The Economic Secretary to the Treasury (Harriett Baldwin)
It is a great pleasure to be able to respond on the Government’s behalf to this really excellent debate. I congratulate the hon. Members for City of Chester (Christian Matheson) and for Ceredigion (Mr Williams) and my hon. Friend the Member for Wells (James Heappey) on securing it, and thank them for giving me the opportunity to update the House on what is going on in this area. I also thank the Backbench Business Committee for scheduling such an interesting debate on a Thursday afternoon. I also thank the hon. Member for Hayes and Harlington (John McDonnell). It is a great honour for me to have the shadow Chancellor respond to the debate. He only lost one member of his team during it, so congratulations to him.
I need to start with a confession. I am a rural Member of Parliament. I spend four days a week up here in London. If I think about it, I actually cannot remember when I last went into a bank branch. I have been to the cashpoint, here and in my constituency, but I also ask myself when, these days, do I even use cash? The only place seems to be in the House of Commons Tea Room. I understand contactless is coming there soon, so where will we all be then?
Customer behaviour is clearly changing. The number of times that we all use a branch in any given year has dropped almost 30%. The most recent data that I have from the BBA show that branch transactions have fallen to 270 million branch customer contacts in 2016. If my maths is right, that is an average of four per year.
Kirsten Oswald
Does the Minister accept that some of the downturn in customer bank transactions is because bank branches have closed?
Harriett Baldwin
The hon. Lady is right to ask that question, but if customers were surging into branches and transacting valuable business, the banks would not be being as radical as they are.
Harriett Baldwin
A lot of Members will want to intervene. I have a lot of ground to cover and only seven minutes in which to cover it, so I will give way only very briefly.
Albert Owen
I am very grateful. I encourage the Minister to go to her local banks and talk to the staff. Their opinions have not really been voiced here today. They are the frontline of the banking industry and quite often we do not hear from them. It is because of reduced hours that she and I have limited time to go into our banks, but I do go in every Friday morning.
Harriett Baldwin
The hon. Gentleman is right to pay tribute to the wonderful staff up and down the land who staff our bank branches. The older members of our communities really value that interaction. It can be very important in protecting them against some of the online fraud, which, we have to acknowledge, targets older customers.
It is clear from the points raised today, and from the regular discussions I have with Members, that we are all in agreement that bank branches are an important part of the solution when it comes to access to finance for our local communities. It is one of my top priorities as Economic Secretary to ensure that financial services work for everyone and that they are on the side of people who want to work hard, do the right thing and get on in life. Having a good branch network is part of that. The role of banks in society is essential. I am glad that that has been acknowledged today.
In the interests of time, I want to just highlight some of the issues raised in the debate. First, in the past year we have made significant progress on access to banking services by improving access to the basic bank account. Many more banks now offer that. We have also reduced the practice of charging for failed payments, which was unacceptable. The industry has moved forward on that. I pay tribute to the hon. Member for Walthamstow (Stella Creasy). She has not participated in this debate, but she made such an impact in terms of bringing payday lending under the regulation of the FCA and the progress we are making on that. There has been much discussion about the access to banking protocol.
Chris Evans
Does the Minister know of my interest in real-time credit scoring? Has she had a chance to look at that?
Harriett Baldwin
The hon. Gentleman knows that that is worth a whole Adjournment debate in itself, so I will talk about the access to banking protocol instead.
The protocol means that when a bank decides to close a branch it must think carefully about the consequences of doing so, particularly when it is the last bank in town. We have heard today—this debate is timely—that Professor Russel Griggs has been appointed by the BBA to review how it has been working in its first year. All the points raised by Members will be excellent submissions to that review. I hope he will take the opportunity to meet hon. Members to hear at first-hand the feedback on the independent review of the protocol. I would like practical recommendations to come out of the review on how we can move forward. I think we all recognise there will be an ongoing review by banks on how they can best use their branches.
Mr Gareth Thomas
The Minister has a reputation for being one of the most reasonable of her colleagues on the Government Front Bench. Is she willing to receive a deputation from the people in the credit union and the responsible finance industry to see what else might be possible to help them to grow?
Harriett Baldwin
I am glad to confirm that all the occupants of the Government Front Bench are entirely reasonable and sane. I regularly meet members of the credit union industry. The hon. Gentleman’s point brings me on to credit unions specifically.
We think that credit unions are very much worth backing. As the hon. Gentleman will know, we have put a great deal of money into improving their technology. One of the challenges they have is scale: the smallness of some credit unions means that they need a communal IT platform. We have subsidised that to the tune of £38 million. I also want to highlight to the House that we have, in the past few days, launched a consultation—people may have missed it, with all the other news that has been coming out—on how the Help to Save product will work. I encourage credit unions to come forward with proposals on how they could be a part of this really important saving product.
Many Members have alluded to the important role that the post office network can play in solving this problem. As we know, this Government, like the last one, have committed to subsidising the network and making it viable. I dispute what the hon. Member for Ynys Môn (Albert Owen) said about the network having fallen from 11,900. The figure has stayed above 11,500—just over 11,600, I think—so there has been a small decline, but not the precipitous decline we saw when Labour was in government. Post offices are an important part of the solution. For example, the network’s opening hours have increased by nearly 200,000 as a result of the modernisation process.
Members have mentioned the importance of mobile phone signals, digital connectivity and our commitment on universal access. Those things are also an important part of the solution. Moreover, we currently have a record number of free-to-use ATMs in this country—about 45,000—and there is a commitment from the LINK network to continue expanding their number, particularly into harder-to-reach communities.
We have heard powerful and passionate contributions from the right hon. Member for Tottenham (Mr Lammy), my hon. Friend the Member for Brecon and Radnorshire (Chris Davies) and the hon. Members for Clwyd South (Susan Elan Jones) and for Harrow West (Mr Thomas), the last of whom talked about the affordable credit sector and the help we are giving to the mutuals sector. We have also talked about lending to small and medium-sized enterprises and the importance of the community finance network, which I know from my own constituency is very important. There are also now other platforms through which small businesses can access finance, such as peer-to-peer platforms and so on.
I do not have time to make all my points, but my door is open. We all aspire to ensure that as we go through this evolution we maintain good access to finance for everybody. Healthy competition is also important. The new starter banks—five have got a banking licence in this Parliament so far—are an important part of the solution, as too is the way firms are adapting branches to use technology to provide more services. I have run out of time—I want to hand over to the hon. Member for City of Chester to conclude—but this has been a very important and well-timed debate.