The Bishop of Newcastle today called on the Government to accelerate plans for banking hubs in rural areas to protect the most vulnerable in our society. Leading a debate in the House of Lords on the impact of the withdrawal of rural banking services, Bishop Helen-Ann highlighted planned bank closures in the Tyne Valley, and a recent Age UK survey revealing that the use of online banking is as low as 14% among the 85+ age group.
Bishop Helen-Ann's speech:
My Lords, I thank all the noble Lords who are taking part in this short debate and look forward to listening to each of the contributions that they will bring. While this debate has its focus on diverse rural communities, my Lords I know that the issue is not solely a rural one.
Last month, Lloyds Banking Group announced that they will be closing 136 bank branches across the country. The Tyne Valley in Northumberland will see another three branches close their doors – two in Hexham and one in Prudhoe – meaning that customers in Hexham will need to travel over 15 miles to Consett to visit their nearest Lloyds branch.
Lloyd’s announcement comes after a decade of decline in the number of high street banks. Figures from Which? show that 6,266 bank branches have closed across the UK over the past ten years, representing 63% of branches open at the start of 2015. If bank branches continue closing at such a rate, we face living in a society where those unable to bank digitally are financially excluded.
However, it is not the closure of banks that is at the heart of this issue, but the stripping away of essential services without adequate alternative provisions. With the number of customer transactions at the Lloyds branch in Prudhoe having almost halved in the last five years, its closure is understandable. Online banking is indeed far more convenient for many, but where does that leave those who rely on the services that in person banking provides? Those living in rural areas whose internet broadband is unreliable? Those who struggle to understand online systems, and fear the risk of fraud? Those on low incomes who rely on cash to manage their budget? And those in need of advice to set up a mortgage, or business, for whom a phone call cannot compare?
While the rise of online banking has increased the ease of managing money for many, the support that face-to-face services provide continue to be vital, especially to some of the most vulnerable people.
An Age UK survey reveals that the use of online banking is as low as 14% among the 85+ age group. A complete transition to digital banking risks financially excluding many older people, making it harder to manage their money and fully participate in society.
The closure of banks also reflects the wider issue of declining high street services. We should not underestimate contribution of such services to fostering a sense of connection in diverse communities (this is not an issue of rurality) in the context of a culture with increasing isolation and loneliness.
Access to cash also remains essential, with 5 million people continuing to use it every day. The closure of local banks puts pressure on small rural businesses, some of which experience a lower footfall because of less access to cash in their area. Many owners are forced to travel further distances to deposit cash and carry out their banking, leading to reduced opening hours. There are also those with special needs, for whom using banking apps is not an option.
I welcome the new duty that the Financial Conduct Authority has placed on banks to assess the impact that the closure of a branch will have on access to cash in the area, and to ensure adequate services are implemented ahead of its closure. However, cash assessments only address part of the issue. These regulations do not protect vital face-to-face services that people rely on.
The assessment of cash access in Prudhoe, completed by LINK last month, deemed that there are already cash access facilities within a mile radius of the Lloyd’s branch that will close this coming May. It therefore concluded that no further services, such as a banking hub, are needed in Prudhoe. The assessment does not, however, consider the impact on access to face-to-face services within the community, as they lose the town’s one remaining physical bank branch.
I fully support the introduction and roll-out of banking hubs, enabling communities to access the fundamental functions of banks from a range of providers in person where bank branches are scarce. I praise the Government for their commitment to open 350 Hubs over the next five years and particularly the recent announcement of plans to open ten new hubs, including Alnwick and Amble in Northumberland and Whitley Bay in North Tyneside.
Nevertheless, I remain concerned about the pace of the roll-out. According to Cash Access UK, the provider of banking hubs, it takes approximately twelve months to open a Hub, as they must secure a suitable property and appoint operators and community bankers.
What steps are the Government taking to speed up the roll out of banking hubs in light of increasing bank closures, and what certainty do they have in the FCA to fulfil its duty of ensuring that no community is left with a gap between the closure of a bank and the opening of a banking hub?
Considering the current rate of bank closures, and the Lloyd’s recent announcement, I am concerned that 350 Hubs will not be enough to fill the gap in services that the rapidly closing bank branches are leaving. Is the Government open to increasing this target to meet the needs of communities?
Finally, whilst banking hubs are essential in providing face-to-face services, I also believe that they have a key role to play in bridging the digital divide. Banking hubs are well-placed to offer training and support to those who do not find it easy to manage their finances online and to equip them with the digital skills to do so. What steps are the Government taking to encourage banking hubs to provide training to enable people to manage their finances online and promote digital inclusion?
Online banking is an innovative tool to manage our personal finances, but it should not come at the expense of removing essential services from rural communities, nor the digital and financial exclusion of some of the most vulnerable people in society. I urge the Government to ensure that no one is left behind, and I look forward to hearing the minister’s response.