikipedia entry famously boasts that he broke a 100-year streak of Conservative MPs to be in this place. If that is not an accolade, I do not know what is. Just before I came to this debate, I was having dinner with my hon. Friend the Member for Warwick and Leamington (Matt Western). I mentioned to him that I was answering a debate called by our hon. Friend the Member for Hexham; our hon. Friend will be pleased to know that he said that Hexham is the most beautiful place he has ever been to in his life—I would say other than Hampstead and Highgate, obviously.

I thank all hon. Members who have contributed to this important debate. The fact that they have stayed behind at a quarter past 10 on a Monday, on their first day back to Parliament on a one-line Whip, demonstrates their commitment. I know that this issue affects many of our constituents, and hon. Members are absolutely right to champion it.

I thank my hon. Friend the Member for Hexham (Joe Morris) for securing the debate. Does the Minister agree that the conditions in rural areas make it particularly difficult for people to take up the alternatives given by banks, such as digital access? Despite the fantastic work of Broadband for the Rural North in my constituency, many of my constituents do not have access to broadband, and access to digital banking is simply out of reach for many.

I thank my hon. Friend for her intervention. I know that she is a doughty champion for her constituents. I hear what she says about her rural constituency. Mine is not a rural constituency, but I speak to people across the country who are really struggling with digital connectivity, as she outlines. It is something that the Government are taking very seriously, and we are aware of the obstacles in the way of people trying to access services online.

I am pleased that this is my first parliamentary debate as the Economic Secretary to the Treasury, because this is an issue that is close to my heart, and one that I am determined to try to address. It is a privilege to be able to use this office to tackle some of the country’s most important issues, as my hon. Friend just said. Ensuring access to banking and supporting financial inclusion featured very highly in our manifesto, which all Labour Members were elected on. We want to ensure that our constituents manage to access the services that they deserve.

Before I get on to the meat of the topic, I will briefly provide the context. Although many people have benefited from changes to the UK’s banking landscape, such as the ease and convenience for some people of remote banking, it is clear to me that others have found it a lot more challenging. According to the consumer organisation Which? over 600 branches in the UK have closed since 2015. Bank branch closures have significantly impacted those in communities who need access to in-person banking services. I am really sorry to hear about some of the specific cases that have been raised. My hon. Friend the Member for Hexham talked about his 74-year-old constituent who has to travel so far. That example particularly stood out to me, because that should not be the case.

I assure my hon. Friend that the Government understand the importance of face-to-face banking, and banking access, to our communities. Not only is it is key to the health and vibrancy of those communities, but as he pointed out, it helps them to drive forward and benefit from our country’s economic growth, and the rural economy. To anyone listening to the debate, please be in no doubt that the Government share the objective of enhancing access to banking services, and we will be prioritising the delivery of that accordingly.

Work has already started. Obviously, we have not been in Government for very long, but even before the election we committed to working closely with banks to roll out at least 350 banking hubs, which will provide individuals and businesses up and down the country with critical cash and banking services.

Banking hubs are in many ways very helpful. However, will the Minister consider reviewing the criteria? I have an issue in my constituency where the distance of the nearest bank is one tenth of a mile too short to get a banking hub. Because of that, they are considering not putting a banking hub in place. Is there potential to review the criteria, to support the most vulnerable people in our communities?

I absolutely hear what my hon. Friend says about protecting vulnerable people in our constituencies. That is why a lot of us stood for the Labour party: because we want to protect the most vulnerable. I will come on to LINK, which provides the banking hubs, but if he does not mind writing to me and laying out exactly what the issue is, I can write to him about the topic and about the criteria, because it sounds as if there is a very small matter that needs looking at and I am happy to do so. I will talk later about LINK, but I ask him to make representations as well.

I congratulate the Minister on attaining her office and wish her well in it. I think she referred to 350 banking hubs, which I presume means across the whole of the United Kingdom of Great Britain and Northern Ireland—I hope so. If not, I ask her to confirm that the same progression and the enthusiasm that she is showing will also happen in Northern Ireland. I ask her one other thing, about which I spoke to the hon. Member for Hexham (Joe Morris) beforehand. Setting up banking hubs seems to take forever. We all want them in place. Is that something that the Minister can help us with?

No Adjournment debate would be complete without an intervention from the hon. Member, so I am glad he intervened; I was waiting for him to do so. I share his frustration about the slowness of the roll-out—I pushed for it when I was in opposition and asked why it was taking so long. I will address this point in my speech, but I can reassure him that with as much influence as I have in our office, we have been asking for the banking hubs to be set up and ready. We are hoping to achieve 100 banking hubs by the end of this year, but I am conscious that they take a long time to set up. It is to do with the planning process, but that is not an excuse. I would like to speed up the roll-out, because I feel it has been dragging on for a long time. I absolutely share his frustration.

As the hon. Member might know, 60 banking hubs have already opened. As I said, we anticipate that 100 will be open at the end of this year, but I agree that it is frustrating to have to wait and watch. We want them to be up and running so that our constituents can make good use of them. We want to ensure that the hubs mean that people and businesses can withdraw and deposit cash, because we know that people still use it. They will deposit cheques, pay bills and make balance inquiries. They will also contain dedicated community bankers from the largest banks in the area on a rotating basis, to help people and businesses carry out wider banking services.

The decisions on the locations of future banking hubs will be made by LINK, which is the banking industry’s cash co-ordinating body. It will consider criteria such as population size, the number of retailers in the community and the availability of alternative bank branches. Communities can ask LINK to carry out an assessment of the local area; I urge my hon. Friends the Members for Blyth and Ashington (Ian Lavery) and for Hexham to make to LINK the case that has so convincingly been made to me. At the end of the day, we have asked it to make the decisions, but I can help in the process as well.

Looking forward, I expect the banks to consider carefully whether the needs of a local community are being adequately served when thought is given to where the banking hubs should be rolled out. However, I also want the industry to ensure that the range and quality of banking services provided in hubs are delivering for customers up and down the country. There is no point in having a banking hub if it does not meet the specific requirements of the town.

I welcome the Minister to her place. If you will indulge me, Madam Deputy Speaker, I suspect that the Minister will want to note, as I do, the passing of Nicky Gavron, who was a Deputy Mayor of London, a very good friend of mine and a constituent of the Minister’s. She died on 30 August, and I wanted to ensure that it was acknowledged in the House.

I congratulate my hon. Friend the Member for Hexham (Joe Morris) on securing this important debate, in which I have two quick questions to put to the Minister. First, will she outline what conversations she has had with the banks to ensure that they put people over profit? I am very proud to represent Newcastle-under-Lyme. I know that she has not visited; if she had, she would agree that it is the most beautiful place in our country. Secondly, how can we ensure that the importance of accessibility is acknowledged not just in words but in deeds?

I thank my hon. Friend for his intervention and associate myself with his comments about Nicky Gavron, who was my constituent and a great friend. She worked with us in London Labour when my hon. Friend was—dare I say it—a very young man. We worked with her for many years, and it was very sad to see her go.

I can assure my hon. Friend that I speak to the banks every day to ensure that they know what our values are and how we want them delivered. Beyond banking hubs, I am saying to them that communities need key banking services to ensure that they have accessibility, cash withdrawal and deposit services—particularly our local businesses and charities, which often deal in cash and need convenient ways to deposit their takings, but also everyone who uses cash to make everyday purchases.

According to UK Finance, cash remained the second most popular payment method last year, so it is not right to dismiss and question the idea that people still use cash. Overall data shows that cash coverage in the UK remains good. According to Financial Conduct Authority analysis, over 99% of the UK urban population is within one mile of a free withdrawal cashpoint, and over 98% of the UK rural population is within three miles of one. I hope that that reassures hon. Members.

However, it is important that coverage is maintained, so I welcome the FCA’s forthcoming rules on access to cash, under which designated banks and building societies will be required to assess the impact of a closure on a community’s ability to access cash. If a closure results in a gap in provision, firms will be required to put in place a new service that meets the community’s needs. That could mean a new ATM deposit service or a banking hub. Where a new service is recommended, firms will need to ensure that it is place before they are able to close the existing service, to avoid gaps emerging in access to cash. Those rules will come into force on 18 September, which I am sure will be welcomed by Members across the House.

We recognise that banking has changed through a shift towards online and mobile access, which mean that customers have more ways to access banking services conveniently and securely. Banking users have clearly taken up those opportunities; recent FCA data shows that almost nine in 10 adults bank online. However, that does not mean that everyone has the means, confidence and skills to use those services, as many hon. Friends have said. We recognise that although we live in an increasingly online world, part of the population, including in my constituency, remain digitally excluded.

As a Government, we are committed to improving connectivity and digital access for all constituents. We will continue to support the roll-out of a modernised broadband infrastructure through Project Gigabit, closing the digital divide for remote areas of Britain. The Government have already started the renewed push to reach full gigabit coverage by 2030. This month we have announced funding of £800 million to improve broadband for over 300,000 rural homes and businesses. Thinkbroadband reported in August of this year that approximately 84% of the UK can now access a gigabit-capable connection. Although the majority of premises will be covered by commercial activity or Project Gigabit, the Government are considering alternative ways to improve connectivity for the parts of the UK where that is not possible. If constituents or Members write to me, we will bear their areas in mind.

I thank everyone for their thoughtful contributions, but this will not be my last speech on this matter. I want to take my hon. Friend the Member for Hexham, and other Members who have spoken, along with me on my journey, working together with the financial services sector and the public to deliver financial services. I want to mention quickly the post office network—[Interruption.] I don’t have time, do I, Madam Deputy Speaker? You are looking at me. I will just say that the Government are committed to looking for ways to strengthen the post office network. The Secretary of State met the chair of the Post Office to discuss that and other important issues, and the Government protect the post office network by setting minimum access criteria to ensure that 99% of the UK population lives within three miles of a post office, with around 11,000 branches in the UK.

Madam Deputy Speaker, you have been very kind and allowed me a bit more time, so I will finish by thanking my hon. Friend once again—