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Face-to-Face Banking: Rural Areas
(1 day, 16 hours ago)
Westminster HallRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Caroline Voaden (South Devon) (LD)
I beg to move,
That this House has considered the provision of face-to-face banking services in rural areas.
It is a pleasure to serve under your chairmanship, Mr Wishart. Banking services in rural areas have been decimated. While big banks make billions in profits, they close branches with impunity, turning their backs on customers and leaving small businesses struggling with the impact. Last year, Lloyds reported a £6.7 billion pre-tax profit and yet in the same period it shut 218 branches, with a further 95 to close this year. Sixty-four per cent of all bank and building society branches that were open in January 2015 have closed in the past 10 years, numbering more than 6,000. In my constituency, which covers about 450 square miles, we have one bank branch left, and I wonder how long that will be there.
Mr Gregory Campbell (East Londonderry) (DUP)
Does the hon. Member agree that the scale of closures is phenomenal and that while the banking hub roll-out is welcome in rural areas such as mine and hers, the scale of the closures is defeating that roll-out? We need an increase in the number of banking hubs to meet the demand on the streets.
Caroline Voaden
I will get to banking hubs in just a minute.
Why do we allow closures to happen? Why do the Government not act with urgency to turn around the decimation in rural banking, which has the biggest impact on the most vulnerable people—the elderly, the disabled—those who cannot use online services and areas where digital connectivity is so bad that using online services can literally be impossible? It is simply outrageous that banks have been able to get away with this to such an extent and at such speed. I call on the Labour Government to address the issue with urgency.
People still want to use in-person banking services, even young people and those who already bank online: 81% of UK adults say that they have accessed in-person banking services at least once in the past two years, while 48% say they have accessed in-person banking services every month. It is simply not true that everyone is happy to bank online all the time.
Stuart Anderson (South Shropshire) (Con)
In a remote area such as South Shropshire, just over half of my constituents have high-speed internet, so face-to-face banking is absolutely important. We have seen the issue in Bridgnorth, Church Stretton and Ludlow. Does the hon. Lady agree that the Government have to take that into consideration? It is not one size fits all.
Caroline Voaden
I absolutely agree. On my tour this summer, I met someone who was frozen out of her bank. She could not get the confirmation code on her phone because she has no mobile phone signal, so her bank account is now closed to her. She will have to travel more than an hour to get to a bank to get back into her bank account. It is an absolute mess.
Face-to-face banking is simply essential for millions of people and thousands of small businesses across the UK. When a loved one has died and finances have to be sorted out, it is normal to want to speak to another human being, not to a chatbot. People might need emergency access to funds, to make a complicated transaction or to send money abroad—out-of-the-ordinary banking matters that chatbots simply do not understand and cannot help with. Businesses might want to take out a loan, or extend or increase borrowing. Yes, people could do that over the phone, but for many a face-to-face conversation is more manageable. The rapid and ruthless shift towards online banking may suit those of us who work odd hours, travel around a lot and would frankly find it hard to pop into our high street branch, but at the same time, it is potentially disenfranchising millions of people from banking services.
Alan Mak (Havant) (Con)
In response to some of the things that the hon. Lady is describing, the last Conservative Government legislated to protect access to cash, but I think we now all recognise the need to legislate for access to face-to-face banking. Will she join me in calling on the Minister to support my In-Person Banking Services Bill to deliver more banking hubs?
Caroline Voaden
I will come on to the legislation passed by the previous Conservative Government in just a minute.
In rural areas, poor internet, non-existent public transport and a higher proportion of elderly residents who are less likely to manage their money online mean that losing the local bank can have a huge impact. The wipe-out in rural areas is mind boggling. A staggering 86% of people in rural areas have seen their closest bank branch—which 10 years ago was within a mile—close. For them, there is no alternative bank to switch to. As banks have closed, the impact of losing access to banking services has been disproportionately felt by those in rural areas, who simply cannot go to another bank in town. Instead, they are left navigating sporadic or non-existent public transport, having to set aside half a day for the outing just to visit the bank. It can be a major mission in a community that is poorly serviced.
Rachel Gilmour (Tiverton and Minehead) (LD)
Like my hon. Friend’s constituency, mine is large at 1,250 square miles and the population is elderly. The No. 25 bus runs every two and half hours. If a constituent needs to bank in Taunton, it takes five hours to get there and back. Does she agree that increasing face-to-face banking services, particularly in enormous constituencies such as mine, is crucial?
Caroline Voaden
I could not agree more. We are facing a perfect storm of decimated public transport; appalling digital connectivity that must be addressed, as we repeatedly say in this place; and closure of banking services. Those three make a toxic combination.
Consumers and small businesses are frustrated with the service they are left with, as is the case in Totnes in my constituency. In September last year, Lloyds announced it was closing the final bank in town, leaving residents without access to banking services beyond a couple of free ATMs and the post office. It seemed obvious to me that, when Lloyds closed its doors, the remaining banking services in the town would be insufficient and that it would get a banking hub. We have a thriving market once a week, where many people use cash. We have 120 independent high street businesses, an older than average population, very poor digital connectivity and poor public transport to other towns. Not only does the town have 13,500 residents, but thousands more people in surrounding villages use it for banking.
The cash access request that I submitted to Link was turned down. I appealed but, to my huge disappointment, Link upheld its original decision, despite my meeting officials from the Treasury and raising the matter with the Prime Minister.
Becky Gittins (Clwyd East) (Lab)
The hon. Lady’s description of using Link for a cash access assessment for banking hubs rings true in my experience of helping my community apply for one in the rural town of Holywell, which serves lots of villages. It is not properly understood how important access to cash is, not only for local people—and the age demographic point is also true of my constituency—but for local businesses, particularly rural ones. Does the hon. Lady agree that rural and semi-rural towns should be recognised in the outcomes of the review when it is published in October?
Caroline Voaden
I absolutely want to see that. When Link assesses rural locations, it considers whether alternative access to cash facilities are available within three miles or 30 minutes on public transport. For Totnes, it noted that alternative facilities were available within a 19-minute bus journey—that is on a really good day. But that is only relevant to those who live in the centre of Totnes. If someone starts from one of the many satellite villages that use the bank in Totnes, it is a completely different story. There may not even be a bus to get into Totnes to pick up the other bus to get to Paignton and the bank.
The impact on local residents and businesses will be familiar: queues at the post office, which become impossible in the run-up to Christmas; hundreds of extra customers for the post office, which has no extra space or staff to cope; and businesses less keen to accept cash, because the only place they can pay it in is the post office. If someone is running a shop on their own, as I did for six years, it is impossible to shut up shop and go down the road to queue at the post office, because they have to keep the shop open to make money.
Edward Morello (West Dorset) (LD)
Bridport in my constituency is sometimes referred to as Totnes-lite. Like Totnes, it has a high concentration of independent retailers, tradespeople and small businesses who rely on cash deposits. On average, a small or medium-sized enterprise deposits cash about 25 times a year and withdraws cash about 15 times a year. Groves Nurseries highlights the exact issue that my hon. Friend mentions: how to keep the business open, run a successful operation and drive to the nearest town every time there is a need to deposit or withdraw cash.
Caroline Voaden
I could not agree more. It is really important that we protect access to cash. My residents do not want to feel that they are being forced into a cashless society. Small businesses used to use the bank’s night safe, but that option has now gone.
Amanda Hack (North West Leicestershire) (Lab)
There are lots of similarities between Coalville and Totnes, including a monastery just a few minutes away. The biggest issue is that banking hubs, although incredibly important, do not provide the excellent business banking services that businesses need. Does the hon. Member agree that the issue is about business support as well as cash access, and that we need to expand the theme of banking hubs?
Caroline Voaden
The hon. Member is absolutely right. We have two banking hubs in my constituency, opened before the rules were tightened. People have said to me that even those banking hubs do not provide all the services they need. In a 21st-century banking offer for rural Britain, banking hubs are the obvious solution—rather than a branch of every bank—but they must be competent and capable of offering all the services that people need.
Five years ago, the rules for receiving a banking hub were much broader, and Dartmouth got one just in time. The current criteria for banking hubs are far too narrow. In September 2024, the Financial Conduct Authority substantially tightened the rules, placing the focus solely on access to cash. The current criteria completely discount all other reasons why someone might need to use a bank. They also do not take account of poor public transport and an older than average population. They ignore the fact that banks do so much more than just give out cash.
I urge the Government to expand the rules for granting a banking hub. I have met with the Economic Secretary to the Treasury, who shares my view that the current criteria are far too narrow. I heard the former Prime Minister tell the Chamber that a banking hub can be rolled out wherever a community needs one, but the policy that Link adheres to does not reflect that, so it must be changed. If necessary, we need legislation to make the banks listen. There simply must be a better minimum service coverage of banking hubs across the UK. So many MPs are campaigning for them that it is clearly a country-wide problem. We know that the banks can afford it, so for once, this is not a question of finding the money or funding. They can afford it.
The Financial Services and Markets Act 2023, passed by the Conservative Government, gave the Financial Conduct Authority powers to protect cash access but, astonishingly, did not extend those powers to protecting wider banking services but limited them to cash. Back then, Labour tabled amendments to the Bill to extend the power to protect banking services, but they were not taken up by the Conservative Government. Now in government, Labour has been very slow to do what it pushed for in opposition.
I urge the Government to rediscover their passion for protecting banking services by amending the Financial Services and Markets Bill that is currently making its way through the other place. We must ensure that face-to-face banking services receive the same protections as access to cash, whether that be via banking hubs, as should be the case in Totnes, or via other means, such as increasing the provision in post offices. As the Post Office is in trouble these days, with many branches closing, surely there must be an all-encompassing solution to make these places viable.
Liberal Democrat peers in the House of Lords have tabled an amendment to the Financial Services and Markets Bill, and I wholeheartedly support it. It would require the Treasury to consider whether assessments following bank closures should extend beyond access to cash to evaluate local community needs for essential in-person banking services when making regulations. The answer is, “Yes. Absolutely, it should,” because banking is about more than just getting cash out of a hole in the wall. I hope that the Government will adopt the amendment.
I look forward to hearing the outcome of the Government’s access to banking services review, which is due to be published shortly. I am sure that it will lay bare the evidence of the real-world impact of bank branch closures and demonstrate that the Government must go further in ensuring that people can access banking services.
Having a bank account and being able to access a range of banking services are a necessity in modern society, not a luxury. The Government must rebalance things in favour of our high streets and communities and put an end to the favourable treatment for big banks, which repeatedly cut their services with no regard for the impact on the lives of their customers. Enough now—it is time that the Government took action to protect and restore face-to-face banking services across rural areas.
Several hon. Members rose—
Pete Wishart (in the Chair)
Order. As everyone can see from looking around the Chamber, this is an exceptionally heavily subscribed debate. We will have to move straight to a two-minute time limit. We shall start with Dr Peter Prinsley.
Dr Peter Prinsley (Bury St Edmunds and Stowmarket) (Lab)
It is a pleasure to serve under your chairship, Mr Wishart. Welcome back from the summer holidays, everybody. I thank the hon. Member for South Devon (Caroline Voaden) for securing this important debate. I will focus my remarks on what the loss of banking services means for rural communities such as those in Bury St Edmunds and Stowmarket.
Let us imagine an older resident living in Ixworth, Stanton or one of the smaller villages surrounding our two market towns. A payment that they do not recognise appears on their statement. They are worried that they might have been scammed, and they want to speak to somebody they trust, show them the letter they have received and understand what to do next. For somebody living in a city or a town, that would be a short walk to the nearest branch, but for a person in rural Suffolk, it means arranging a lift, relying on an infrequent bus service or paying for a taxi—only to discover, perhaps, that the bank is closed. That is the reality behind every announcement of another bank closure.
We hear that customers are moving online. Revolut, which is now the fastest-growing bank in the country, has no branches. But the fact that most people use an app does not mean that everybody can, and it certainly does not mean that every banking problem can be solved through one. There are moments when people need to talk to somebody. That is particularly important in my constituency of Bury St Edmunds and Stowmarket, where there are large numbers of elderly residents. When a bank closes, the impact spreads everywhere. The planned closure of the Halifax branch in Bury St Edmunds is another reminder of the services that we cannot take for granted.
I am happy that the Government have a manifesto commitment to working with the banking industry to deliver 350 banking hubs by the end of this Parliament. Banking hubs are sensible alternatives that give customers access to cash and the opportunity to speak privately with representatives of their bank. However, rural communities must be properly considered when deciding where these hubs are located. Residents in rural Suffolk should not receive a second-class service simply because of where they live.
David Reed (Exmouth and Exeter East) (Con)
I thank my near neighbour, the hon. Member for South Devon (Caroline Voaden), for bringing this important subject to the House. Like her, I have seen many of these problems in my constituency.
We have had a number of problems in Budleigh: every major bank has left the town. Importantly, there are a number of smaller surrounding villages, such as East Budleigh and Colaton Raleigh, meaning that the town supports around 6,500 people, yet we have no access to cash whatsoever. The area is a tourist economy, with people coming down during the summer, but there is no access to cash for tourists. On multiple occasions, people have tried to take out money from the cash machine on the side of Tesco, but the money has simply run out. That is not good enough for a place that relies on tourists. We have seen a similar problem in Exmouth, where our post office is closing and we have one remaining bank. Exmouth is one of the largest towns in Devon, so that is just not acceptable.
Looking at the demographics, we are a largely elderly constituency where people have mobility issues, and access to transport is not the same as in London, Manchester or other bigger cities, so this needs to be sorted out rapidly. We have heard strong calls for a banking hub, and we have been trying to work with Link for the past year but have been rejected twice. From what we have seen, Link does not incorporate the geographic and demographic issues that I have just raised. I strongly call on the Minister to reassess the criteria that Link is using to make sure that constituencies like mine are not left out.
Perran Moon (Camborne and Redruth) (Lab)
It is an honour to serve under your chairship, Mr Wishart. While I welcome the many improvements to the digital banking experience over the past decade, I am concerned that those changes are moving services further away from the most vulnerable and from remote constituencies where digital connectivity is very poor. I thank the hon. Member for South Devon (Caroline Voaden) for securing this debate.
In my remote coastal constituency of Camborne, Redruth and Hayle, the most southerly Labour constituency in the country, 85% of bank and building society branches have closed. We have just four branches left, two of which are due to close in a month’s time, and one of the remaining two is open only on Mondays. We must appreciate that online banking is far less accessible for older people, the vulnerable and the disabled, and that it is not a silver bullet for charities and small businesses that receive and need to deposit cash. I welcome the roll-out of the banking hubs in my constituency, and I look forward to the first permanent hub in Camborne opening in the coming weeks. We also have temporary hubs in Redruth and Hayle and a deposit machine in Perranporth. Planning permission has gone in for a permanent hub in Redruth, which I hope progresses smoothly.
I welcome the Government’s review, and I urge the Minister to ensure that rural and remote coastal communities are, for once, at the heart of Government thinking as we consider what further action might be necessary to prioritise digital connectivity and secure permanent banking provision in places such as Redruth and Hayle.
Steff Aquarone (North Norfolk) (LD)
It is a pleasure to serve under your chairship, Mr Wishart. Making sure that people can still access cash and speak to someone from their bank has been one of my longest-running campaigns in my time working for the residents of North Norfolk. I remember well the trip that the council leader Tim Adams and I took to Acton in London to see one of the first banking hubs in action back in 2023. There were only seven in the whole country then, and I am glad to report that there are now three in my constituency alone.
However, in the coming months I will still be campaigning to secure services in both Stalham and Hoveton, which are without any high street banks. There are clusters of thousands of people in the villages in my constituency who are left underserved because the current criteria do not guarantee them access to services, as we have heard from many hon. Members today.
People in constituencies such as North Norfolk still rely on physical banking and the benefits of handling financial matters with a friendly face in person. A constituent from one of those broads villages told me that she considers herself to be fairly digitally able, but that she finds herself anxious about online banking when large sums or important transactions are at stake. Banks need to accept that is a perfectly reasonable position and deliver reassurance for their customers.
Access to non-digital alternatives should be a right, not a privilege. It is about providing security and comfort for those who are not native to the digital world. It is not just about age; it is also important for those in rural areas for whom digital access is a challenge.
I know that the answer to many of the questions raised today will be, “Wait for the access to banking services review.” I want to be able to look my constituents in the face and tell them that the review will make a meaningful difference to them. If the Minister will not give us an early hint today, all I ask is that she gives us the reassurance that rural communities such as North Norfolk will be well served by the findings of the review and that the concerns raised today on their behalf are being heard and acted upon.
Joe Morris (Hexham) (Lab)
It is a pleasure to serve under your chairship, Mr Wishart. I congratulate the hon. Member for South Devon (Caroline Voaden) on securing such a vital debate. We are obviously talking about a largely defensive issue—defending cash access for our communities and defending the banking services that our communities need—but we need a much more broad-ranging debate about what the Government could do proactively to bring banking services to more rural communities.
Opening a banking hub months after a community has lost a bank branch will give access to only some of the services that have been lost. Access to cash is great if that is a person’s only need, but a banking hub can never provide the kind of support that people might need, no matter where they live. I am thinking about things such as delegated power of attorney or some of the additional support that young entrepreneurs need to bring jobs and investment into rural areas, for which towns such as Haltwhistle in my constituency are crying out. The town has not received nearly enough support from the “Keystone cops” at Northumberland county council.
Given the time available, I particularly want to focus on Haltwhistle. We have been trying to get better banking services in the town since I was elected—it was the subject of one of the first speeches I gave as an MP—but it consistently fails to meet the guidelines for a banking hub. There is some access to cash through ATMs at supermarkets or through the post offices’ services with partner banks, but those are not enough. The ATMs are often out of order and the post offices do not meet the needs of the local business community.
I am particularly concerned about the damage that the lack of cash access does to the business community. It does not just discourage entrepreneurs from setting up in the area; it also forces people to use online giants in a town where 30% of the population is over 65. It is also a dispersed community, with the service serving not just the town of Haltwhistle, but Featherstone, Melkridge, Plenmeller, Gilsland and Greenhead. I would like to invite the Minister to meet some of the Haltwhistle businesses that have real concerns about the ongoing lack of access to cash, and to discuss how we can better support businesses in rural areas through better banking provision.
Graham Leadbitter (Moray West, Nairn and Strathspey) (SNP)
It is a pleasure to serve under your chairship, Mr Wishart. I congratulate the hon. Member for South Devon (Caroline Voaden) on securing the debate. Members will be aware of the half-hour Adjournment debate that I recently led, in which there were 19 interventions on me and the Minister. Many of those Members are present today, which demonstrates the strength and breadth of cross-party support on this issue. It is important to bear that huge cross-party support in mind.
In my constituency, I have communities that are 65 miles from the nearest bank branch. For context, that is the same distance as from here to Hastings or Cambridge. It is an enormous distance, and people are hours of travel from a bank branch. That includes people who may be seeking entrepreneurship advice, perhaps on the first steps in setting up their own business. They may not know who to contact, but if they are able to see someone face to face in a branch, they can be told, “These are the people you need to speak to. This is how you set up an account”—not detailed business advice, but just the basics of how to access the system. People risk falling at the first hurdle otherwise.
I restate the point about people who may be unsure about digital services, or who are attempting to use apps but need a bit of advice. They might do something on the app and then think, “Oh, I’m not sure I’ve done that right.” They need the opportunity to go into a bank. If someone has suffered a bereavement, they are looking for face-to-face contact and reassurance that their joint bank account will be sorted out. These are critical points in people’s lives.
Finally, many of us will have been at highland games and agricultural shows, where charities hold lots of raffles and collect lots of cash. For people in my constituency, it is hours of travel to go to bank that cash.
Patricia Ferguson (Glasgow West) (Lab)
It is a pleasure to serve under your chairmanship, Mr Wishart. I congratulate the hon. Member for South Devon (Caroline Voaden) on securing today’s important debate.
I represent a very urban constituency, but I also chair the Scottish Affairs Committee and we have been looking at this issue as part of an inquiry into Scotland’s high streets. I do not have to tell you, Mr Wishart, that many Scottish communities are rural and/or remote. It is also important to note that Scotland’s population is older, relative to the UK average, and that in many areas, access to reliable internet at a decent speed is extremely poor, if it exists at all. Those factors are clearly very significant, but The Herald reported earlier this summer that three in four bank branches in Scotland have closed in the last decade. For remote and rural areas, that means, as we have heard, lengthy journeys and unreliable travel connections to access alternative branches—often for people who cannot easily move to online banking. We have heard from Members whose constituents are travelling more than 100 miles to get to the nearest bank to access the kinds of services that they used to be able to get locally.
UK Finance responded to our concerns by noting that only 2% of the UK population rely exclusively on in-person branches to do their banking, but it was unable to provide us with an equivalent figure specifically for rural Scotland. We were also disappointed at its very poor understanding of how much further—
Mr Angus MacDonald (Inverness, Skye and West Ross-shire) (LD)
The metropolis of Gairloch in Wester Ross—[Laughter.] It is a major town, I will have you know. It has seen its only bank closed, and Dingwall has seen its bank closed, so people have to travel two hours, each way, to get to Inverness city, and there is only one bus a day. That is bringing the town to its knees, and it is happening up and down the west coast. Does the hon. Member agree that this sort of thing is an enormous reason why we are seeing such major depopulation in remote areas?
Patricia Ferguson
The hon. Member makes a very valid point. I know that this issue concerns him greatly, because he has spoken to me about it on many occasions. There is an issue, as has been mentioned, about access to cash. Access to cash is important, but access to wider banking services is also crucial—something that Link acknowledged to us.
Mr Gagan Mohindra (South West Hertfordshire) (Con)
In my constituency, 89% of my banks have closed in the last 10 years. Alongside that, this year, Barclays has said that it will withdraw its banking van, which has helped to contribute to the provision of face-to-face banking for my constituents. Does the hon. Lady share my frustration and agree that banks need to do better?
Patricia Ferguson
If I can speak for colleagues, I think that that would be the conclusion of everyone in the room.
Importantly, our Committee asked witnesses what they would like to come from the Government’s review. I will briefly run through those points: a clear definition for what reasonable access to in-person banking services looks like, with consideration for geography and a minimum service level for consumers and small businesses, and a clear definition of what basic services should be offered in any in-person banking facility. They also wanted further investment in the banking hubs model so that it can provide more support to customers; for example, enhanced video links would allow customers to speak with specialist advisers who might not be able to travel to the region. That is not a panacea, but those steps might be helpful and I hope that the Minister will address them in her response.
Aphra Brandreth (Chester South and Eddisbury) (Con)
It is a pleasure to serve under your chairmanship, Mr Wishart. In my constituency, there is not a single bank branch. This issue is a particular challenge for rural communities because not only do we lack bank branches; public transport is extremely limited and, in some areas, non-existent.
While many people are comfortable with using digital banking, we should not assume that everyone can simply move online. For older residents and those less confident with technology, the loss of face-to-face provision can be particularly challenging. In rural areas, poor broadband and unreliable mobile coverage only compound the problem. There is real irony in increasingly telling people in precisely those communities where digital infrastructure can be least reliable to rely on digital banking.
Alongside the social impact, there is an economic impact. Many small businesses still handle significant amounts of cash and need practical ways to deposit takings, obtain change and manage their finances. Having to travel long distances to do that means lost working hours and additional costs, as well as greater security risks. Of course, I recognise that banking habits are changing and that alternative provision has an important role to play, but alternatives work only if they exist, are accessible and are sustainable.
We are also seeing post offices under pressure, with local branches closing in villages including Malpas and Kelsall. It is important that access to banking is measured not simply by the distance to the nearest bank branch but by whether people can genuinely access banking services, and that we take a holistic approach that ensures that rural communities like mine are not simply expected to make do, but properly supported.
Torcuil Crichton (Na h-Eileanan an Iar) (Lab)
It is a pleasure to serve under your chairmanship, Mr Wishart. I thank the hon. Member for South Devon (Caroline Voaden) for raising this important issue, and I welcome Members back after a long summer. First, I have a holiday confession: I spent a week in Spain without touching a euro or a cent—not that I made my partner pay for everything; I just used a digital app. On my return, there was that quaint item in the post: a cheque, which I banked yesterday using a digital app.
The truth is that we are using banks and handling cash less and less, but that does not mean that communities like mine in the Western Isles do not need banking services. This summer, the Bank of Scotland branch in Benbecula in my constituency closed its doors. That followed the closure of branches in Harris and in the port town of Lochmaddy. Those closures have raised concerns about banking services across the islands and in other parts of rural Scotland. My constituents cannot simply drive to the next bank, because it is across the sea on the mainland. In passing, I pay tribute to the mobile banking service, the bank van, which the RBS is still providing in the islands and other parts of Scotland.
The closure of banking services has profound effects on islands, because another truth is that communities in my constituency, particularly in Uist, face a stark depopulation crisis. There is an ageing population and economically active families are being pushed away by unaffordable housing, lack of childcare and lack of digital and physical connectivity, with failing ferries and unaffordable air fares. Without correction, we will lose not just people but communities. Banking services, as well as housing and a growing economy, have to be part of the jigsaw to retain populations.
In cash-heavy local economies, the loss of any branch is important. That is why I welcome the banking services review, but remind Ministers that they must move quickly and make sure that the approach is not one size fits all. Rural and island areas like mine rely on these vital services. Under the rules, an area should have a population of 10,000 to have a banking hub, but the population of Uist is 4,500. We need flexibility in the banking review because one size does not fit all.
Adrian Ramsay (Waveney Valley) (Green)
It is a pleasure to serve with you in the Chair, Mr Wishart. I want to talk about my experience in my constituency. In Harleston, we have a temporary banking hub that has been operating for some time. I have been working with the community to press for a permanent location to be confirmed, but it is taking some time to do so. In Halesworth, the last remaining banking presence closed in December 2025, leaving the market town without a bank. The post office closed around the same time, and while we have secured a temporary post office, we do not yet have a permanent post office back on the high street. The market town of Eye has no bank branches and was without a post office for two years. It took a huge amount of work by Green councillors to secure the return of a post office, which was thanks to a local shopkeeper taking it on.
The market town of Bungay perhaps illustrates the biggest problem here. The town once had branches of HSBC, Barclays, NatWest and Lloyds, but those have all gone. Link concluded that Bungay does not meet the banking hub requirements because cash facilities remain available, but access to cash is not the same as access to banking or the personalised support that staff, branches and banking hubs provide. Link also said that a banking hub would not be granted for Bungay because there is one in Harleston, but in rural communities, getting from one market town to another is not always easy.
As the Government review access to banking services, will the Minister look at whether communities such as Bungay, where there is a clear demand for face-to-face services, can qualify for banking hubs even if cash withdrawals are accessible? Can Link’s assessment criteria be updated to reflect that, and can the bureaucratic obstacles to getting replacement post offices and banking hubs be reduced?
We have heard clearly from Members across the Chamber how crucial banking services are, particularly to rural communities, to avoiding isolation and ensuring that our market towns can flourish. I hope that Government policies will make that easier.
Terry Jermy (South West Norfolk) (Lab)
I thank the hon. Member for South Devon (Caroline Voaden) for securing this important debate. It is pertinent for the whole of my constituency, but particularly for Thetford where, towards the end of last year, we lost the last two banks in our town centre. Those closures coincided with the loss of our town centre post office, leaving the fourth largest settlement in Norfolk—a town of nearly 30,000 people—and the many surrounding villages that rely on it as a service centre without a single bank or post office.
I am appalled that Post Office Ltd allowed our town centre post office to close last November, claiming that a new one was imminent, only for there to be no provision nearly a year later. With the last two banks and the main post office closing, it is no wonder that retailers told me that footfall was significantly down in Thetford last Christmas and that, consequently, sales were bleak. A temporary banking hub did follow, but there was a gap in services and a lot of confusion due to limited publicity. As time has dragged on, it has become clear that what I regard as temporary is not the same as what Cash Access UK regards as temporary: we are still in the temporary banking hub nearly a year later, with no date set for the permanent site to open.
Of course, a temporary service, and even a permanent service, does not come with like-for-like services. We do not have Saturday banking access, for example, and there is no external ATM—no like-for-like replacement for what we had with a fully functioning bank. When I challenged the decision about the ATM, I was told that a review indicated that there was sufficient coverage. I was highly amused: “sufficient coverage” included the ATM located in the local bingo hall; that is accessible only to members and only when the bingo is open, which they have to pay to get into, and they then have to pay to use the ATM. We must have like-for-like services when branch closures happen.
Graham Stuart (Beverley and Holderness) (Con)
It is a pleasure to serve under your chairmanship, Mr Wishart. I congratulate the hon. Member for South Devon (Caroline Voaden) on securing this debate. The timing is fantastic: we have a dynamic Minister at the Dispatch Box, we have an imminent Government review from Richard Lloyd in response to this and we have the opportunity to listen to this cross-party call for change.
After a review, the Conservative Government recognised the need for cash and legislated for it; the introduction of banking hubs, and eventually cash hubs, was all part of that. I am very proud of what the Conservative Government did there, but, as the hon. Member for South Devon set out and other Members have supported, face-to-face banking is an important part too. I hope and expect that we can move forward in the right way and get the balance right between being overly prescriptive to the banking industry and setting a clear sense of direction to make sure that no one is left behind, as so many Members have set out.
It is a happy coincidence that we are having this debate today, because it is the day that Lloyds customers can once again deposit a cheque at a post office or banking hub. Mr and Mrs Proctor came to see me in Withernsea with a simple problem: they could not pay a cheque into their Lloyds account at their local banking hub, which surprised me. I wrote to Lloyds about it, but nothing came about. I then raised it with the Chancellor, and colleagues from right across the House signed a joint letter to the chief executive of Lloyds Bank. I am pleased to say that Lloyds listened and, as of this morning, people can deposit cheques at those places.
These issues being raised by Members across the House today are important. I trust that given the timing of the Richard Lloyd report, the Minister in her seat will make sure that they are be resolved to everyone’s satisfaction.
Jonathan Davies (Mid Derbyshire) (Lab)
It is a pleasure to serve under your chairmanship, Mr Wishart. Mid Derbyshire has no banks left. Not only is that a source of frustration for local people and businesses, it really irks them because the Government stood behind the banks with public money during the financial crisis. Now we need our banks to stand with our communities. That is why I welcome the Government’s commitment to delivering 350 banking hubs by 2029. Belper in my constituency has one of those banking hubs. It has been a huge success, reporting over 1,500 customer interactions a week, and residents tell me that it has been a lifeline.
The evidence is clear: there is huge demand for banking services. I experienced that recently when I was sent a cheque that was a peculiar shape, perhaps designed specifically so that I would not deposit it. It would not be scanned by the app, so I had to make a trip to the bank. I appreciate that more of us are using online services, but there is still a need for in-person services. Hubs like the one in Belper also drive footfall into towns. A vibrant high street is one of the things that creates a real sense of place, which I know is a priority for the Government.
There are substantial places in Mid Derbyshire, such as Allestree and Spondon, which remain unserved by in-person banking. A recent constituency survey I conducted drew to my attention local people’s demand for such services. That is why I have written to Link on several occasions to ask for a review of access to cash in those areas. However, Link’s remit is not broad enough to consider banking services as a whole; it only considers access to cash. My ask of the Government, which I have written to the Economic Secretary to the Treasury about, is to broaden Link’s remit so that it can look at how people access services as a whole—not just cash, but advice and guidance when they have concerns. That is particularly important to people in rural communities and those who cannot access online services as many people have begun to do, perhaps because of disability or other factors such as internet access.
Wendy Chamberlain (North East Fife) (LD)
It is a pleasure to serve under your chairship, Mr Wishart. I congratulate my hon. Friend the Member for South Devon (Caroline Voaden) on securing this debate. I am sure that many Members have had the same frustrating experiences I have had when I meet a bank that is planning to close a branch. It has all this data and statistics telling us about the number of people who use that branch, but never asks how many people would use it if they knew that they could get access to it. Link also cannot tell me why, despite the measures that are in place, the percentage of people with access to cash in my constituency continues to reduce. It is also important to remember that in many of our communities, the bank branches that do exist often have very reduced hours. Business customers in particular express real frustration to me about that.
I do not want to repeat the things that have been said today, but I want to pick up on scams and vulnerable constituents. Rural poverty is real. We all deal with it. Citizens Advice locally and food banks are seeing an increase in people’s need for support. Banks have a responsibility to improve financial literacy. In addition, rural transport is non-existent, as many people have touched on. Over the summer, I went out with a constituent who used a wheelchair. We had to take two buses to make the journey and, to add to her distress, one of the bus’s lifts was not working and the whole bus had to decant while she was left on the pavement. We need to remember that it is not always easy for people to get to banks.
I am very conscious that the party that talks about broken high streets and broken Britain is not represented in this debate, but if we think back to the past, the bank manager was someone we knew. I have a constituent who subject to a very distressing scam involving a significant amount of money. I am confident that if they had been going into their bank branch, the staff would have known them and asked the right questions to prevent the scam in the first place—it is not about the person asking for advice. The Government know what they need to do; I hope they get on and do it.
Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)
It is a pleasure to serve under your chairship, Mr Wishart. I thank the hon. Member for South Devon (Caroline Voaden)—who faces issues similar to those we have in Cornwall—for securing this debate. Lloyds, the last bank in Falmouth, closed in March. Big banks have been pulling their branches out of our towns and cities at great speed since covid. From the Moor to Market Street in Falmouth, the most obviously empty and degrading buildings are those that used to have banks in them.
The population of Falmouth and Penryn, plus the villages, is approaching 30,000. We now have a banking hub, which opened when Lloyds closed. However, like the hub mentioned by my hon. Friend the Member for South West Norfolk (Terry Jermy), our hub has only a temporary location, in the town council offices, and I am concerned that it does not have a more permanent home. None of the numerous empty buildings in Falmouth —most of which used to be banks—is decreed suitable for a more permanent banking hub. Ours is one of the 230 banking hubs now in the UK. I support the Government’s commitment to increase that number to 350—if not more—by the end of this Parliament. I hope that more of those banking hubs find a permanent home.
The Post Office had been the last bastion against that change until now. Customers are directed to post offices by closing banks, but that is now changing. The franchise model that the Post Office has adopted means that it relies on bigger stores to run post offices, which leaves it vulnerable to high street closures. The post office in Truro—Cornwall’s capital—is closing in October because it resides inside a TGJones that used to be a WH Smith. Due to the Post Office insisting on finding another franchise rather than a direct store, we have to wait for a commercial procurement process for a host company, which will leave the capital of Cornwall without a post office—we do not know for how long—and vulnerable to the same thing happening again. The Post Office can justify that by saying that there is another post office just under a mile away as the crow flies, but it is a tiny shop across a dual carriageway, and it is in no way suitable to serve the capital city of Cornwall.
David Mundell (Dumfriesshire, Clydesdale and Tweeddale) (Con)
It is a pleasure to serve under your chairmanship, Mr Wishart. I know that you like good news, so I will start with some.
Last week I met Stuart Miller, the chief executive of the Cumberland building society. He confirmed that the building society will keep all its branches open indefinitely —including those in Dumfries, Lockerbie, Langholm, Annan and Gretna—and that it is already seeing an uptick in customers coming from banks that have closed.
My constituency—which, as you will know, Mr Wishart, is larger than any consistency in England—has seen the wholesale closure of all Lloyds and Bank of Scotland branches. We have only one Royal Bank of Scotland NatWest branch left. The branch in Biggar is about to close, and there is no real arrangement in place for what will replace it. There is very poor mobile reception, as I experienced yesterday, and there is no commitment to a free-to-access cash machine.
The hon. Member for Mid Derbyshire (Jonathan Davies) made an important point, which I have also raised with the Minister’s predecessor: Link abides by the rules—it is a rules-based organisation. In Moffat in my constituency, there are technically two other cash machines—one is in a shop and never has any money in it, and the other is in another location that is not open 24/7—so we are unable to get a free-to-access cash machine in the centre of what is a very busy town. That issue needs to be looked at.
As the Minister and others may know, Henry Duncan founded the world’s first savings bank in my constituency in 1810. It seems rather ironic that it was easier to access banking 200-odd years ago than it is now.
Jon Pearce (High Peak) (Lab)
It is a pleasure to serve under your chairship, Mr Wishart. I thank the hon. Member for South Devon (Caroline Voaden) for securing this debate.
I will also start with some good news. When Lloyds closed the last bank in Glossop, and Halifax closed in Buxton, Link was very good, and we were able to secure banking hubs for both those major towns. Both those hubs are looking for permanent homes, which we expect to see later this year.
Across the middle of my constituency, the story is very different. In New Mills, there is a community bank that is open for only five and a half hours on a Monday, and there is no access to banking for the rest of that belt. There are post offices in Chinley and Whaley Bridge, but both have been under threat and have nearly closed. We have only recently managed—touch wood—to secure their long-term futures. It is vital that my constituents have access not only to cash, which was the original impetus for this, but to face-to-face banking. That was a big issue for those who came along to hear about the banking hubs in Glossop and Buxton.
The ability to talk to someone about savings, to take hard-copy documents and to talk things through makes such a massive difference for so many people. I very much welcome the Minister’s announcement of the review into access to banking, and I look forward to the outcome. I encourage the Government to consider changing the rules applying to Link, to move away from access to cash alone and towards face-to-face services. That is, as we have heard, what our communities are desperate for.
Richard Foord (Honiton and Sidmouth) (LD)
I join this debate to speak about an appalling bank heist. It is happening not just in one town but in rural towns across the country. It is not a vault being raided, and it is not cash being snatched; it is the very banking services that support our most vulnerable being taken away. Too often, people’s concerns about bank branch closures are misrepresented as issues of convenience, but they are about lives and livelihoods. Let me offer an anecdote or two in support of that argument.
Jack and Jacqueline Barrass from Honiton have an adult daughter who has significant learning difficulties. Unable to remember her PIN without prompting, or to conduct telephone banking without a parent present, she relies on in-person banking. Virtual services are too complex and leave vulnerable adults like her dangerously exposed to online scams.
Another constituent of mine, who is in her late 70s, had a miserable experience of using a banking hub. She wanted to pay her husband’s care insurance with cash. She was told that, because her local branch of Lloyds bank was closing, she would have to use the post office. The post office said that it could not make the payment and told her to ring Lloyds bank. After using an automated system, she gave up. She went to a banking hub, where she was reduced to tears as the helper again tried to navigate her through the Lloyds automated service.
I pay tribute to my hon. Friend the Member for South Devon (Caroline Voaden) for securing this debate. The figures she set out are stark: Lloyds closed 218 branches across the country last year, including in Seaton, and will close 95 more in the next year, including in Honiton, while reporting £6.7 billion of pre-tax profits. That is an outrage, and the Government need to do more than just set up an independent review into access to banking services. They need to ensure that the most vulnerable in our society get the services they need in rural regions.
Lizzi Collinge (Morecambe and Lunesdale) (Lab)
It is a pleasure to serve under your chairship, Mr Wishart.
We all know that there has been a marked decline in the number of bank branches across the UK over many decades. The main message I want to get to the Minister is that the response to bank closures has focused too much on access to cash—important though that is—and not enough on the loss of face-to-face services, as my constituents know all too well. We have had bank closures in Sedbergh, and the NatWest branch in Kirkby Lonsdale closed earlier this year. It had not even been noticed that the ATM was closing, so it took far more effort than it should have done to ensure that access to cash was retained.
Face-to-face banking services offer a lifeline for vulnerable people and protection against fraud and digital exclusion. Some things are simply too complex to do over the phone or through an app. Setting up powers of attorney and delegated authority has been mentioned. Anyone who has lost a partner or a parent knows the complexity of dealing with grief—there might be a mortgage to deal with, money to transfer out of a joint account or bills to continue paying from the estate. Those processes are complicated and upsetting enough without having to explain the situation over and over again to different call centre staff or spending 20 minutes listening to hold music—sometimes people just need to sit down with a member of staff. Of course, rural inequalities compound that problem; people are told to travel to another branch, and anyone who has tried to get around Morecambe and Lunesdale on the bus will know how challenging that is.
Leigh Ingham (Stafford) (Lab)
This summer I did a rural tour in my constituency of Stafford, Eccleshall and the villages. Interestingly, a resident said to me that they had been directed to Stafford, where we are also getting bank closures. That is not a rural area; it is a town—quite urban. The issue they had is that their nearest bus stop was three miles away and they did not have good mobility. Where there are these interconnecting complex issues, rural communities in particular are being poorly served. Does my hon. Friend agree that we must consider access to proper local transport when making these recommendations?
Lizzi Collinge
My hon. Friend is absolutely right. I also know that other Members present struggle with broadband access. We are blessed in Morecambe and Lunesdale with Broadband for the Rural North, but that interplay of complex situations can make life so hard for people when they lose their bank branch. In Morecambe, which is a town, we did get a banking hub—I helped to secure it after the shutdown of the Halifax. I think it is working well, but, again, even in a town it cannot provide everything that is needed, although I really do appreciate it.
Online banking is convenient for many people, but it does not work for everyone and everything; people still need face-to-face services like hubs or mobile banks. Services need to be reliable. The people of Sedbergh could tell us what an unreliable bank bus does to a town. I encourage the Minister to continue working closely with rural MPs on the issue, and I say gently that access to cash is not the be all and end all.
Charlotte Cane (Ely and East Cambridgeshire) (LD)
It is a pleasure to serve under your chairship, Mr Wishart. I congratulate my hon. Friend the Member for South Devon (Caroline Voaden) on securing this debate.
When Dad died a few years ago, I was able to go with Mum to our local bank branch to deal with all the issues that come from a bereavement. Subsequently, Barclays has closed that branch in Ely and its branch in Newmarket. That means that the residents of Ely and East Cambs no longer have that facility available to them. I am grateful that Barclays has opened a hub in Ely, but it does not provide all the services that a bank used to. I have a lot of farmers in my constituency. They need a bank branch that understands their business, the ebb and flow of their cash flow, and, in a summer like this one, the extra pressures that their businesses are under.
We heard from the hon. Member for Na h-Eileanan an Iar (Torcuil Crichton) that when he came back from Spain he was able to deposit a cheque online. Community groups cannot do that. As they have two signatories, they have to go to a bank or post office to deposit cheques. I heard on Sunday from someone who had gone in to pay some cash from his community group. The post office refused to take the Scottish notes, as many of my Scottish colleagues will have experienced, no doubt—that is a problem as well. As we have heard from everyone, Link just looks at access to cash. That is not the real problem any more; it is about access to that wide range of banking services.
Adam Dance (Yeovil) (LD)
With fraud on the rise—we are seeing quite a lot of it lately—does my hon. Friend agree that all banking hubs should have fraud-trained staff?
Charlotte Cane
I agree. As we have heard already, bank scams are a real nightmare for people. If people can go into their local branch and talk to people who know them, they are much better protected against online scams. I am afraid that we have basically advised my mum not to do online banking, and not to click on any links, unless one of us is with her, because there is too much risk. If there were a local branch, things would be so much better.
I call on the Minister to seriously consider widening Link’s remit so that it looks at the wider range of banking services and we can keep them in our various constituencies.
Jim Shannon (Strangford) (DUP)
It is a pleasure to serve under your chairship, Mr Wishart, and a big thanks to the hon. Member for South Devon (Caroline Voaden) for raising this debate. As the Member for Strangford, I am growing increasingly concerned about the effects of bank closures on vulnerable individuals in our rural communities, because face-to-face banking is about much more than simple convenience. Local bank branches have long been an important point of social contact, particularly for older people, those with disabilities and those who struggle with technology. It is a safe place for young people to get sound advice on savings and ISAs, and a place where people learn, get to know the staff and build protection for themselves.
I stress that online banking is simply not a straightforward substitute for an in-person service. Fewer bank services mean reduced footfall, as people have fewer reasons to visit town centres, and the impact of that on the high street is clear. Eleven banks have closed in my largely rural constituency, and as the MP for Strangford, I am deeply concerned about what this means for my constituents and particularly the older people in my constituency, a large proportion of whom rely on cash. The loss of local bank services will mean significantly longer journeys to access basic financial services. More must be done to ensure those in our rural communities are not left behind and continue to have unfettered access to essential banking services. Unfortunately, there is no longer a single permanent bank on the Ards peninsula where I live, and only very spotty internet services. The situation must be reversed.
It is not all doom and gloom: I thank the Nationwide Building Society, which has pledged to maintain all branches until 2030. My own local branch is an example of consumer-led safe banking, and I believe that we must hold main street banks to a higher standard. The banks must do better. Rural constituents deserve the same service as city dwellers, and the rural inequality must be addressed from this house down. For my constituents in Strangford, we need to do more.
Pete Wishart (in the Chair)
Before I call the Lib Dem spokesperson, I thank colleagues for their assistance and restraint. We have had 25 Back Benchers in for this debate.
Sarah Dyke (Glastonbury and Somerton) (LD)
It is a pleasure to serve with you in the chair, Mr Wishart. I congratulate my hon. Friend the Member for South Devon (Caroline Voaden) on securing this particularly important debate. The decline in face-to-face banking services is evident across the country—just visit any high street—but it is felt most acutely in rural areas. While the Government have taken steps to protect access to cash, protecting cash is not the same as protecting access to banking services. The number of bank and building society branches has declined dramatically, from 21,600 in 1986 to fewer than 6,900 in 2025, with more closures scheduled for 2026 and 2027. In rural areas, only 33% of people live within three miles of a bank branch, compared with 93% in urban areas. When bank branches are closed in rural market towns, it does not just inconvenience people, but can be the difference between a small business thriving and a small business failing.
Wendy Chamberlain
One of the problems we have experienced with the Link criteria is that the town is classed as urban by the Office for National Statistics, but is actually servicing a rural community. That mismatch means that some hubs are being missed out.
Sarah Dyke
I thank my hon. Friend for her intervention. She makes a very good point, which I wholeheartedly agree with.
Small businesses also suffer from bank closures because they are not able to deposit their takings, transfer money between accounts, manage fraud or get simple advice on opening a business account. This has a large impact on small businesses in rural areas. For local charities, closures can mean the difference between banking the proceeds of a coffee morning and not banking them at all.
This also demonstrates the impact of the rural premium that people in rural communities face when living their everyday lives. My constituency of Glastonbury and Somerton has felt the full consequences of the decline. Many market towns have lost all banking facilities already, and the Lloyds branch in Street is due to close next March. I have collected many signatures from concerned constituents who will be impacted by this change, and I have urged Lloyds—and will continue to do so—to reconsider the decision. I recognise that a community banking hub is expected to begin visiting Street from early 2027, and I welcome that effort to maintain some local presence of banking services, but let us be clear: a fortnightly visit from a community banker is not a substitute for a staffed bank branch. Of course, banking hubs and community bankers do have an important role to play, but they must be integrated as part of the conversation around banking services, rather than being the Government’s answer to it.
In addition, the Coventry Building Society branch in Wincanton will close in nine days’ time, leaving the town without any face-to-face banking services. Coventry Building Society has informed its members that they will be able to deposit their cash at their nearest branch in Frome, but that is a 40-mile round trip, so the closure will undoubtedly affect both rural local residents and local businesses, who will now need to make alternative arrangements.
Jim Shannon
Does the hon. Lady agree that there is something immoral about banks that make such exorbitant profits money closing branches and penalising their customers?
Sarah Dyke
The hon. Member makes a very good point. For people wishing to access banking services in Wincanton only the post office remains, despite the town’s continued growth, with more homes being built. Yet research from the Post Office found that 82% of consumers find it important to be able to access at least one in-person banking service, and the many small local and independent businesses that make Wincanton such a lovely market town will undoubtedly be inconvenienced.
In a rural county such as Somerset a significant number of businesses are SMEs: 78% employ fewer than five people. As the Countryside Alliance outlined earlier this year in its submission to the Treasury’s call for evidence on access to banking services, cash plays
“an important role across much of the rural economy.”
Business owners in rural areas are forced to travel further to bank their takings, deposit cash and obtain change. That reduces their productivity, increases fuel costs and adds to their administrative burden when they already operate on tight margins. SMEs, on average, deposit cash twice per month, but rural businesses may now postpone cashing in until they have more to deposit in order to avoid additional travel. However, that makes them more vulnerable to a growing rural crime epidemic. The total cost of rural crime in 2025 was estimated by the National Farmers Union Mutual to be £41.5 million, and increasingly sophisticated and organised gangs are operating in rural areas.
If rural economies are to thrive it is vital that rural businesses are not put at a disadvantage simply due to their location. That is why Liberal Democrats in the other place tabled an amendment to the Financial Services and Markets Bill that would require the Treasury to assess alternative frameworks, including the post office banking framework, for providing access to banking and cash services.
In many rural areas the post office network has become a lifeline. It is often the only local place to make cash withdrawals, deposits, and everyday banking transactions. During the summer recess I was delighted to support the reopening of two post offices in my constituency. Henstridge post office recently opened after local residents Lesley and Andy Scard and their neighbours Barry and Helen Howlett worked tirelessly to reopen the much-missed and much-needed community shop and post office. In Somerton the long-awaited post office has also returned, based inside the Stationery House, after Malcolm Adams stepped up and refurbished part of his shop to accommodate it. However, many local post offices are still under threat and we have seen closures recently in Butleigh and Charlton Adam.
Following last year’s Green Paper, the Government must commit to rural-proofing the post office and look at ways in which the post office can drive wider access to banking as part of the Treasury’s ongoing access to banking services review. Without adequate investment post offices cannot replace bank branches. Will the Minister commit to properly rural-proof the post office network so that postmasters are adequately resourced to take on the increased demand for local banking, rather than forced to absorb the cost when they are providing such a vital service?
The Liberal Democrats support the introduction of a fair banking Act to tackle financial exclusion. We have committed to the introduction of a national financial inclusion strategy that would require both the Financial Conduct Authority and the Prudential Regulation Authority to have regard for financial inclusion, such as by protecting access to cash in remote areas and supporting banking hubs.
Of course, the impact of bank closures is compounded by a deeper problem of digital exclusion. Across the country 1.7 million households have no broadband or mobile internet at home, around 2.4 million people cannot complete a single basic online task such as opening an internet browser, and over 5 million employed adults cannot complete essential digital tasks at work. Basic digital skills are set to become the UK’s largest skills gap by 2030. With the cost of living still biting, up to 1 million people have cut back or cancelled their internet packages altogether in the past year, while banks push them to access services online. In rural Somerset, patchy mobile signal and frustratingly slow broadband are not just an inconvenience; they are the difference between banking and not banking at all. Older and disabled residents, and those with visual impairments, are too often advised to download an app as if that were an appropriate solution; instead, it simply causes a further barrier.
Rural communities are not asking for special treatment or to be treated differently. They ask for a fair formula so that they are not left behind. Face-to-face banking, a functioning post office network and reliable connectivity are not luxuries; they are part of the basic infrastructure of rural life. Will the Minister commit to rural-proof banking policy and to bring forward without further delay a national financial inclusion strategy that genuinely supports rural communities? Unreliable access to face-to-face banking stymies economic growth and drives people and businesses out of rural communities. Somerset cannot wait, and neither can rural Britain.
Mark Garnier (Wyre Forest) (Con)
Thank you for your leadership, Mr Wishart. I welcome the Minister back to her position as the Economic Secretary to the Treasury for the second time. It is a great pleasure to see her in her place. Much more importantly, I congratulate the hon. Member for South Devon (Caroline Voaden) on securing this important debate. The fact that 25 Back Benchers have contributed illustrates just how important the subject is to our constituents. The debate has also illustrated the fact that the nature of banking in the UK is evolving quite fast.
According to data from Finder, just under 30% of adults used online or remote banking in 2006. In 2024, that figure had increased to 88%. It is simply the case that fewer people are using face-to-face banking services, but that does not mean we should get rid of branches altogether. As we have heard, many people still rely on them. We need to strike the right balance between allowing our banking system to evolve with changing consumer habits and protecting those who rely on traditional banking services, such as vulnerable people and local businesses.
Before I go further, it is valuable to provide some context to this debate. According to Which?, 6,871 bank branches have closed since 2015, meaning that 69% of branches closed in that period. Which? also found that 56 of our constituencies, from Norwich North to Mid Bedfordshire, are now without a single bank branch, and that 101 constituencies have just one branch left. The South Devon constituency is part of that category, following the recent closure of the Lloyds Bank branch in Totnes. As the hon. Lady set out, the impact on all her constituents, but especially the vulnerable and older constituents she serves, is significant.
In the increasingly digital world in which we live, it is easy to forget that many people struggle to use technology. The Government’s own statistics suggest that 1.3 million adults in the UK are deemed to be digitally excluded. Although that has decreased from 6.8 million in 2017, there are still a significant number of people who find the digital alternatives difficult to navigate.
David Mundell
Does my hon. Friend acknowledge that some people who would otherwise be willing and able do not have access to these services? Many of my constituents do not have good enough mobile service to operate apps.
Mark Garnier
My right hon. Friend raises another big argument that we could have on the issue of rural broadband, but it is worth making the point regarding internet connectivity that I was just coming on to. I know this is as painful in other constituencies as it is in Wyre Forest. According to the financial lives 2024 survey, adults living in rural areas were,
“disproportionately more likely to report having poor or no connectivity.”
We must also remember that many of our local businesses rely on face-to-face banking services. According to the House of Commons Library, an average small business deposits cash twice a month, withdraws cash once a month and gets change for their cash registers once a month. It is worth bearing in mind that, typically, we have about 3,500 businesses per constituency, so an awful lot of people rely on these services.
I remember the impact that was felt in 2015 when HSBC closed the last bank in Bewdley in my constituency; people were utterly dismayed. Happily, the post office stepped in and was able to help resolve the issues, but since then we have now discovered that that the post office is under threat. We are working on it, but it demonstrates the point that things are changing very quickly.
There is also a more subtle outcome of a sharp reduction in bank branches: the relationship between a bank and the local economy is being dramatically reduced, which has implications for our wider economy. Local branch managers living in a community, providing banking services to local businesses and understanding local economic opportunities as well as pressures, are well placed to understand the commercial value of a loan application by a local business. That is important.
An application for a business loan is usually something that business owners and managers want to get in place as fast as they can, but the reality is that applications for smaller business loans now take an average of nine months to be approved. That is not good for our local economies. Furthermore, banks need to lend money. That is the business they are in. Each loan creates a banking asset. Indeed, 95% of the money in circulation is the result of banks lending it into existence through fractional reserve banking. It is in the interest of both our banks and our economy that they lend, but if it takes too long, others will step in. That can be good, but it can be bad.
Private debt is gaining traction alongside private equity. Meanwhile, unregulated loan notes have been central to some recent mis-selling issues at the smaller end of the market. That is not the fault of the banks, but the lack of local banking services opens doors to alternatives, not all of which are properly understood, risk-assessed and regulated. However, we must recognise that banks are businesses. I do not want to be an apologist for banks, but they do provide a very important service, which they have to do in a profitable way. They have to make commercial decisions, and they have to consider the footfall in their branches and the take-up of digital banking.
Caroline Voaden
The hon. Member says that banks have to make profits. Last year, Lloyds made £6.7 billion in profit. Does he agree that £6.7 billion is such an incredible amount of money that asking banks to put more money into maintaining services for customers across rural Britain is not an exceptional or particularly demanding ask? The money is there. Nobody needs to be making £6.7 billion of profit a year.
Mark Garnier
As I say, I am not an apologist for banks, and I am keen to ensure that we get a balanced argument. The hon. Lady is absolutely right that that is an awful lot of money, but it all comes down to what should be the right and proportionate response. I do not disagree with her fundamental point, but the question is slightly more complicated.
I will give the hon. Lady an example from my constituency. Not so long ago, I went into a branch of Santander. It was a Thursday, and I was banking a cheque. I was the fourth customer that the bank teller had seen that week. It was utterly dismal, and that was in the centre of Kidderminster. The branch was closed the following week. There are issues for banks—whether they should necessarily be opening branches that could get one or two customers coming in a week. There is a balance to be struck. If a branch is not viable, should the bank keep it open?
We must look at the other opportunities. The last Conservative Government recognised that and were committed to retaining vital banking services. That is why we provided a system of free and convenient access to banks through the post office branch network, why we introduced protections for access to cash and why we enabled the development of banking hubs through the Financial Services and Markets Act 2023.
I am glad that the Government have continued our positive trajectory, especially through their commitment to 350 new banking hubs by 2030, but I also welcome the independent access to banking services review chaired by Richard Lloyd. We are interested to see its outcomes and recommendations, but would be grateful if the Minister gave us a clue as to when it will report. Decisive Government action could ensure support for underserved communities in good time and mitigate the impact of bank branch closures.
This and previous debates on this subject have shown just how much Members support bank branches, especially in rural areas. Members have emphasised how many of their constituents and local businesses still rely on those services, which is especially true in rural areas such as South Devon. It is vital that the Government step up to support communities who lack adequate banking services provision.
The publication of the access to banking services review will help to identify the next steps, but many people will be frustrated that the Government are undertaking another review and not taking action. As the previous Prime Minister, the right hon. and learned Member for Holborn and St Pancras (Keir Starmer), said, people are “impatient for change”. When it comes to this issue, our constituents do not want to wait much longer.
The Economic Secretary to the Treasury (Lucy Rigby)
It is a pleasure to serve with you in the Chair, Mr Wishart. I am very grateful to the hon. Member for South Devon (Caroline Voaden) for securing this debate. I recognise that she has been a consistent advocate for her constituency on this matter.
I was going to make the point that access to banking attracts considerable interest from across the House. However, I hardly need to say that, given the number of hon. Members who have attended today, or who have personally raised this issue with me while I have been in this role—or indeed who raised it with the former Prime Minister at the Dispatch Box, as the hon. Member for South Devon did recently.
I shall endeavour to respond to all the points that have been raised today. I am, I fear, under pressure to do so in a dynamic fashion—following the remarks of the right hon. Member for Beverley and Holderness (Graham Stuart)—so I will do my best.
I am particularly grateful to all those Members who have shared the practical and, in some cases, very personal circumstances of their constituents—that is especially important. I recognise that in rural communities—the subject matter of this debate—the loss of a branch can make everyday banking much harder. That was recognised by the hon. Member for South Devon, as well as my hon. Friends the Members for Clwyd East (Becky Gittins), for Bury St Edmunds and Stowmarket (Dr Prinsley) and for Morecambe and Lunesdale (Lizzi Collinge), and the hon. Member for North Norfolk (Steff Aquarone), and plenty more besides—too many to name.
It is right to acknowledge, as many hon. Members have, that the way people bank has changed significantly in recent years. Many customers now benefit from the convenience and flexibility of online and mobile banking. For many people, those changes have made managing their finances easier, more convenient and also more accessible. However, it is important that we recognise that while digital services work well for many customers, many people still need to access banking services in person—a point that has been set out thoughtfully and, in some cases, very movingly by hon. Members today. Those include some members of our communities who are older or may be more vulnerable, and those who face barriers to digital banking, not least because of connectivity—a point well made by the hon. Members for South Shropshire (Stuart Anderson) and for Chester South and Eddisbury (Aphra Brandreth). Many small businesses also continue to rely on face-to-face support and cash services.
Around 3.3 million current account holders did not bank online or through a mobile app in 2024. That is a significant number. As has been detailed in this debate, branch closures can have a significant impact on communities, especially where transport links are limited—even on a good run, as the hon. Member for South Devon put it—and where towns provide essential services for a much wider rural area. That is exactly why access to banking services remains important. As a Government, we are committed to ensuring that people who need in-person banking can continue to access essential services.
As the hon. Member for Havant (Alan Mak)—who is no longer here—recognised, access to cash is protected by the Financial Services and Markets Act 2023, but access to banking services is currently not. That is why in May the Government announced an independent review into access to banking services chaired by Richard Lloyd. That review will assess whether changes in access to in-person banking services are causing detriment. It will gather evidence on the extent of that detriment, and look into which groups are affected and which of those are most affected. As hon. Members know, that review has been gathering evidence from consumers, businesses, charities, community organisations, local authorities and industry right across the UK. It will consider whether current arrangements are meeting the needs of customers and communities. That includes banking hubs and other alternative banking services.
I know that many Members—not least those in this Chamber—would like immediate answers to these questions, but it is important that interventions in this space are based on robust data and evidence, and a clear understanding of where the problems are and who they affect. That is why the Government’s review matters. I am not making a case for it to be a substitute for action; it is the evidence base that will enable the Government to act in the right way. Importantly, as Members have said, the Financial Services and Markets Bill, which is currently in the other place, includes a power that will allow the Government to take action to protect access to banking services. Together, the review and the Bill will enable the Government to respond swiftly and proportionately to the results and evidence from the review.
Graham Stuart
Banking hubs themselves came out of an industry response from the NatWest executive. Does the Minister agree that we must present the information from the Lloyd review to the banking groups, be clear about what we want, and give them the opportunity to respond and provide a solution, as they did with banking hubs, so that we can perhaps avoid a more heavy-handed governmental approach?
Lucy Rigby
I do not want to prejudge the way that we will deal with the conclusions of the review. In response to one of the questions that I was asked, I can say that the Lloyd review’s results and report will be published next month. We can expect it in that timeframe.
The Government’s commitment is further reflected in our support for the roll-out of 350 banking hubs by the end of this Parliament. I am pleased to report that we continue to make real progress against that target. More than 280 banking hubs have been announced, and 240 are already open. As hon. Members know, they provide assisted cash services and allow customers to receive face-to-face support from community bankers representing individual banks. I very much welcome the progress that has been made on the roll-out and on expanding the services available via the hubs. Community banker services now more closely resemble those of traditional branches.
Torcuil Crichton
Island communities like mine simply do not fit the parameters of banking hubs. The population of Uist, for example, is half the size of that required for a banking hub. Will the Minister consider island solutions in the roll-out of new banking hubs?
Lucy Rigby
We are considering the entirety of the geography of the United Kingdom, as my hon. Friend would want us to. His point relates to not just access to cash but access to banking services, and it is important that the Government take action in that area.
Let me go back to the services now available via banking hubs. Customers can now get help not only with account opening and changes of address, complaints and powers of attorney, but with things such as bereavement support and concerns about fraud and scams, which have been raised in the debate. They can also get help with digital banking. We and the industry recognise that digital banking services are not always completely intuitive, so some people may need assistance to use them. Many hubs are piloting further improvements, including Saturday opening hours and customer liaison officers.
A number of hon. Members raised concerns about how decisions are made about the location of banking hubs under the existing legislation, and whether the current arrangements adequately reflect the circumstances of rural communities in particular. Decisions about the location of banking hubs are made independently by Link, following an access to cash assessment. Link assesses a range of criteria and factors, including population size, vulnerability, transport links, the local retail environment and post office facilities. There is a real strength of feeling across the House about how those criteria are applied, and many feel that there should be a wider consideration of access to face-to-face banking services, beyond access to cash alone—
Motion lapsed (Standing Order No. 10(6)).
Science Facilities and Laboratories
(1 day, 16 hours ago)
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Pete Wishart (in the Chair)
I will now call Alison Hume to move the motion. I hope that anybody seeking to speak has already asked permission from the hon. Member in charge of this debate, as is the convention. There will then be an opportunity for the Minister to respond.
Alison Hume (Scarborough and Whitby) (Lab)
I beg to move,
That this House has considered the future of science facilities and laboratories.
It is a pleasure to serve under your chairship, Mr Wishart. Few debates can boast such an out-of-this-world subject as the search for dark matter; it is up there with the incredible physics of the Higgs boson, black holes and the big bang, and it is a field in which the UK has traditionally led the world.
My own interest in particle physics was sparked when I came up with the idea for a children’s science fiction television show called “The Sparticle Mystery”, which follows a group of children after an experiment at a cut-price British version of the large hadron collider goes wrong, sending everyone aged 15 and over into a parallel dimension—a kind of “Home Alone” planet Earth.
During the development of the series, I immersed myself in physics, spending lots of time researching at laboratories and science facilities, including visiting the ATLAS—A Toroidal LHC Apparatus—project at CERN in Switzerland and filming a series finale inside the ISIS science facility near Didcot. Little did I know that my adventures would continue when I became the Member of Parliament for Scarborough and Whitby; the incredible Boulby underground laboratory is located just on the edge of my patch—and just on the edge of making discoveries that will change our understanding of the universe.
Jim Shannon (Strangford) (DUP)
I commend the hon. Lady on securing this debate. This is an immense issue: it is about providing the world-class science facilities and laboratories of tomorrow. Does she agree that, when it comes to spreading the moneys across the United Kingdom of Great Britain and Northern Ireland, Queen’s University Belfast and Ulster University in Belfast should be key places to ensure that money is available? The NHS, future science, apprenticeships and helping agri-tech—all those things come off the back of what she is saying.
Alison Hume
I thank the hon. Member; he is right that those areas of academic expertise must continue to be a hotbed for physics talent.
Boulby underground laboratory, nestled between Saltburn and Whitby on the north-east coast of England, is the UK’s only deep underground science facility. Located 1.1 km beneath the Earth’s surface, in a working polyhalite and rock-salt mine, it is the deepest laboratory in the UK and one of only a dozen such facilities worldwide. I will never forget visiting the lab for the first time and descending for what seemed like an hour—it was actually about eight minutes—in a tiny lift towards the centre of the Earth, before walking out towards a pristine laboratory sitting in the dusty, science-fiction-like moonscape.
Inside, Boulby lab is home to an extraordinary range of research, from environmental science and biology to quantum physics. The lab’s greatest advantage lies in its depth: a quiet place in the universe, where studies can be carried out almost entirely free from interference from natural background radiation, including the search for dark matter.
Peter Fortune (Bromley and Biggin Hill) (Con)
I commend the hon. Lady on securing this debate. I share her passion for physics, although I make this point objectively: some of the proposed £160 million-plus reduction in funding will reduce the ability of younger people to learn a passion for physics. That is something we can all get together to encourage the Government to look at again.
Alison Hume
I thank the hon. Member for making that important point. We lead the way in physics in the UK, and we want to continue that and continue to inspire young minds.
Jonathan Davies (Mid Derbyshire) (Lab)
I draw colleagues’ attention to the fact that I chair the all-party parliamentary group on UNESCO world heritage sites. There is a question over the future funding of Jodrell Bank at the moment. Will my hon. Friend join me in asking the Minister to look at what we can do to ensure that that site, which has inspired many young people, will continue to be funded properly and retain its UNESCO designation?
Alison Hume
I thank my hon. Friend for making that important point. I will come to Jodrell Bank later in my speech; I completely agree that it needs to be saved.
Dark matter is thought to make up most of the matter in the universe. It has played a major role in shaping the cosmos, but despite decades of effort it is yet to be detected. Discovering what dark matter is made of will be one of the biggest discoveries of our time. The Boulby lab has been a frontrunner in the race since the 1980s. It is the birthplace of the ZEPLIN technology that is now used in the world’s leading dark matter experiments. I want to welcome some of the incredible scientists working at the Boulby underground laboratory to the Public Gallery today, and thank them for making the journey down to Westminster.
In recent years, Boulby has been preparing to host a massive international experiment seeking to detect dark matter. This is not the stuff of films and TV—it is really happening. It is called the XLZD, and it is a $1 billion international science project that would build upon the legacy of ZEPLIN to create the most sensitive dark matter detector ever constructed. Only a small number of underground laboratories worldwide are considered capable of hosting such an experiment, and Boulby is one of them.
Kevin Bonavia (Stevenage) (Lab)
I thank my hon. Friend for bringing this important debate to us today. In Stevenage we have a leading life sciences sector. Our biggest employer is GSK. It was helped to set up there by the council and the Government in the 1990s. However, in the last few weeks it has announced it will be leaving Stevenage, despite plans to expand in the last couple of years. Will my hon. Friend join me in asking the Minister to do all that we can to make the most of that amazing life sciences site that GSK is leaving behind?
Alison Hume
I thank my hon. Friend for making that important point. I am sure the Minister is aware that many hon. Members here are fighting for fantastic facilities and laboratories in their constituencies.
Preparations for the experiment have been under way since 2020. Boulby has attracted millions of pounds in investment, but hosting the experiment in the UK is still not guaranteed. Boulby is competing against underground labs across the world. In that context, the lab’s worst fears were realised in July this year, as the Science and Technology Facilities Council prioritisation review proposed cutting Boulby’s operating budget by a massive 40%, creating a perception of uncertainty about continued support for XLZD. Boulby has substantial fixed operating costs, so the bulk of required savings might have to be found from cuts to the staffing budget, potentially leading to redundancies at the lab as well as limiting opportunities for future expansion. The cuts are so drastic that they pose an existential threat to Boulby’s future—and, as hon. Members are aware, the issue goes far beyond Boulby. STFC’s prioritisation review has proposed sweeping cuts across the board for fundamental physics, nuclear physics and astronomy.
Barry Gardiner (Brent West) (Lab)
My hon. Friend is making a superb case for the importance of funding for her deep earth facility. I had the privilege of going to the National Oceanography Centre’s deep oceans facility, and the innovative science there on carbon sequestration is superb. Does she agree that the sustainability of that world-leading science is dependent on long-term funding certainty? The chop and change that goes on is damaging not just to the world-class science that we do in this country, but to our economy and our skills base.
Alison Hume
My hon. Friend makes a really important point. Certainty of funding is so important. We risk cutting off everything at the knees and, with our plan for growth, that is not something that the Labour Government can afford to do.
The cuts are £162 million in cumulative savings by 2030. Brian Cox, TV scientist and professor at the University of Manchester, has likened the impact of these cuts to the “destruction of the future”. His concerns have been echoed by academics across the field, who fear that physics departments at universities will close. Professor Jeff Forshaw, also at Manchester, has said that these cuts are “annihilating” a field of research that inspired young people into physics.
Multiple physics facilities carrying out world-leading research now face serious funding challenges or the threat of closure. Diamond Light Source and the ISIS Neutron and Muon Source are facing cuts of 15% apiece. The Jodrell Bank observatory, home to the UK’s largest radio telescope for nearly 70 years, faces closure as early as 2028.
Sarah Russell (Congleton) (Lab)
The Jodrell Bank observatory has been doing fantastic, cutting-edge physics in my constituency and that of my hon. Friend the Member for Macclesfield (Tim Roca) for a very long time, but it is regularly updated and retains its reputation for cutting-edge science. Does my hon. Friend agree that it would be an absolute travesty if its funding were withdrawn?
Alison Hume
My hon. Friend is absolutely right—it would be catastrophic. I completely agree with her. Other hon. Members have also mentioned Jodrell Bank. These cuts are threatening some of the UK’s most important scientific assets and arguably the entire discipline of UK physics.
Luke Myer (Middlesbrough South and East Cleveland) (Lab)
I thank my hon. Friend and constituency neighbour for giving way. I am immensely proud to represent Boulby, which sits on the cusp of our two constituencies, and to have joined her on the incredible visit to that facility a few months ago. As she says, it is the UK’s only deep underground science laboratory, providing skilled jobs in a region that desperately needs them, yet it faces a 40% cut to its operating budget. That is not equitable with cuts across the country. Does she agree that, where STFC needs to make savings, it needs to do so in an equitable way, to ensure that we are not cutting from the regions that have already suffered the most?
Alison Hume
My hon. Friend and constituency neighbour is absolutely right in that important intervention. The constituency he represents has some of the most deprived communities in the UK and would benefit most from the expansion of the Boulby lab.
Involvement in LHCb, the large hadron collider beauty experiment—one of the major experiments at CERN’s large hadron collider—is also in doubt. STFC has cancelled UK participation in the next upgrade programme because of cost pressures, despite the UK being a major contributor. It is not clear to scientists working on the project exactly why it has been deprioritised.
Cancelling projects and closing facilities will lead to the loss of talent and reduce UK competitiveness in high-precision science and international collaborations. There is also the negative impact it will have on the success of Labour’s industrial strategy. The proposed expansion at Boulby and the construction of the XLZD will generate substantial economic benefits for the north-east, North Yorkshire and the UK.
Tristan Osborne (Chatham and Aylesford) (Lab)
My hon. Friend makes an outstanding point about the multiplier effect on surrounding economies. I have had the pleasure of visiting Sussex University and its leading quantum lab. The proposal it has put together would make a net contribution not only to the local economy, but in terms of direct drivers to jobs linked to airports and other transport corridors. Does my hon. Friend agree that cuts to simple science budgets have a material impact on communities, and also a multiplier effect?
Alison Hume
I agree with my hon. Friend entirely. This is about looking forward and investing in the future.
Independent analysis by Arup shows that the proposed expansion of the Boulby site and the construction of XLZD would bring approximately £587 million to the UK economy through the creation of skilled jobs, by increasing supply chains in advanced manufacturing and by attracting scientific investment into the region. There are also plans for a visitor centre to showcase the north-east’s remarkable contribution to our understanding of the universe, which could attract hundreds of thousands of visitors annually.
Although the Government are increasing spending on research and development, I would be grateful if the Minister could answer a couple of questions. First, why does the facility in the north-east face more than double the cuts faced by facilities in the south? Will she set out how the Department, UK Research and Innovation and the STFC assessed the relative value of investment in fundamental physics compared with other areas of research and development? Will she publish the evidence that underpins the decisions? Has the Minister looked at the cumulative impact of the cuts on physics as a discipline in the United Kingdom?
On Boulby specifically, will the Minister please explain how the Government have assessed the laboratory’s unique strategic position? What weight has been given to the projected economic impact of the expansion of the Boulby lab? Finally, will the Minister explicitly restate the Government’s interest in and support for the XLZD project? It is a project of such international stature that it could deliver the discovery of dark matter, which would be worthy of a Nobel prize.
I appreciate that I have asked my hon. Friend the Minister a lot of questions, but I assure her that they pale in comparison with the number of questions physicists ask themselves every day. Science facilities such as Boulby are places where discoveries are made, young people are inspired, international partnerships are forged and the foundations of future industries are laid. With XLZD at Boulby, we have a once-in-a-lifetime opportunity for the UK to make one of the biggest discoveries of our age in the search for dark matter. It offers transformational economic opportunity for the north-east, and would strengthen our industrial strategy, skills base and reputation on the world stage. I therefore urge the Minister to recognise the exceptional national value of Boulby underground laboratory and other UK science facilities and laboratories, and to ensure that Britain remains at the forefront of scientific discovery for decades to come.
The Minister for the Future of Work (Kate Dearden)
It is a pleasure to serve under your chairship, Mr Wishart.
I congratulate my hon. Friend the Member for Scarborough and Whitby (Alison Hume) on securing this really important debate on the future of the UK’s science facilities and laboratories. She has been a strong advocate for the Boulby laboratory, which is just outside her constituency, and I thank her for her brilliant speech, which reflected her creative and unique insight into this vital sector. It is always great to hear about her work before she entered this place, and her adventures—it is pretty cool. I welcome and thank the incredible scientists from Boulby underground laboratory and the many other attendees who have joined us in the Gallery for this debate—it is a pleasure to see you all.
The Government are committed to ensuring that the UK remains a leading nation in science and technology, which are fundamental to our economy, our public services and our national security. On average, every £1 of public research and development investment leverages £2 of private investment and generates £8 in net economic benefits for the UK in the long term. That investment is about backing the people, facilities and technologies that turn excellent research into practical benefits.
Tim Roca (Macclesfield) (Lab)
My hon. Friend the Member for Congleton (Sarah Russell) talked powerfully about it being a travesty if e-MERLIN and Jodrell Bank were to cease scientific endeavour. Will the Minister take back from this place to her colleagues in the Department the strong message that we want a viable future for the continuation of amazing science at Jodrell Bank, and in particular the Bernard Lovell telescope and the e-MERLIN network?
Kate Dearden
I thank my hon. Friend for that important intervention, and also thank him, my hon. Friend the Member for Congleton (Sarah Russell) and the many other colleagues who have raised that issue, not just today but with the Government and Ministers consistently, for their continued campaigning and advocacy. I will take this opportunity to address the concerns about the future of the world-famous Jodrell Bank site, which have been heard loud and clear—I will feed them back to the relevant Minister. UKRI has confirmed that its funding for the e-MERLIN network, which makes use of telescopes at Jodrell Bank, will wind down in 2028. However, I want to provide reassurance that Jodrell Bank will continue to be a significant centre for radio astronomy, science and research, with a strong future ahead.
Andrew Cooper (Mid Cheshire) (Lab)
Is the Minister aware that staff at the Daresbury laboratory, not too far away from Jodrell Bank, have been asked to mothball CLARA—the compact linear accelerator for research applications—which is a 250-mega-electronvolt electron accelerator, alongside the biology lab that sits above it? Incidentally, that lab has never been used, as it has only just been put in. Is the Minister prepared to meet me and other Cheshire colleagues, because I am really concerned about what is happening to science in the north Cheshire corridor? It looks to me like the STFC is circling the wagons around facilities in the south of England at the expense of those in the north, so I would be interested in meeting my hon. Friend or the relevant Minister to look at how we can reverse some of the damaging cuts.
Kate Dearden
I thank my hon. Friend for raising that important issue on behalf of his constituency and the sector more widely. I have heard him loud and clear and will feed that back to the Minister for Science, Innovation and Investment, who I am sure will be happy to discuss it further with my hon. Friend and any other colleagues who are keen to be kept in the loop.
I have mentioned how investment that backs people, facilities and technologies can not only turn research into practical benefits but strengthen our economy and support the high-skilled jobs that colleagues have mentioned throughout the debate. Such investment is vital to keeping the UK at the forefront of global science. The sites across the country are essential to that work, which is why I am proud that the Government have put forward the largest ever investment in research and development, with a record £86 billion to be invested between 2026-27 and 2029-30.
Some £38.6 billion of that investment will go to UK Research and Innovation, the UK’s largest research funder, with a mission to advance knowledge, improve lives and drive growth. UKRI supports the full spectrum of research and development, from curiosity-driven discovery research through to business innovation and commercialisation.
Barry Gardiner
The Minister will know that the grant structure on which UKRI is based gives out grants for a maximum of three to five years. Very few are for five years—most are for three years or under—yet the sort of long-term scientific development that my hon. Friend the Member for Scarborough and Whitby (Alison Hume) elaborated on depends on certainty into the future. Will the Minister and her colleagues give real consideration to changing UKRI’s structure so that there is long-term funding certainty for fundamental science in this country?
Kate Dearden
I thank my hon. Friend for his work in this area. I have heard his reflections and his desire to see longer-term certainty, which I will feed back to the relevant Minister and the Department.
The benefits of our investment, building on the previous funding that I mentioned, will be felt right across the UK. Particularly in respect of this debate and the Yorkshire and the Humber region—I am a Yorkshire MP myself—UKRI’s £580 million investment in 2023-24 was significant.
My hon. Friend the Member for Scarborough and Whitby mentioned a long list of vital science facilities, including Boulby, Diamond, ISIS and Jodrell Bank, which we have touched on, and I completely agree that they are not merely items on a balance sheet; they are national assets. Boulby is unique in that respect, as it is the UK’s deepest underground science facility. Located more than a kilometre beneath Yorkshire in a working mine, its depth and the surrounding salt rock mean that it is shielded from radiation, enabling world-leading research in areas such as dark matter and quantum technologies. I hope to answer many of my hon. Friend’s questions throughout my speech.
Our science and research ecosystem has lots of important research infrastructure. The UK’s science and technology successes are built not only on researchers making groundbreaking discoveries, or engineers developing new technologies, but on our world-class R&D facilities and capabilities—the essential tools that our research communities use every day. Those include the facilities that allow us to explore the building blocks of matter and the computing systems that allow scientists to turn raw data into models of the universe or treatments for disease, as well as the international collaborations that enable us to tackle grand scientific challenges that no country can solve alone.
Our research infrastructure makes the UK’s R&D achievements possible. The facilities are not only tools for research and industry but national assets, as I have mentioned. The landscape is changing rapidly. Facilities are becoming more connected and data-intensive than ever before, researchers are increasingly collaborating across borders, and the most powerful scientific instruments are often of a scale, cost and geographical reach beyond the capacity of any one nation to deliver alone. To ensure that our research facilities are ready for tomorrow, we must lay the groundwork today by supporting the facilities that allow researchers and innovators to produce the most insightful and impactful research.
I will briefly highlight some examples of the impact of our facilities on our understanding of science and the lives of people across the UK. As we heard from colleagues, the Diamond Light Source at Harwell in Oxfordshire is the UK’s national synchrotron. Currently undergoing a £500 million upgrade, Diamond generates intense beams of X-rays, allowing research to examine materials in extraordinary detail. This enables discovery and innovation in fields ranging from medicines and battery technology to advanced manufacturing and aerospace, including for companies such as Rolls-Royce. We are also a leading partner in major international facilities, sharing the costs and benefits of scientific endeavours that, as I have said, no country could undertake alone.
Also included in respect of our investment, and the Government’s absolute commitment to the sector, is the Square Kilometre Array observatory, headquartered in the UK at Jodrell Bank. I will come to that in just a second, but we are investing more than £300 million over 10 years to build the world’s largest radio telescope, enabling scientists to study the cosmos with unparalleled sensitivity, from the first stars and galaxies to signs of life beyond Earth.
Peter Fortune
The issue underlying a lot of this is the £160 million saving. My understanding is that that saving has come about because a previous agreement to match expanding costs for research has been reversed. Perhaps the Minister could tell me, or could ask the relevant Minister to let me know, who took the decision not to match those costs, which has resulted in the need for £160 million of savings.
Kate Dearden
I am coming to the difficult choices about how to prioritise funding. We can of course follow up with any further information that the hon. Gentleman requires from the relevant Minister.
Ensuring that the UK remains at the forefront of global research requires not just record levels of investment, but difficult choices about how to prioritise funding. When a country has world-class research projects across so many disciplines and sectors, prioritisation is unavoidable. The fact that we cannot fund every excellent idea is a reflection of the depth, ambition and international competitiveness of UK research and innovation. But, of course, our responsibility is to ensure that the infrastructure we do support continues to deliver the greatest scientific, economic, industrial and societal benefit for the country, including in the places we have heard about today. That means taking long-term decisions.
Alison Hume
I thank the Minister for being generous in giving way—I am aware of the time. Given the Government’s stated commitment to place-based growth, regional rebalancing and the growth mission, how can a reduction in support for Boulby laboratory be reconciled with their objectives?
Kate Dearden
I thank my hon. Friend for her intervention and for the passion we have heard in the debate, as well as her desire to fight for Boulby, her constituents and the sector as a whole. The Minister for Science has written to her today and will be happy to discuss with her the budget pressures and the difficult decisions that UKRI has taken to ensure that STFC remains financially sustainable and is able to support world-leading science in the future.
Luke Myer
The Minister knows that I am a supporter of her work to champion the north in the Department. Given that the team from Boulby have travelled all this way, will she take a couple of seconds out of her day to meet them after the debate and discuss the challenges they are experiencing? I know she is not the Minister directly responsible, but I am sure they would appreciate it.
Kate Dearden
Of course—that would be a pleasure and I would be honoured to do so. I reiterate that Boulby will remain an internationally significant research facility. It will continue to support a range of world-leading underground science and provide highly skilled employment in the region, with the potential to play an even larger role in the UK’s scientific future.
My hon. Friend the Member for Scarborough and Whitby highlighted in her speech the challenges with the operational budget at Boulby. UKRI has also announced funding that will sustain the UK’s continued engagement with the international XLZD dark matter experiment, which my hon. Friend mentioned, beyond the current £7.8 million infrastructure fund grant, which ends in 2027. Boulby will remain well placed to pursue future funding opportunities alongside its outstandingly significant work.
I thank colleagues again for being in Westminster Hall to support this debate. I want to offer reassurances that UKRI and STFC are engaging directly with facilities, laboratories, partners, staff and trade unions throughout the implementation of the saving plan, including in respect of any potential workforce implications. However, to be clear, no staff exits are expected this financial year, and formal processes will follow where needed.
The UK has an extraordinary scientific heritage, but our task today is not merely to celebrate past achievements but to ensure that the next generation of discoveries and the innovations they will enable happen here. The Government will achieve that goal, not just through record investment in public R&D but through responsible stewardship of our national assets, international co-operation, and taking the difficult decisions necessary to ensure we have a portfolio of research facilities that are fit for the future, because the future of British science will depend not only on the brilliance of our researchers but on the strength of the infrastructure that supports them. I once again thank all colleagues for being here to support the debate.
Question put and agreed to.
UK Financial Services
(1 day, 16 hours ago)
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Callum Anderson (Buckingham and Bletchley) (Lab)
I beg to move,
That this House has considered the future of UK financial services.
It is a pleasure to serve under your chairmanship, Mr Twigg. Before turning to the topic of this debate, I congratulate the Economic Secretary to the Treasury, my right hon. and learned Friend the Member for Northampton North (Lucy Rigby), on her reappointment. In her first spell in the position, she was a formidable advocate for UK financial and professional services, so we are all very fortunate that we have her back for a second act. I wish her well for the time ahead.
Today, I want to make a positive case for the future of the UK’s financial services sector. I will say why it should lie at the very heart of this Government’s strategy for backing Britain’s wealth creators, standing behind the entrepreneur with a bright idea and ensuring that we channel capital toward the innovators and builders who will drive growth in every part of this country, while also ensuring that the sector provides people, wherever they live and whatever their circumstances, with the tools to participate fully in a modern economy and a modern society through a bank account that works, savings and investments that build real financial security, and insurance that protects families, homes and businesses when life throws its inevitable curveballs at them.
With financial and professional services employing around one in every 13 workers across the UK, two thirds of them outside London, they are no longer a niche interest in the UK or a City of London story alone. They are a genuine national endeavour. When I meet in Parliament the people I represent from Buckingham and Bletchley—from the owners of small businesses to the families who I also meet on the doorstep and the staff at Allica Bank or Santander UK, both of which have their headquarters in Milton Keynes while serving customers the length and breadth of Britain—I see the same thing: a national industry built for all of us. In the time available, I will set out five challenges and opportunities facing the sector in the years ahead.
First, there is the need to go even further in mobilising a greater share of domestic capital toward domestic assets, in particular high-growth businesses and especially those aligned with the eight sectors set out in the industrial strategy and infrastructure development. I welcome the Mansion House speech in July by the former Chancellor, my right hon. Friend the Member for Leeds West and Pudsey (Rachel Reeves), and the progress that this Government have made against the financial services growth and competitiveness strategy one year after its publication, building on the progress made by the previous Government. We have seen that £28 billion of equity capital has been raised in London since the start of last year. The Pension Schemes Act 2026 was also passed in the last parliamentary Session, which is expected to deliver an additional £29,000 in pension savings over an average career. Eight firms have now been authorised to provide targeted support to savers, benefiting around 18 million consumers—our constituents—over the coming decade. All of that is welcome progress in turning the overly cautious British saver into the responsible investor, but I believe that we can—indeed, must—go even further in unlocking our largest pools of pension, insurance and retail capital.
When we were debating the Pension Schemes Act earlier this year, the case against mandating UK investment rested on two grounds: first, the principle that Government should not tell institutions or individuals where and how to invest; and, secondly, that if UK investments were good enough, funds would already be backing them. However, what I think that argument missed is the trend towards passive global indexing that we have seen over the last few decades, which has mechanically reduced UK equity allocations to around 4%, regardless of the underlying fundamentals. I suspect that without further intervention, that trend will increase, leading to further declines in the years ahead. That risks creating a self-reinforcing cycle of declining investment in British companies by funds, regardless of where they are domiciled, depriving UK plc of domestic patient capital, and it would ultimately weaken our public equity markets and the strength of the London stock exchange.
In the light of that, I encourage the Government to look again at how they can actively incentivise our largest pools of domestic capital. For instance, we could build on the Pension Schemes Act by requiring default pension funds to adopt a UK-weighted approach to listed equity, with UK equities making up, say, 20% to 25% of listed holdings in order for them to continue enjoying the various tax reliefs on offer, but giving funds and individual savers full agency to opt out. According to the New Financial think-tank, that could unlock as much as £75 billion of additional investment into UK companies. I am aware that this idea is held by a number of right hon. and hon. Members in this House, as well as Members of the House of Lords.
We could also scale up the British Business Bank’s British growth partnership so that it is more in line with the scale of France’s Tibi initiative, while giving the British Business Bank and the National Wealth Fund complementary mandates to crowd in capital for the larger funding rounds. We could support UK scale-ups—which my right hon. Friend the Prime Minister just mentioned in his statement in the main Chamber—with the British Business Bank focusing on those companies from series B to C, and the National Wealth Fund acting as a direct investor in later-stage companies.
Finally, we should maintain our focus on unlocking some proportion of the £600 billion of retail capital currently held in cash, in individual savings accounts or other savings accounts. With the right mix of financial education, a simpler ISA product framework, tax incentives and, crucially, accessible investment research, we can ease access to capital from growing domestic companies while enabling British people to own a greater share of our economy’s future success.
Peter Fortune (Bromley and Biggin Hill) (Con)
I agree with many of the hon. Member’s potential solutions to increase investment. Does he agree with the Treasury’s assessment that the Financial Ombudsman Service is not fit for purpose? Does he agree with the Opposition’s suggestions that a new independent body to replace the Financial Ombudsman Service would probably increase legal certainty and encourage investment into the UK?
Callum Anderson
I confess I have not read the Conservative party’s full recommendations in this regard. The Government are clear that the Financial Ombudsman Service needs reform; it is not working for the sector, consumers or the UK’s international competitiveness. The Conservative party will put forward its recommendations, and the Government will make their considerations as part of the Financial Services and Markets Bill, which will be debated in the House of Commons Chamber in October. I recognise the downsides that the hon. Gentleman identified in his intervention, so I thank him for it.
The Minister already knows my views on retail capital. There is an excellent opportunity in the months ahead—certainly, in the run-up to the Budget in October—for the UK to establish a long-term retail investment strategy that is co-designed by industry, Government, civil society and regulators to be the best mechanism to realise the full potential of UK investors’ savings.
The second challenge that I want to turn to lies in how we manage artificial intelligence, which I became very familiar with when I was Parliamentary Private Secretary at the Department for Science, Innovation and Technology, and the broader digital revolution in financial services. Distributed ledger technology and tokenisation are having an ever-increasing influence on the international financial ecosystem. The UK should continue to act as a global leader and embrace that change now so that regulators, industry, investors and consumers alike can benefit from lower costs, widen access to capital, deliver a more efficient industry and enjoy the benefits of more productive investment.
At the same time, that requires us to fully build the infrastructure, regulatory framework and market confidence to allow innovators to scale safely and responsibly. I welcomed Chris Woolard’s first report as the UK’s wholesale digital markets champion. It marked an important step in delivering the Government’s wholesale financial markets digital strategy, but we now need to shift up a gear.
I would focus on two immediate priorities. First, the Government should publish a clear road map for DLT-enabled capital markets. UK financial markets—and global financial markets more broadly—need certainty about the sequence of reforms, the regulatory framework that the UK proposes to put forward and how new infrastructure will connect with the systems that are already in use by market participants. Second, we should use DIGIT—the digital gilt instrument—to build momentum across the market by setting a clear timetable for regular, benchmark-scale digital sovereign bond issuance so that we are properly mainstreaming UK Government debt in the financial market system.
On artificial intelligence, it is right that AI can transform productivity, investment management, fraud detection and customer service across the economy and society. But those opportunities also bring new and unfamiliar risks, from automated decision making that leads to unintended consequences to cyber-attacks by belligerent forces and operational disruption due to a greater dependence by industry on a small number of technology providers. With that in mind, I was proud to partner with Community trade union, which I should disclose that I am a member of, in May to launch its responsible AI charter for financial services; Zurich UK was its first signatory. The charter sets out practical principles for ensuring that AI is adopted responsibly, transparently and with people at the heart of its deployment. The Bank of England’s recent work makes it clear how quickly the risks that I just identified are growing. That is why we must maintain the urgent momentum on implementing the financial services AI adoption plan.
The third challenge facing the sector, which I want to address briefly, concerns the clean energy transition. I will not discuss the benefits or otherwise of which energy sources we may like to prioritise, but in my view, net zero cannot be delivered by public investment alone, however committed the Government are to that mission—and rightly so. Long-term, patient private capital also has a crucial role to play in supporting tomorrow’s energy infrastructure, from onshore and offshore wind and grid upgrades to next-generation nuclear power. In order for that capital to be committed effectively, I would welcome an annual published pipeline of investable clean energy projects so that firms and asset owners can plan and deploy investment at the scale and pace that our net zero commitments demand.
Kerry McCarthy (Bristol East) (Lab)
My hon. Friend will not be surprised to hear that I very much agree with the point that he just made. We have some excellent, innovative businesses in Bristol that came up through the Science Creates innovation hubs and attracted private capital. They are flourishing, but they need signals from the Government that we are sticking to our net zero agenda so that there will be a market for their products in due course. Does my hon. Friend agree that those signals are important?
Callum Anderson
I could not agree more with my hon. Friend. In this space and across many policy areas, what business and investors require and demand from us as policymakers—regardless of which party happens to be in power—is policy certainty. When we risk lurching in various directions, with various priorities and changing timelines, the only result is that investors withdraw or deploy their capital in other countries. Frankly, with regard to the clean energy transition, that will ensure that other countries, be they our competitors or our foes, will have a massive, global competitive advantage over us. I do not think it is a good idea for us to enable that.
Changing tack, the UK also faces the challenge of our constituents accessing affordable financial services and products. We need to honestly confront the barriers that still prevent too many of our constituents from opening a basic bank account, building even a very modest savings buffer for when times are hard, and accessing safe and affordable credit or securing the insurance that protects people from life’s shocks.
Andrew Pakes (Peterborough) (Lab/Co-op)
My hon. Friend’s constituency sounds a lot like mine, which is underserved in many ways by financial institutions. The recent takeover by Nationwide of Virgin Money means that, in a constituency like mine, Nationwide’s high street network will soon be able to offer support to small businesses and innovators in the postcodes covering Peterborough. Does he agree that that highlights the vital role the mutual sector, credit unions and member-owned banks play in extending financial services to every postcode of the city, widening prosperity in our country?
Callum Anderson
I could not agree more. Since entering Parliament in 2024, my hon. Friend has been a leading voice for the role that co-operatives and mutuals can play in the broader ecosystem of UK financial services. He will know well that the Government are committed to doubling the size of the co-operative and mutual sector. Financial services should play a big role in helping to deliver that agenda.
I started my career supporting the development of credit unions and community development financial institutions, which have many similar economic and social objectives to building societies, co-ops and mutuals. My conviction is as strong as it was 15 years ago that they have an important role, not to replace or be a substitute for mainstream high street banks but to be part of the integrated financial ecosystem described by my hon. Friend the Member for Peterborough (Andrew Pakes). The UK has a lot to learn from other countries, such as Germany, Canada and Australia, about how best to do that in a sustainable way.
The Government can already be proud of a strong record, from last November’s financial inclusion strategy to the commitment to roll out 350 banking hubs across the UK. My constituents in Buckingham and the surrounding rural communities greatly value the hub that opened just before I was elected in 2024, and the expansion of the reach of the Help to Save scheme to more than 3 million people through universal credit.
Specifically on the financial inclusion strategy, although it is no doubt thoughtful and well considered, I encourage the Government to go even further and prepare clear, measurable performance indicators against all six of its pillars, so that we can see in a year or five years how far it has advanced the UK in being financially more inclusive or otherwise. Government, industry, regulators and civil society can then best identify where the barriers to inclusion continue to lie.
I am conscious that I have spoken for almost 20 minutes, so my final point is about skills. Skills gaps in the financial services sector, if left unaddressed, not only threaten the sector’s productivity and future global competitiveness but, most importantly, its collective ability to innovate, grow and best serve our constituents, who are ultimately the customers of those companies. I commend the financial services skills compact, which according to my latest research is now signed up to by more than 20 firms, covering more than 250,000 employees.
Although such industry-led initiatives are crucial and valuable, the Government also have an essential role to play. Two things would strengthen that essential private-public partnership. First, Government can be much more ambitious in using the flexibility of the growth and skills levy to fund dedicated conversion pathways into financial services for adults outside London, perhaps matched by employer-funded boot camps in regional clusters, be that in Bournemouth, Edinburgh, Leeds or Belfast. The talent pipeline should grow where the jobs already exist and are growing.
Secondly, Government and industry, through the Financial Services Skills Commission, should build a shared live map of regional skills gaps, which would allow apprenticeship places, training, investment and further educational funding to target the specific shortages that each region faces, rather than rely on a slightly arbitrary national formula that takes no account of where the sector actually needs people.
Those are just a few of my summer observations on the future of UK financial services. The underlying drive and rationale are ultimately the same, starting from a familiar place. The UK already has a lot of the ingredients that allow it to be a global leader in so many parts of financial services. However, if we are to stay ahead of the other great global financial centres, be that New York, Frankfurt, Singapore or Hong Kong, we need the Government and Parliament to work together with industry to provide the right regulatory framework, the spirit of innovation and the commitment to making our constituents’ money work better for them so that the financial services sector itself can further strengthen the UK’s economic, energy, industrial and national security and sovereignty. I look forward to the contributions from Members across the House this afternoon and I would be happy to meet the Economic Secretary later this autumn to discuss any of the points I have raised if that would be helpful.
Sir Jeremy Hunt (Godalming and Ash) (Con)
It is a pleasure to speak under your chairmanship, Mr Twigg. I speak today as chairman of the all-party parliamentary group for financial markets and services. I refer hon. Members to my entry in the Register of Members’ Financial Interests, which states that I accept speaking engagements from financial services companies.
I thank the hon. Member for Buckingham and Bletchley (Callum Anderson) not just for securing this debate, but for an excellent opening speech. He has a background in the City—in the stock exchange and working for the City of London corporation—which is probably unusual in his party. I thank him for deploying his expertise, because it is incredibly important for UK financial services that the world sees that there are experts in financial services on both sides of the House. I particularly welcome his comments today.
I welcome the Economic Secretary to the Treasury back to her role, which she carried out previously with great distinction. She has always engaged extremely constructively when it comes to the interests of the City and financial services. I know that her return to that post was widely welcomed. It is also a pleasure to speak alongside my hon. Friend the Member for Wyre Forest (Mark Garnier)—an old friend—who himself has a background in the London stock exchange.
After the financial crisis in 2008, financial services had a pretty bad name. The Government had to put up around £1 trillion to support the sector. Chief executives of banks made very ill-judged decisions to continue paying themselves large bonuses at a time when the rest of the country was suffering, and the country suffered a longer and deeper recession at that time as a result of our exposure to the financial services sector, which was much greater than that of our peers. We learned many painful lessons in that period.
As well as the financial crisis, the sector had to deal with the loss of passporting rights post-Brexit. Despite those body blows, the sector employs 2.5 million people—more than at the time of Brexit—and two thirds of the jobs are outside London. It is worth around 11% of our national output. It generates more than £110 billion in tax revenues, which is more than any other single sector. Put another way, it funds more than half the cost of running the NHS.
Whatever one’s interest in financial services, from a fiscal perspective alone they simply cannot be ignored. The sector is also thriving today in very challenging circumstances. The City think-tank Z/Yen tracks the competitiveness of global financial service hubs. In 2020, London trailed New York. Now it has caught back up. It remains the world’s premier centre for foreign exchange and specialist insurance. It helps to make the UK the world’s second largest services exporter.
When I was Chancellor, I introduced the Edinburgh and Mansion House reforms to support this important sector. Regulations, including listing rules, were simplified and the mighty task of making our pension fund industry fit for purpose was started. To their credit, this Government have built on those reforms with the Leeds reforms, the Pension Schemes Act 2026 and the forthcoming Financial Services and Markets Bill, all of which are extremely welcome. But, as the hon. Member for Buckingham and Bletchley said, our competitors are not standing still.
With smart policies, our financial services sector could do even more for growth in the UK. Easy access to finance, alongside having the most respected universities in the world outside the United States, has helped to create, for example, the world’s third-largest tech ecosystem. In artificial intelligence, the UK has the potential to be the world’s next silicon valley. If we get there, easy access to finance will have played a major role in making that possible.
What needs to happen next? The first thing is to do no harm—in particular, to do no harm with additional taxes in October’s Budget that could potentially damage the sector. Uniquely, the UK already charges higher corporation tax to banks. Total bank taxes are about 45% here, compared with 32% in Dublin and 28% in New York. I totally understand the temptation—finances are extremely tight, and the banks have few friends—but international capital is mobile, and hiking taxes further will mean that the sector ultimately generates less tax revenue, not more, for the Chancellor.
Secondly, we need to make regulation in UK financial services more proportionate. Consumer protection really matters, but we cannot eliminate all risk, which is what our regulators sometimes appear to be trying to do. Compliance now costs the sector more than £39 billion a year—about 13% of operating costs. We should aim to at least halve that using the new international competitiveness and growth objectives, which the Financial Conduct Authority should apply to authorisation, supervision and enforcement decisions.
Kerry McCarthy
I too worked in the financial markets, although I think I have done a better job of hiding it in my 21 years in Parliament. I was more on the debt market side. In fact, I am so old that I was part of the salvage operation for Barings bank when it went under. That brings me to the right hon. Gentleman’s point about regulation. The management of Barings did not have a clue what its traders were doing, and the regulators certainly did not have a clue what Barings was doing. I strike a note of caution. I worked for an American investment bank, so I saw the Securities and Exchange Commission as well as the UK regime. Where do we strike the balance between ensuring that there is not another collapse of a bank and light-touch regulation?
Sir Jeremy Hunt
I thank the hon. Lady for her role in helping to salvage Barings. I did not know that before. She is absolutely right to raise that issue. I do not say this in a party political way, because my party pretty much supported it at the time, but there is no doubt that, in the run-up to the financial crisis, regulation was not as tight as it needed to be. That is one of the reasons why we needed such expensive rescue missions for the banks. Since then, regulation has made the UK financial services sector much more secure.
The Prudential Regulation Authority and the sector as a whole are very resilient. In one of my most difficult moments as Chancellor, one of the most reassuring things that happened was that the Governor of the Bank of England said to me, “This sector is solid. You don’t have to worry. We are in a much, much better state than we were in 2008.” But I do think that it has gone slightly too far in the other direction. Sometimes we can over-correct. Particularly when it comes to consumer risk, there is a danger that we restrict consumer choice by being over-restrictive about the products that banks and financial services companies can offer. That is not to say that we want a free-for-all but, in terms of competitiveness, we need to keep a weather eye on the relative burdens of our regulatory regime, compared with those in other places.
I echo what the hon. Member for Buckingham and Bletchley said about AI, tokenisation and digital identity. The UK legal system is widely respected, and this is an area where good regulation could attract a lot of investment. We really could be leaders in it. London should be the world’s most trusted centre for tokenised wholesale finance, with clear rules for tokenised securities, custody settlement, digital money and market infrastructure.
We also need to speed up the consolidation of the pension industry, not least, as the hon. Member for Buckingham and Bletchley said, to encourage more investment in UK infrastructure, equities and tech start-ups. If that was done in a sensible, controlled way and as part of a balanced investment strategy, the returns for pensioners would be much higher than they currently are. That would start to stem the tide of British unicorns, of which we have more than Tokyo, Paris and Berlin put together, but which invariably at the moment tend to go to New York when they want to IPO, rather than doing it in the UK.
The fifth thing we could do is to encourage more saving. If we are going to transform the way this country grows, we need an investment-led growth strategy, not just a consumption-led growth strategy. Although it is painful for me to say this, scrapping our crazy system of giving people a new pension pot for every job, and instead copying the Aussies’ pension system—giving everyone one pension pot that follows them around for their whole lives, but with the freedom to change provider whenever they want—would make saving much simpler. It would mean people could go into an app on their phone and immediately see the value of their pension pot. It would encourage them to top up their pension pots if they were able, perhaps because of an inheritance or whatever. The impact of doing that in Australia has been that they save more, they get better returns, and there is much fiercer competition to attract those savings in the domestic pension fund industry.
I know that everyone here today will agree with this, but I think it needs to be said: it is imperative, whatever the pressures, to keep Britain open to the world. Our advantage has always been our openness. We are at our strongest when we connect global capital, trusted law, deep markets and world-class professional services all together. That means the painful, often boring, but absolutely vital work of negotiating trade deals, securing digital market access, agreeing mutual recognition deals, and making sure we have proper mobility for talent.
I am really grateful to the Minister for coming today, and would ask her to briefly address the following questions. When he is considering measures for the Budget, will the Chancellor of the Exchequer keep the competitiveness of the City and financial services central to his considerations? Will the Government undertake a review of the UK’s international tax competitiveness, particularly when it comes to financial services? Will she set out some specific steps that the FCA and PRA can take to deliver their competitiveness and growth objectives? What further reforms will the Government bring forward to help London to become the world’s leading centre for tokenised finance?
What progress has been made in further unlocking pension fund investment into productive UK assets? What further action will the Government take to improve access to finance for small and medium-sized enterprises and scale-ups, which has been a particular issue in the period since the financial crisis? Finally, does the Minister agree that maintaining the UK’s position as a leading global financial centre should be treated as a core element of the UK’s growth strategy? The prize, if it is, is absolutely enormous. TheCityUK says that we could add £53 billion to our additional annual output by 2035. That is the entire output of the life sciences sector, and would generate about £22 billion of extra tax revenues—around the entire budget for the police or the Department for Transport. The opportunity is huge. The question is whether we have the political will to get there by going further and faster.
Phil Brickell (Bolton West) (Lab)
It is a pleasure to serve under your chairship, Mr Twigg. I congratulate my hon. Friend the Member for Buckingham and Bletchley (Callum Anderson) on securing today’s important debate. He is a distinguished advocate for the financial services sector, and I reiterate his points about unlocking cash sat on deposit in ISAs and making it work harder, not only for savers but for British businesses. The previous Chancellor of the Exchequer, my right hon. Friend the Member for Leeds West and Pudsey (Rachel Reeves), was keen to support in that challenge, and I want to stress it again as we look towards this autumn’s Budget.
My contribution will make a slightly different point from that of my hon. Friend the Member for Buckingham and Bletchley. Before entering this House, I, too, spent my career in financial services: first, in a brief stint in commercial banking, and then, for a long time as a specialist tackling financial crime. I saw first hand the strengths of our world-leading financial sector and the vulnerabilities that can be exploited by those seeking to abuse them. That experience taught me a simple lesson: the future of financial services in this country has to be a clean one. A successful City—a successful financial services sector that works for everyone up and down the length of the country and, ultimately, a successful British economy—is not built on turning a blind eye to dirty money, but on trust, transparency and integrity.
As chair of the APPG on anti-corruption and responsible tax, I regularly engage with UK Finance, the City of London, compliance professionals and senior representative from across financial services. The message I hear repeatedly is that businesses do not want weaker regulation; they want smarter regulation, a point that the right hon. Member for Godalming and Ash (Sir Jeremy Hunt) alluded to. That should mean regulation that works to prevent bad faith actors, maintains the integrity of our economy and is looked at with envy by investors and competitors from further afield. A secure financial system is inherently more investable, as investors seek certainty, strong institutions and robust enforcement of the rule of law.
This Labour Government, building on the platform provided by the Economic Crime and Corporate Transparency Act 2023, have made significant strides on that issue. It would be remiss of me not to thank them for the anti-corruption and fraud strategies published over the last 12 months, and I welcome the Treasury’s move to consolidate the fragmented anti-money laundering professional body supervisors under the FCA via the forthcoming Financial Services and Markets Bill. However, to really capitalise on the opportunities that are available, I would like the Government to commit to two core deliverables as part of their wider approach to economic crime: better regulatory enforcement and better transparency.
On enforcement, the FCA will need to be adequately supported to fulfil its new regulatory obligations. The reality is that enforcement pays for itself many times over, across the wider landscape. The compliance work of His Majesty’s Revenue and Customs has generated around £22 for every £1 spent on compliance staff. Those are extraordinary returns on investment. We should view spending on economic crime enforcement not as a cost but as an investment in Britain’s prosperity and security.
Of course, we are in a difficult period for public finances, which is why we should look carefully at how financial penalties for firms that do not abide by the rules are used. Between 2016 and 2025, the FCA secured more than £1 billion in regulatory and criminal fines, but significant sums are ultimately returned through rebate mechanisms rather than being used to strengthen the enforcement capabilities that generated the penalties in the first place. There is a strong case for allowing the FCA to retain a greater proportion of anti-money laundering fines to meet its enforcement costs, particularly as it takes on significant new supervisory responsibilities.
I welcome the Economic Secretary to the Treasury to her place. As she knows, I am a long-term advocate for establishing an economic crime fighting fund, allowing a proportion of enforcement receipts to be reinvested in the agencies responsible for protecting our financial system. The financial sector rightly pays its way via the economic crime levy, so what about the criminals? Let us make them pay too. At present, billions of pounds have been raised through economic crime fines and enforcement activity, yet frontline agencies continue to face resource pressures. A sustainable, multi-year funding model would allow the likes of the FCA, the National Crime Agency and the Serious Fraud Office to further invest in specialist expertise, to build capability and to plan strategically for the long term.
The Financial Action Task Force is already in town, ahead of next year’s mutual evaluation review, in which it will mark the UK’s homework on enforcement against economic crime. I would welcome the Minister’s initial reflections on whether existing schemes, such as the asset recovery incentivisation scheme, are performing as hoped, and on whether we might expect to see some reform to police funding in the forthcoming economic crime plan. I appreciate that that might not all fall squarely within the Minister’s brief, but I know that she has taken a keen interest in these matters previously and has a strong grasp of the cross-cutting nature of these issues across Whitehall.
On the second point—transparency—equitable, clean growth can be achieved by reducing the compliance costs faced by legitimate firms, freeing up capital that could be more productively invested elsewhere. A major reason for those costs is the continued difficulty of identifying the true owners of companies hidden behind opaque offshore structures, as I saw first hand in my previous career.
That is why I have long argued that the UK’s overseas territories must finally implement meaningful and accessible public registers of beneficial ownership, as we have in this country via Companies House. Every hour spent by compliance teams untangling complex offshore ownership chains is an hour not spent supporting customers, financing businesses or driving growth. Every duplicated check increases costs for legitimate firms, while benefiting those who rely on secrecy.
Public registers of beneficial ownership would make “know your customer” checks faster, cheaper and more accurate. They would reduce duplication, lower compliance costs and strengthen confidence in our financial system. That would help to ensure that honest firms are not left carrying the burden created by hidden ownership structures and dirty money.
I will not relitigate past debates on the issue, but I do want to place on record once again my wholehearted desire to see all British overseas territories, particularly the Cayman Islands and the British Virgin Islands, finally fulfil long-made promises by throwing open their books.
Dirty money is not just a financial crime problem. It is a threat to economic growth, it distorts markets, it undermines trust, it damages fair competition and it weakens our institutions. I want a future financial services sector that is competitive because it is trusted, successful because it is transparent, and prosperous because it is clean. I will do everything in my power to support the Government achieve that objective.
Bobby Dean (Carshalton and Wallington) (LD)
I thank the hon. Member for Buckingham and Bletchley (Callum Anderson) for securing this debate and for bringing his great experience to it. I hope to build on his comments encouraging the Government to build on the momentum of the pension reforms they have recently introduced.
The UK investment system holds £6 trillion-worth of investable capital, mostly via pensions and life insurance schemes, so there can be no doubt at all that the financial services sector will be key to growth when it returns to this country properly, but access to that capital has become a problem. We hear it all the time from businesses. That can only be a systemic failure.
Central to the problem is the UK’s allocation of its pension funds, which, as has been noted, collapsed from levels of around 50% back in the ’90s to an average of just 4% now. Some of that is explainable. Some of it was inevitable, as capital markets went global and people diversified their portfolios—we were always going to see a decline from those heights of around 50%—but the UK sits below the global average of allocation, which is 13%, so the UK has a specific problem that it needs to address.
We have to ask how we got here. I think the root is a certain naivety in the way that we applied laissez-faire economics. As a liberal, I support free and open trade with the world, but with a narrow interpretation of what free and open means. We have marginalised the state’s role. We have moved its role of shaping the conditions for UK businesses to thrive to the periphery. We have been so hands-off that we have allowed our economy to be dominated by a handful of actors who have accrued pretty unchecked power in a fairly anti-competitive manner.
An example I would point to is the proportion of our pension funds that passively invest into big global indexes. An example is the MSCI world index. It allocates more of British pension savings to Apple than to the entire UK economy—around 5% to Apple and 3.8% to the UK.
What does that mean in practice? It means that when brilliant UK tech start-ups want to scale and are seeking out capital, their only option is to be sold out to one of the big US competitors that pension savers in the UK are funding. So the cycle continues, whereby Britain fails to scale its businesses to the level required.
Britain needs to be more streetwise and a bit more hands-on. We need to redesign our system so that it can still take advantage of global capital markets, while being clever about the way it incentivises and actively supports the growth of the UK economy. One way in which I believe we can do this has been suggested by the New Capital Consensus project, of which I am a member: to right-size some of our defined benefit pension funds so that they are big enough to actively manage funds and to identify and invest in the opportunities that exist across Britain. They should not be so big that they find those kinds of regional opportunities more hassle than they are worth, and they should not be so small that they choose to manage their funds passively in the way that I have just described.
At the moment, we have around 5,500 small defined benefit pension funds, and while each charges low fees for a fair return, I ask: at what cost is that a fair return? Is it really good value to get over 8% for the individual saver if the country around them is in decline? Should the real test of value not be about the return to not only the individual but society? After all, this is the country in which they seek to live and retire.
I encourage the Government to build on the progress they have made so far with the pension reforms and to look more broadly at investment funds across the sector. I believe that if we can right-size some of those pension funds to incentivise them to identify and invest in UK businesses, things will be delivered for not only those savers but the country as a whole.
Jim Shannon (Strangford) (DUP)
It is always a pleasure to serve under your chairship, Mr Twigg. I thank the hon. Member for Buckingham and Bletchley (Callum Anderson) for setting the scene incredibly well, and for highlighting a vital debate around the future of our financial services sector. I thank him for bringing this matter to the Floor of the House; if there is one thing that affects every single household, from the City of London right across to the beautiful shores of Strangford lough, it is the stability, accessibility and integrity of our financial systems.
It is also a joy to see the Minister in her place again. I think we are level pegging for how many times we can speak in Westminster Hall today. We are both at the touchline, and if she manages to stay for the third debate, she will find herself equal with me. I thank her for all her answers this morning and this afternoon, in anticipation of the passion she has for the subject matter of this debate. I mean that sincerely, because I think we are all encouraged by her knowledge and helpfulness in trying to answer the questions we pose.
When we talk about the future of financial services, the pundits and the media often look straight at the glass towers of London—they look at fintech, AI and the complex global trading systems. I am a proud Unionist; I want the City of London to remain the pre-eminent financial powerhouse of the world—as it is and as it should be—because that benefits us all. It brings billions to the Treasury, and a strong City means a strong United Kingdom of Great Britain and Northern Ireland.
The hon. Member for Peterborough (Andrew Pakes), who just left, referred to Nationwide in an earlier intervention. As I said this morning, the Nationwide branch in Newtownards has committed to working with the community and to staying in the town until 2030, and we hope that the commitment will go beyond that. I am not a member, stakeholder or customer, but I have noticed the large numbers of people who come in, and I understand that Nationwide is filling in where the banks sometimes fall short.
My main concern—indeed, the common concern of the DUP—is what the future of financial services looks like for the working man and the working woman. That is what I want to focus on. It is about the squeeze on the middle class and the ordinary families who are trying to navigate volatile inflation and changing economic climates. If financial services are to have a successful future across the whole of this United Kingdom of Great Britain and Northern Ireland, we must ensure that they are built on three fundamental pillars: financial inclusion, regulatory fairness for small businesses and unwavering integrity.
As banks look to a digital future, they are shutting physical branches at an alarming rate, which we discussed this morning. It is all well and good to say that everything will be on a mobile phone app, but what about the elderly constituent in Portaferry in my constituency, who relies on the face-to-face chat to manage their life savings, and who has to travel some 22 or 23 miles up the road to Newtownards because there is no bank in the entire Ards peninsula? What about the young people trying to understand credit and mortgage products without an accessible high street presence? The future of banking cannot be one that locks out the vulnerable, the elderly or those without reliable internet. We must protect physical access to cash and also look after consumer support.
There is a duty to protect our small and medium-sized enterprises, our small charities and family-run shops. In Newtownards we are privileged and honoured to have so many family-run shops. Whether they are agribusinesses or local hospitality venues, they are the backbone of our economy—certainly they are in my constituency. The future regulatory framework of the Financial Conduct Authority must be tailored to protect those businesses from hidden credit liabilities and predatory lending practices. The hon. Member for Buckingham and Bletchley referred to that in a previous debate in Westminster Hall—I remember it well. We need a financial system that acts as a springboard for entrepreneurship, providing firm, clear foundations of support rather than wrapping our local shopkeepers in suffocating red tape.
The future must be defined by absolute transparency and a transformation of corporate culture. Trust in our financial institutions was severely damaged in the past. As the FCA continues its work on transforming the culture in financial services, we must demand that the big banks treat customers with the respect they deserve. Every pound looked after by a financial institution is a pound earned by hard work. There must be no question of dishonesty or systematic unfairness.
The United Kingdom’s financial services sector has a bright future—I believe that with all my heart—but only if it remembers its core purpose, which is to serve the people. As we as MPs serve the people we are elected to serve, they should also serve the people that we represent. So let us ensure that as we innovate, we build a system that levels up every corner of our great nation, the United Kingdom of Great Britain and Northern Ireland, and preserves our high streets, supports our small businesses, and protects the hard-earned money of the working-class families who are the backbone of this country.
Charlie Maynard (Witney) (LD)
It is a pleasure to serve under your chair, Mr Twigg. I thank the hon. Member for Buckingham and Bletchley (Callum Anderson) for securing this important debate and for making it a large enough subject for us all to pick and choose, because it is hard to cover such an enormous range. It is much appreciated. I thank him for such good points made, and I thank the Minister for returning to her role. I look forward to working with her. I refer Members to my entry in the Register of Members’ Financial Interests and my ownership stake in BDA Partners, the business I founded in 1996, which focuses on Asian mergers and acquisitions, in which I have no management role.
Everybody here believes that our financial services sector is a strategically important national asset and a key competitive advantage for our economy. We all want the sector to continue to thrive, boosting businesses, jobs and growth all across the UK. We all want Britain’s financial and professional services industry to remain possibly the leading such services cluster globally. Such services make us a trade superpower. We benefit from our unique combination of language, law and location. We have strong institutions and dynamic markets. We are the world’s second largest destination for fintech investment after the US, and we are a material player in the AI space.
Those are huge strengths that we must continue to build on, but we must also be clear about the challenges. Our financial services sector has lost ground on a relative basis and on a global basis. Other economies are rapidly growing, innovating, investing and preparing for the future. We have no cause for complacency. We need to be ambitious and take decisions now, which will help the UK over the short, medium and long term.
Post Brexit, the City has continued to be an excellent location to base a global financial services business. However, our departure from the EU has substantially weakened our financial services industry, both in terms of the UK serving as the centre of European finance and a slower-growing UK economy that has not provided the traditional tailwind that it previously did. UK financial services remain a bright spot, but it would be a lot brighter if we were inside the EU’s single market. Do not just take that from me. TheCityUK notes that even though overall services trade has held up,
“Exports of financial services have declined 5.9 per cent…likely at least in part due to the impact of Brexit frictions.”
If the Government are serious about growth, they need to fix this. We should be pursuing a growth and defence partnership with Europe, including joining both the single market and the customs union. That would be revolutionary for the future of the UK financial services sector; it would tear down the barriers to trade in services that we have erected, which are still holding back our financial sector. In particular, joining the single market would secure again passporting rights for the sector, reducing costs and administration burdens and enabling financial firms to offer services across the whole of the EU without requiring further authorisations.
In the shorter term, the Government should move quickly to immediately improve financial services co-operation with Europe. For example, they should be making the most of the UK-EU financial regulatory forum to secure a deal on the mutual recognition of professional qualifications, building on the dialogue that was agreed at the UK-EU reset last May. We must also finally see the UK-EU youth mobility scheme, which was agreed in principle last year, through to implementation.
Secondly, if the Government are going to boost financial services and seriously compete with the US, they must look at the business landscape as a whole. We need far more ambition to boost UK plc—especially our high-growth, high-tech businesses—and pull every available lever to encourage capital formation, so how can we do this? Traditionally, the UK has been a fantastic harbour for international capital on the back of a cast-iron reputation for strong, fair regulation that safeguards investor rights. We need to ensure that our regulators continue to live up to that benchmark, and I think there is a question about that today.
The same goes for competition. The Competition and Markets Authority needs to be using its powers under the Digital Markets, Competition and Consumers Act 2024 to demonstrate it has the will to enforce both quickly and effectively against strong players as well as weaker ones and, where applicable, it should be working closely with its EU counterpart to magnify its impact. This is not an issue that is just floating in the ether; it matters to people across my constituency, because it brings down costs. Everybody talks about the cost of living; if we allow people to control markets so that there is no competition, costs go up, and everybody feels that in their pockets. It is really important to draw that link, so having the CMA move fast, at scale and at speed matters.
We also need to fix how we support business innovation. Research and development tax reliefs are a powerful tool, but too often they are undermined by uncertainty, delays and a “compliance first” mindset. A more liberal, pro-innovation approach should move towards an expert-led pre-clearance system for R&D tax reliefs. We could have up-front assessments by scientists and engineers—people who understand the technology—rather than retrospective scrutiny by compliance teams. Models in countries like the Netherlands show that this can work effectively. It provides certainty to the founders, reduces disputes, and ensures support is directed towards genuine innovation.
We must also look at reducing regulation where it is not required, as the right hon. Member for Godalming and Ash (Sir Jeremy Hunt) mentioned. For example, why is the regulatory burden on the venture capital industry so much higher in the UK than in the US, including in terms of time, which is as critical as cost? How about the UK taking the approach of using exempt reporting advisers—as they do in the US, focused on professional investors—to more effectively balance regulation with levels of risk?
Many Members have talked about AI, and I am going to do so too. Any discussion of the future of financial services has to take AI into account. Earlier today, the Governor of the Bank of England, Andrew Bailey, published an open letter warning G20 Finance Ministers that artificial intelligence could pose a major cyber-security risk to financial systems. Writing in his capacity as chair of the international Financial Stability Board, he said that the potential impact of frontier AI is “the most immediate concern” for the global financial system, and that financial institutions, financial market infrastructures, and technology providers all need to
“strengthen vulnerability management, response and recovery capabilities, and prepare for more severe scenarios involving simultaneous disruption across multiple firms or shared technology dependencies.”
These risks are inherently international, and many jurisdictions still lack the systems to manage them—frankly, I think we do too.
The UK Government must make AI security a top priority to safeguard not just UK financial services but the international financial markets on which we all depend. I would therefore be grateful if the Minister could set out what steps the Government are taking to promote the safe and responsible deployment of AI internationally, and how the cyber-security of the financial system is being strengthened.
The other technological revolution that will shape the future of financial services is digital assets, stablecoins and cryptocurrency. A few days ago, the Treasury gave the Bank of England the new objective of supporting payment systems innovation. That is welcome, and having the right regulatory conditions in place to make the most of digital innovations is critical, but we need more clarity from the Government about how they intend to balance the opportunities and risks generated by new digital assets.
A key question is what stance the Government intend to take on stablecoins and a central bank digital currency or digital pound. The global stablecoin ecosystem is now dominated by two US dollar-pegged issuers, Tether and Circle, which together account for around 90% of the market. The UK’s own GBP stablecoin is, per the House of Lords Financial Services Regulation Committee’s assessment, “nascent”. Many are therefore worried that the digital financial infrastructure of the future is likely to default to dollar-denominated instruments issued by foreign private firms.
I urge the Minister to address those concerns clearly, and to set out how this Government plan to make the most of the opportunities presented by this new technology while safeguarding against the risk and, crucially, whether there is or will be a timeline for a decision to be made jointly with the Bank of England.
Mark Garnier (Wyre Forest) (Con)
It is a pleasure to serve under your stewardship, Mr Twigg. I thank the hon. Member for Buckingham and Bletchley (Callum Anderson) for securing this debate. He speaks with great authority, and it is refreshing to hear a positive vision of the financial services sector, especially given his experience working for the London Stock Exchange Group. He raised a number of points, some of which I will deal with in my speech.
The hon. Member raised some interesting points that are strongly related. The first was the lack of growth capital and the fact that we are not seeing a huge amount of money invested into the UK by UK pension funds. Companies looking for growth capital seem to go to places such as America, where they can do better. He also talked about the undervaluation of the UK stock market, which is part of that problem, as well as clean energy and the fantastic opportunity it provides for investment in long-term patient capital. It is interesting that, during the passage of the Pension Schemes Act, one complaint thrown up by a very large annuity asset manager was that it wanted to invest in the equity of wind farms, where there is a predictable income because of contracts for difference, but the Pensions Regulator would not allow it because it had to be invested in bonds, which have a more liquid market.
Although the Conservatives completely support the Mansion House compact and the Mansion House accord, there is too much stuff getting in the way. We had a long debate on this during the passage of the Pension Schemes Bill, now an Act. We are trying to work with the Government on how not just to force more money into the UK equity market, but to clear away the clag that gets in the way of investments. That comes to the point about regulation and the regulatory environment. I will discuss more of the hon. Member’s points in the main thrust of my speech, but I wanted to get that point over early on.
As we heard from my right hon. Friend the Member for Godalming and Ash (Sir Jeremy Hunt), the financial services sector matters hugely to the UK. It is often described as the engine room of our economy, for two good reasons. The first is that the banking sector provides the plumbing that moves finance around our economy, making sure that money, where it is accumulated through wealth, is distributed to people who need it. The second is our international position: the financial services sector generates 11% of national economic output and contributes £12 in every £100 of tax paid—it pays for a lot of the NHS. As we heard, the sector makes up more than 3% of all jobs in the UK, with 2.5 million people employed in it, and we have the most unicorns in Europe. The sector here is the second-largest asset sector globally, the third-largest insurance market globally and the fifth-largest domestic banking market globally. I could go on, but the point is that the UK is absolutely a world leader in financial services, and we need to continue to be that. It is vital that we get this right.
It is worth comparing London to New York. New York is the biggest financial services centre in the world and London is the second biggest, but in New York, 80% of the turnover is driven by the domestic market of America, while just 20% is international; those numbers are reversed in the UK, where 80% of the activity is international. International competitiveness is four times as important for us as it is for those in America. The Conservative party recognises that, and that is why the Leader of the Opposition has promised to deliver a new economic revolution and to create conditions that will allow the financial services sector to innovate, take risks and be an economic powerhouse.
Before discussing the future of UK financial services, we need to understand the past. The City of London has been innovating and leading the way for a few hundred years now. The Knights Templar issuing receipts to crusaders for their gold created the first ever bank notes. In the 17th century, Jonathan’s Coffee House—the hon. Member for Buckingham and Bletchley will be familiar with it—was the first to advertise share prices. From there the London stock exchange grew, setting the model for equity ownership the world over. Similarly, Lloyd’s Coffee House created the insurance market that we see today. By continually innovating, the UK led the way for centuries. It is vital that the UK continues that spirit of innovation to maintain its international lead.
Although we have enjoyed much success over the years, a recent report by TheCityUK and PwC shows that over the past decade growth has stalled. Technologies such as artificial intelligence and distributed ledger technology are fundamentally rewiring financial market infrastructure, and it is vital that the UK keeps up with the pace of change. Financial services firms are ready to do that, but they need policy makers to create the right conditions and then get out of the way, allowing them to innovate and take advantage of that.
That brings me to what we need to do to unlock the future of UK financial services. First, we need to look at regulation in the UK. Although it is important to recognise that the UK’s regulatory and legal frameworks make us an attractive destination—that is really important; our rule of law is vital to this—we believe that the UK has gone too far and that regulation has become too burdensome. Research from TheCityUK suggested that the cost of regulatory compliance across the financial services sector now exceeds £33.9 billion. That represents more than 13% of firms’ annual average operating cost.
An interesting number was presented to the Treasury Committee by Nationwide Building Society, which estimated that, as a result of over-regulation by the regulators and over-compliance by their own internal compliance department, their lending book was £35 billion smaller than it would have been, had they been complying with the original rules and regulations. That is an awful lot of money taken out of the economy, getting stuck in one building society—admittedly the biggest one, but none the less, that is an important measure that we need to consider. This money could have been better spent across the whole of the wider sector, but more worryingly, it has affected our international reputation. The chief executive officer of Marsh McLennan said that it cost six times more to comply with regulation in the UK than in any other country it operates in. That does not foster an attractive business environment. Something needs to change.
That is why the Conservatives recently announced three policies that would reduce the regulatory burden. First, we would remove the ringfencing on banks. Secondly, we would reduce bank capital requirements. Thirdly, we would replace the Financial Ombudsman Service with a financial adjudication service.
Bobby Dean
The description of the regulatory regime since 2008 is fair. There has been a degree of over-correction, particularly on things such as capital requirements, and the regulators themselves are saying that we could do with some tidying up, but abolishing the ringfencing regime—one of the fundamental protections put in place for everyday bank users in relation to the risks presented by investment banking—does not seem like addressing an over-correction. It seems like a revolution back to the 2008 regulatory regime. Can the hon. Gentleman defend that Conservative party proposal in that context?
Mark Garnier
Yes, I can, from having been on the Treasury Committee from 2010 to 2016, when we looked at creating the Financial Conduct Authority and the Prudential Regulatory Authority, and, more relevantly, on the parliamentary commission on banking standards. Our report recommended that we introduce the measures in the Davies review, which was bringing ringfencing in. The hon. Member may remember that, at the time, the Liikanen review in the European Union looked at ringfences. The subtle difference between our ringfencing and theirs is that it was described as caging the tigers in Europe and as putting a fence around the deer park in the UK. Our retail banks were ringfenced. The problem we have found is that it has become increasingly complex to operate the regime, and the Europeans did not bring it in; as a result the resolution regime on banks—the recent Bank Resolution (Recapitalisation) Act 2025 looked at this—actually means that we now have an awful lot of other stuff in place and do not necessarily need the ringfencing.
The problem with ringfencing is that banks end up with a cliff edge, where their customers are traversing from the ringfenced bank to the commercial and investment banks, and it becomes very difficult. Only one bank has managed to satisfy itself that it is okay, and it has set that ringfence limit at £100 million worth of turnover; all other banks have been at the lower end, which is close to £5 million or £10 million in turnover.
It is costing us more and becoming less internationally competitive to have a ringfencing regime that other countries did not adopt. When we adopted it we were the first mover, but we were not followed. International competitiveness is the key point, as well as the bank resolution. There are MRELs, bullion bonds and a lot of stuff out there that makes up for that, brought in since the financial crisis. It just looks like we have too much. I hope that answers the question from the hon. Member for Carshalton and Wallington (Bobby Dean).
Analysis shows that the annual cost to the UK’s banking sector of ringfencing alone is £1.5 billion. At the same time, reports from industry are clear that ringfencing is duplicated and is not responsible for post-crisis improvements. In 2022, the independent review of ringfencing and proprietary trading said that
“the reduction in the implicit government guarantee and progress in ending too-big-to-fail was not found to be attributable to ring-fencing.”
We understand that the Government are looking at this, and at reforming the ringfencing regime through the Financial Services and Markets Bill. The Economic Secretary to the Treasury and I will be spending a lot of time in the coming months going through the minutiae of banks’ balance sheets—frankly, I find it fascinating; I hope she does too. However, like most of the Bill, while welcome, we feel that the Government are not fully utilising the opportunities that the Bill will provide, and that they could go much further. As I say, I will not delve into too much of the detail because we have a long time to go through all this, but I hope that the hon. Member for Buckingham and Bletchley will throw his weight behind the Financial Services and Markets Bill when it comes to the House of Commons.
I have a second point on taxation. If we are to unlock the future of UK financial services, the other area we have to look at is the level of taxation. In a world where capital, talent and business activity are highly mobile, the UK needs to remain an attractive place to do business. That is especially important given the international nature of the UK’s markets. While our competitors such as the US have a high domestic focus, the UK is the exact opposite: the London Stock Exchange Group found that more than four fifths of the revenues of FTSE 100 constituents now stem from outside the UK. Despite that, data from across the industry shows that the UK is an outlier when it comes to the level of taxation on our financial services sector.
Taking the banks as an example, data from UK Finance and PwC in 2025 suggests that the total tax rate on banks in London is 46.5%, which is significantly higher than in other financial centres such as Amsterdam, Frankfurt, Dublin and New York, as we have already heard. In fact, compared with the US, our banks are paying 60% higher tax than theirs are. Another example is the insurance sector. Data from the Association of British Insurers shows that their membership’s total tax contribution increased by 77% between 2014 and 2024. Analysis suggests that that has mainly been driven by increases in the insurance premium tax.
Derek Twigg (in the Chair)
Order. I am conscious of time. I assume that the shadow Minister is coming towards the ends of his comments, but I want to make sure that the Minister and Member in charge have plenty of time to respond. I will call the Minister in about a minute’s time.
Mark Garnier
I will draw my remarks to a close, Mr Twigg—I have been rambling on a bit. I thank the hon. Member for Buckingham and Bletchley again for his words. This has been a very intelligent and thoughtful debate. As I say, the most important point is that we have to be incredibly mindful of our international competitiveness, which is so vital for our country. It is so important that we get this right. If we fail, we may find our descendants sitting in this Chamber in 20 or 30 years’ time, wondering what on earth happened to the UK’s financial services sector. We must get it right.
The Economic Secretary to the Treasury (Lucy Rigby)
It is a pleasure to serve with you in the Chair, Mr Twigg. I am not sure either of my descendants wants to serve in this Chamber yet—to the point made by the shadow Economic Secretary to the Treasury, the hon. Member for Wyre Forest (Mark Garnier)—but there we are.
I thank my hon. Friend the Member for Buckingham and Bletchley (Callum Anderson) for securing this debate and for his consistent advocacy for the importance of financial services to the United Kingdom. While I am not sure I needed any convincing, even in the short time since returning to this brief I have seen that importance at first hand: in Leeds, home to an incredibly vibrant financial services cluster; in conversations that I have had with debt advice organisations about the difference that timely support can make to those in difficulty; and in Bournemouth, where I met degree apprentices and those at the beginning of their careers who are building the sector’s future.
Those few engagements have reinforced for me just how much a thriving financial services sector matters to communities right across this country. I wholly appreciate the contributions of all hon. Members to this debate, whether they wear their financial services experience on their sleeve or seek to hide it—whatever experience they have, it has been a very informed debate.
My right hon. Friend the Member for Leeds West and Pudsey (Rachel Reeves), to whom I pay tribute, put financial services at the heart of this Government’s growth agenda and launched our 10-year strategy for the sector. The new Chancellor has been equally clear about its importance. Within days of taking office, he went to Bloomberg, reiterating his support for the central importance of our financial services sector. I think that that answers, at least in large part, one of the questions put to me by the right hon. Member for Godalming and Ash (Sir Jeremy Hunt); the remainder of his questions I shall seek to answer as well. I look forward to supporting the Chancellor as we continue to deliver on the Government’s financial services strategy.
In doing so, I recognise the challenges, but also the opportunities, in the five areas that my hon. Friend the Member for Buckingham and Bletchley has identified as central to the future of financial services. I will take each of those themes in turn. I thank him for his continued advocacy for strengthening UK capital markets and ensuring that those long-standing strengths support long-term investment in the British economy. He is right to recognise the progress that has already been made.
Through the financial services strategy, the Government have taken decisive action to increase investment, to improve outcomes for savers and to support growing British businesses. We have delivered the Pension Schemes Act 2026, established a framework to monitor delivery of the Mansion House accord, enabled targeted support for consumers and launched measures to help to build a stronger retail investment culture, a point I will come back to.
Mobilising more domestic capital must go hand in hand with ensuring that firms can access the right finance at the right time. Innovative businesses need clear funding pathways, from start-up right the way through to scale-up and into public markets, if they are to invest, expand, create jobs and, of course, remain headquartered in the UK. That is exactly why we are strengthening funding pathways at every stage of business growth. The expanded British Business Bank is helping to address market gaps and crowd in investment, while the National Wealth Fund is mobilising investment into the sectors and infrastructure that will drive long-term economic growth.
We also recognise the particular challenge of later-stage funding. Our reforms are intended to support a more diverse range of funding sources and connect high-growth firms with the capital that they need to scale domestically and internationally. Strong capital markets are central to that objective. The UK has deep markets, global expertise and a position as Europe’s leading investment hub. There is no complacency, to answer my hon. Friend’s point, in my saying that we must ensure that our markets consistently deliver what companies need and make the UK the best place for firms to start, scale, list and stay.
PISCES—the private intermittent securities and capital exchange system—provides a stepping stone from private to public markets. Hon. Members may have recently taken note of its first major auctions, which saw Wayve and Moneybox sell more than £100 million of shares between them. We have removed barriers to secondary fundraisings, improved market liquidity and eased accounting and reporting requirements for the smallest companies, because listing must be the beginning of a company’s growth story, not the end.
Alongside these reforms, we are encouraging pension funds to diversify—I acknowledge the passionate case made by the hon. Member for Carshalton and Wallington (Bobby Dean)—supporting investment in private markets and helping savers to access better information and guidance. Trustees and fund managers must, of course, remain responsible for decisions made in the best interests of their members and customers. Sustainable success will come from making UK assets an attractive investment proposition.
On retail investment, I share the view of my hon. Friend the Member for Buckingham and Bletchley that too much capital remains in low-yield savings when it could be working harder for individuals and the wider economy. We are therefore helping people to understand the opportunities and risks of investing, and giving them access to appropriate guidance and support. We have also been working closely with the Bank of England’s Financial Policy Committee to increase the financial system’s ability to support economic growth, which relates to another of the questions put to me by the right hon. Member for Godalming and Ash on financing for SMEs.
Taken together, those measures join up the full investment chain: mobilising more domestic savings, directing capital towards productive assets, widening access to finance for growing businesses and ensuring that UK capital markets help business to build and grow global companies here.
Secondly, I am grateful to my hon. Friend the Member for Buckingham and Bletchley for pointing out the opportunities presented by the digitalisation of financial markets. That is something I am particularly passionate about. The shadow EST, the hon. Member for Wyre Forest, talked about the importance of innovation to financial services—something that I talk about almost on an hourly basis in this job. The UK is a global leader in financial services because we have consistently embraced innovation; I will not go through the coffee houses that were set up on the banks of the Thames decade by decade. I should say at this point that it is fantastic to have leaders in the insurance industry listening to this debate from the Public Gallery. Innovation is important. We must consistently innovate, because it is key to our global competitiveness and the future of our financial services industry.
Our ambition is to digitalise the UK’s financial markets and make the UK a world leader in tokenised finance. It is reassuring and encouraging to hear the right hon. Member for Godalming and Ash indicate that he thinks that is a sensible ambition. We are moving from experimentation to adoption at scale, as set out in our wholesale financial market digital strategy. We appointed Chris Woolard as the Government’s wholesale digital markets champion, and he published his first report in July. We are enabling firms to adopt tokenised securities through the digital securities sandbox, where the first firm recently received permission to conduct live activity. The regulators have committed to publishing a full cross-authority road map on tokenisation of wholesale markets later in 2026.
We have committed to issuing DIGIT, a digital sovereign debt instrument, no later than quarter 1 2027. Alongside that, we are modernising and optimising the foundations of our markets, moving to a T+1 settlement cycle from quarter 4 2027 to reduce risk and improve efficiency. The hon. Member for Witney (Charlie Maynard) talked about the importance of stablecoins, and I think he welcomed the innovation objective that we are giving to the Bank of England. Stablecoins are important because they can enable faster and more efficient transactions, which means that money that would otherwise be held up can be spent by businesses on other things—they free up capital by being an efficient means of payment. The Government want to see Great British pound denominated systemic stablecoins and, as he is aware, we have established the regulatory regime. There really is no shortage of ambition from the Government when it comes to stablecoins—[Interruption.] The hon. Gentleman is gesturing as if I have forgotten something; I think that means he wants me to address the matter of a central digital bank currency. Work in that regard is ongoing among the Government, the Treasury and the Bank, and we will set out the next steps very shortly.
Many Members mentioned AI, which is already delivering benefits across financial services, from improved customer services to tackling fraud, enhancing productivity and supporting decision making. We now have an AI adoption plan; I will not rehearse that, but I want to pick up on the hon. Gentleman’s points, since he rightly highlighted the extreme importance of resilience in our financial system—as he pointed out, the Governor has been speaking about that recently. Work is going on across Government, including with the regulators and in international fora. I hope I can reassure him that the Government are taking the issue about as seriously as it is possible to take it.
The third area that my hon. Friend the Member for Buckingham and Bletchley mentioned was clean energy. The UK is playing a leading role in supporting and financing the global net zero transition, which my hon. Friend the Member for Bristol East (Kerry McCarthy) has spoken passionately about in this place on many occasions. As my hon. Friend the Member for Buckingham and Bletchley will be aware, the UK is already one of the world’s leading sustainable finance centres, and the Government’s focus is on how we can evolve and expand that leadership. We are delivering a number of targeted initiatives and prioritising changes that will have the greatest impact, such as UK sustainability reporting standards. We are also focused on making the UK a global hub for transition finance, which is not only essential to meeting our global net zero goals, but a major opportunity for UK growth and investment.
I will speed up, but I want to mention financial inclusion as another aspect of my brief that I am particularly passionate about. I am grateful to my hon. Friend for his recognition of the financial inclusion strategy; I intend to make it a step change in how easily all our constituents can access the financial services they need. He rightly recognised that the ability to open a bank account, to build a modest savings buffer, to access safe and affordable credit, to secure insurance and to protect against life’s shocks is fundamental to participation in our economy and, therefore, to participation in our society. The hon. Member for Strangford (Jim Shannon) spoke passionately about the importance of ensuring that financial services are available to all who need them. For all those reasons, those areas are the focus of our financial inclusion strategy, with actions ranging from supporting those without a fixed address to open a bank account, to supporting our credit union sector through a £30 million transformation fund.
You are indicating, Mr Twigg, that I should draw my speech to a close. Before I do so, let me again thank my hon. Friend the Member for Buckingham and Bletchley for securing the debate and all Members for their contributions.
Callum Anderson
I will keep it short, so that we do not overexcite ourselves on the first day back after summer recess. I can only thank right hon. and hon. Members from all parties for their contributions and for adding extra dimensions to the debate. I thank the Liberal Democrat spokesperson, the hon. Member for Witney (Charlie Maynard), the shadow Economic Secretary to the Treasury, the hon. Member for Wyre Forest (Mark Garnier), and my right hon. and learned Friend the Economic Secretary to the Treasury for their constructive contributions. It is clear that we have a united front and a shared collective recognition, not only of the value of UK financial services in their own right, but of their importance for all our constituents.
Question put and agreed to.
Resolved,
That this House has considered the future of UK financial services.
Local Government Reorganisation: Cambridgeshire
(1 day, 16 hours ago)
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Derek Twigg (in the Chair)
I will call Ben Obese-Jecty to move the motion and then call the Minister to respond. I remind other Members that they may make a speech only with prior permission from the Member in charge of the debate and the Minister. As is the convention for 30-minute debates, there will not be an opportunity for the Member in charge to wind up.
Ben Obese-Jecty (Huntingdon) (Con)
I beg to move,
That this House has considered the impact of local government reorganisation on Cambridgeshire.
It is a pleasure to serve under your chairship, Mr Twigg. Last week I wrote to the Secretary of State outlining my concerns regarding the delayed decision on the future of local government reorganisation in Cambridgeshire and Peterborough. Thus far we have heard little of her position regarding the criteria under which a decision will be made and how it may differ from that of her predecessor, who decided to delay the decision in the first place. I outlined how the pregnant pause preceding this interregnum is creating uncertainty and instability and affecting the retention of experienced council personnel, investment decisions for local businesses and questions about the viability of local plans crucial to the success of Huntingdonshire.
In Huntingdonshire, we fear a local government reorganisation stitch-up. In January, I asked the then Prime Minister whether he could
“offer assurances to my constituents and people across Huntingdonshire that the decision is not already a done deal, and that the democratic will of Huntingdonshire district council will not be overridden to satisfy an unelected Labour regional office”.—[Official Report, 14 January 2026; Vol. 778, c. 928.]
He said:
“There are no done deals here; we are going through the proper process.”—[Official Report, 14 January 2026; Vol. 778, c. 928.]
In March, I asked the previous Minister for Local Government whether she could
“reassure me that Huntingdonshire will not be split in two”.—[Official Report, 26 March 2026; Vol. 783, c. 411.]
She did not offer any reassurance, so here we are in September with no decision having yet been made as we await the announcement of what we fear will be a stitched-up local government reorganisation in favour of a gerrymandered pork barrel option that even Labour councillors in Huntingdonshire despise.
Daniel Zeichner (Cambridge) (Lab)
Cambridge city council has long punched above its weight and has carried much of the rest of the county, but it is a second-tier authority. Does the hon. Gentleman agree that a globally recognised city like Cambridge is long overdue unitary status?
Ben Obese-Jecty
Given that Peterborough has unitary status, I agree that it makes sense for a city the size of Cambridge to have that unitary basis. However, I stress that I do not believe that should come at the expense of other regions across the county.
The Government splitting Huntingdonshire in two and using the wealthier half to try to prop up their two MPs in the north of the county is going to go down badly. The hon. Members for Peterborough (Andrew Pakes) and for North West Cambridgeshire (Sam Carling) proposed option D after it was concocted by the Labour East regional office. Nobody in Huntingdonshire was asked or consulted about the proposal, but as soon as it was put forward by those two MPs, it was clear that it would be the one likely chosen by the Government.
Sam Carling (North West Cambridgeshire) (Lab)
I am troubled by the unpleasant allegations the hon. Gentleman is making. It would have been pleasant if he had come to talk to me about his concerns at any point over the last few months rather than he and a member of his staff attacking me on social media about this. It is not great.
The hon. Gentleman is raising process concerns. I am sure we all want to see a proper process. Why was it that he went on to social media and made quite a large number of claims about Labour MPs being pre-briefed of an apparent announcement that never happened—claims that therefore cannot possibly have been true, and were not?
Ben Obese-Jecty
I would bounce that back at the hon. Member and ask him why he never came to me or any of the other Huntingdonshire MPs to ask about proposing an option that would split Huntingdonshire in two. The hon. Member told the BBC last summer:
“A Mid Cambridgeshire council would allow rural areas across East Cambridgeshire, Fenland and parts of Huntingdonshire to form an authority that can deliver effectively on residents’ priorities, while a Greater Peterborough council encompassing the most high-growth areas of northern and western Cambridgeshire could better regulate and plan that growth.”
Nonsense. I am fascinated to know how an almost entirely rural Mid Cambridgeshire county council is supposed to thrive when it has no basis for economic growth. The Greater Peterborough council would encompass
“the most high-growth areas of northern and western Cambridgeshire”.
I wonder which authority the hon. Member’s constituency is within.
Jim Shannon (Strangford) (DUP)
In Northern Ireland some 10 years ago, we had local government reorganisation that promised significant savings and more efficiency. Unfortunately, on neither of those two occasions were they delivered. Does the hon. Gentleman agree that when looking at what others have done, as he has outlined, perhaps it is time to see where things went wrong and learn lessons from what we did and did not do right?
Ben Obese-Jecty
I concur with the hon. Gentleman. There is absolutely an opportunity here to learn from previous mistakes and make sure that they are not repeated when we drive this forward in the new year.
In early July, news began to leak out from the Local Government Association’s annual conference that Peterborough city council suddenly seemed to be aware that option D was going to get the nod. Word spread quickly among Cambridgeshire senior executives that option D was going to be selected. Who was leaking that information, and why was I left to announce it on ITV News Anglia so that people could see for themselves that the process under this Government was on the cusp of selecting the Labour-proposed option, as has happened in local authority areas across the country? Strangely enough, the response received on Friday to a freedom of information request to Peterborough city council was not able to be answered. I eagerly await the response to my own subject access request in a few days’ time.
It is simply a disgrace that the Government would treat Cambridgeshire residents with this level of contempt by leaking the outcome of a decision that appears to have been almost certainly predetermined to a privileged few, allowing those who have been given the information to achieve a head start and for favoured businesses to gain a competitive advantage, and affecting decisions on employment and education opportunities and future investment decisions.
Ben Obese-Jecty
No, I will carry on.
The announcement by the former Secretary of State for Housing, Communities and Local Government on 16 July therefore makes little sense. He said:
“On Cambridgeshire and Peterborough and West Sussex, I am not making announcements today, because further time is required to get the decisions right.”—[Official Report, 16 July 2026; Vol. 789, c. 1097.]
Could the Minister outline precisely what was meant when the former Secretary of State stated that further time was required to get the decisions right? Can he state definitively how much time is required, and can he articulate what specifically is in danger of being got wrong?
Alison Griffiths (Bognor Regis and Littlehampton) (Con)
My hon. Friend just mentioned West Sussex, which has also seen the deferral of any decision and a request for a third option despite the fact that the democratically elected councils had offered up two of their own proposals. We are still waiting for a decision and the way forward is still unclear. Does he agree that in both Cambridgeshire and West Sussex, this Government’s inaction and indecision are causing real harm to our constituents because all our council officers are taking so long to deliver this?
Ben Obese-Jecty
I agree with my hon. Friend. It is absolutely key that we get clarity on the timeline for this decision process—when it will be taken and when we can expect to hear—because there are local elections to prepare for next year and people need to know exactly what is going on.
Pippa Heylings (South Cambridgeshire) (LD)
Local authorities and council leaders were asked to produce evidence-based proposals according to the criteria laid out by the Government, and they did so, but since then, as we have just heard, all we have seen is uncertainty and a vacuum of decision making at a time when councils should be gearing up for the local elections for the new unitary authorities next May. Does the hon. Gentleman agree that we would like to hear two things from the Minister? First, in terms of the criteria, will it be the original criteria laid out by the Government that will be used to determine what the new unitary authorities will look like, and secondly, what timeline—
Ben Obese-Jecty
I agree with the hon. Member. We urgently need clarity. On the statement that was made before recess, we saw a huge amount of discontent across both sides of the House with the decisions that had been taken previously, and it is essential that we get real clarity on exactly what the process is going to be. I appreciate that the Minister has come back into his role having had some time away and may be having to catch up, but I assure him that the strength of feeling is high.
Charlotte Cane (Ely and East Cambridgeshire) (LD)
Will the hon. Member give way?
Ben Obese-Jecty
I will make a little progress.
Further to this, in his letter of 16 July, somewhat contradictorily, the former Secretary of State, the right hon. Member for Streatham and Croydon North (Steve Reed), stated:
“I have decided that more time is needed to consider which option, if any, to implement at this time in Cambridgeshire and Peterborough.”
We now have a new—old—Secretary of State. Can the Minister clarify whether the Secretary of State also requires more time in order to make a decision? Whether she does or does not, can the Minister clarify when the Secretary of State plans to have made her decision by? Her Department has held no further discussions with Huntingdonshire district council, so what precisely is in need of further discussion that warrants a delay of two months? Can the Minister outline why there has been a delay? Can he also clarify when Labour MPs were informed of the delay to a decision in Cambridgeshire and Peterborough in the first place?
I ask the Minister to clarify, on the record, whether his departmental colleague, Baroness Taylor, the Parliamentary Under-Secretary of State, participated in a meeting with Labour MPs and councillors on Wednesday 15 July 2026, during which local government reorganisation in Cambridgeshire and Peterborough was discussed. I ask him to choose his “yes/no” answer to that question very carefully, lest he might later be accused of misleading the House.
My position remains extant: I back a Huntingdonshire unitary authority, which is known locally as option E. It is the option that was overwhelmingly backed by councillors from all parties across Huntingdonshire district council. Disappointingly, the only people not to have backed this option are Huntingdonshire’s two other Members of Parliament. I maintain that a united front in this respect would have sent a stronger message to the Government.
I have led two debates in Parliament about local government reorganisation, both of which highlighted the potential issues that arise from getting the decision wrong. The more recent of those debates was last November and during it I provided an in-depth assessment of why option D specifically was unworkable. It is almost as if I expected the Government to stitch up the decision. I will reiterate the points that I made then for the benefit of the Minister who is here today.
Option D rips Huntingdonshire in half, creating east and west Huntingdonshire. There is a significant risk in attempting to disaggregate Huntingdonshire district council. There is a lack of precedent and an absence of lessons being learned, not to mention the destruction of local identity in Huntingdonshire, which is already stronger than local identities elsewhere in Cambridgeshire, particularly in separating Huntingdon from Godmanchester and St Ives. Disaggregating Huntingdonshire district council would also come with greater transition costs and affect service delivery.
Peterborough is a basket case. It is estimated that 11% of Peterborough’s budget is needed simply to service its own debts, with 80% needed to fulfil its statutory adult and children’s social care obligations. How on earth does it plan to run all the other existing county and district functions on a 9% budget?
Peterborough council’s debt gearing is 91%, against a national benchmark of just 50%. Under the Chartered Institute of Public Finance and Accountancy’s local authority financial resilience index analysis, Peterborough is rated as high-risk for its overall level of reserves, its unallocated reserves, its earmarked reserves, its interest payable or net revenue expenditure, its gross external debt, its fees and charges to service expenditure ratio, its council tax requirement or net revenue expenditure, and its growth above baseline. Huntingdonshire is not deemed to be high-risk in a single one of those categories.
Ben Obese-Jecty
No, I am going to carry on.
The option D business case itself states:
“As Peterborough has historically required exceptional financial support and comes from the most financially challenged position, increasing the scale does not necessarily provide the desired resilience. Reserves still remain low. The cost of servicing debt continues to eat into a significant proportion of the net budget and the funding headroom is tight. This could be mitigated by resizing services in line with available funding.”
Option D provides a significantly lower level of reserves, leaving it more vulnerable to shocks. The reserves of Greater Peterborough are comfortably the lowest in Cambridgeshire at just 16%, which is again deemed high-risk. By comparison, Huntingdonshire would be 42%.
On employment, we need look no further than the percentage of universal credit claimants in the local authority; in Huntingdonshire, it is 2.8%, while in Peterborough it is 8%, which is far and away the highest rate locally; Peterborough has the highest unemployment rate in Cambridgeshire. Greater Peterborough is also projected to have the highest prevalence of education, health and care plans, and the greatest risk of special educational needs and disabilities escalation. At present, Huntingdonshire has the second lowest rate of EHCP prevalence in Cambridgeshire.
This analysis strongly suggests that the system would all but immediately collapse. Greater Peterborough will have the highest spend per resident for adult social care and for children’s social care, more than double that of the other two unitaries, as well as the highest SEND spend per resident and the highest percentage of homeless households, at nearly double that of Greater Cambridge.
It is akin to the Berlin Wall being put up overnight, condemning one half of Huntingdonshire to eking out an existence in the bleak Peterborough Democratic Republic while the eastern half enjoys the trappings of a slightly better existence in the Federal Republic of Mid Cambridgeshire. But will we? Is Mid Cambridgeshire any more viable than Greater Peterborough? No, it is not. A unitary authority for Mid Cambridgeshire would be centred upon St Neots as the biggest town, compared with Cambridge or Peterborough in the neighbouring unitaries.
The option D business case barely even attempts to sell the viability of Mid Cambridgeshire, stating:
“It encourages reflection on ensuring the resilience of all unitaries, especially Mid Cambridgeshire”.
It goes on to outline that
“targeted action can be taken to sustain its market, towns and rural communities”
and that this model safeguards the rapid growth trajectories of the two city regions. It makes no effort to address the challenges that this would leave Mid Cambridgeshire to face.
Charlotte Cane
I draw Members’ attention to my entry in the Register of Members’ Financial Interests as a district councillor on East Cambridgeshire district council. One of the other big problems for this proposed Mid Cambridgeshire unitary is that it will have most of the soil-affected roads in Cambridgeshire, which are really expensive to maintain, and most of the internal drainage boards, which need significant funding to keep our market towns and villages dry so that people can live in them. It will be a very challenging unitary to run financially.
Ben Obese-Jecty
I agree. The numbers that I saw were terrifying. I think somewhere in the region of 80% to 90% of Cambridgeshire’s peat roads would be based in the Mid Cambridgeshire authority; the roads budget itself simply would not be able to cope with that. I did not know the point about the internal drainage board and the mid-level commissioners, but having seen some of that infrastructure I can well imagine that the bill for replacing that will be terrifying if it falls solely on Mid Cambridgeshire.
The business case also states that Mid Cambridgeshire’s
“proposed lower levels of funding may result in difficulty in being able to deliver services to residents within its budget envelope. A significant transformation programme will be required to ensure services are resized accordingly”.
We can read that to mean “reduced”. The business case later adds that
“Mid Cambridgeshire may face particular challenges in both capacity and funding for high-cost statutory services”,
and that Mid Cambridgeshire
“in particular, may require additional support to ensure it can participate fully and equitably in regional initiatives”.
That is very reflective of the sentiment expressed by the hon. Member for North West Cambridgeshire about the land grab for high-growth areas that Greater Peterborough is attempting. Mid Cambridgeshire will be set up to fail.
Daniel Zeichner
The hon. Member may remember the Cambridgeshire and Peterborough independent economic review, which was commissioned during the time of Mayor James Palmer. That identified three discrete economies within the area. Is that significant to this debate?
Ben Obese-Jecty
I am not aware of that; I have not seen the detail of the report so it would be remiss of me to opine on it, but I have read the business cases in detail. While splitting the county into those three distinct regions may look like it makes sense, the travel regions for those areas are very distinct and do not necessarily reflect the make-up of the option D business case.
It is worth highlighting that in the option D proposal the travel-to-work patterns and commercial activity data clearly illustrate that the movement of people within Mid Cambridgeshire is limited to within each of the three component areas of Huntingdonshire, Fenland and East Cambridgeshire. There is little in the way of movement between them, which begs the question of why three distinct areas would then form a viable unitary authority. The evidence clearly shows that Huntingdonshire would benefit from being its own unitary authority, rather than its being split in two, given that there is little in the way of movement from the northern part of Huntingdonshire into Peterborough, and vice versa.
When we look at option D further, we see that it does Mid Cambridgeshire no favours when it comes to gross value added per capita. The two councils with the highest GVA per capita are Cambridge and South Cambridgeshire, which are to be combined to form Greater Cambridge. The next two highest are Peterborough and Huntingdonshire, with the wealthier half of the latter to be merged into Greater Peterborough. That leaves the two councils with the lowest GVA per capita to be combined, along with half of the next lowest, resulting in a Mid Cambridgeshire authority with a GVA per capita that is roughly 50% of neighbouring Greater Cambridge. The lack of potential for growth in Mid Cambridgeshire is baked in by design. If that option is selected by the Government, I would like to understand how Mid Cambridgeshire is supposed to wash its own face.
“Splitting Huntingdonshire could weaken this cohesion and reduce its prominence relative to neighbouring authorities.”
That is a direct quote from the option D business case, which identifies the threat to Huntingdonshire alongside the lack of viability of either Greater Peterborough or Mid Cambridgeshire. We are now in the crucial final phase prior to the final decision on the outcome of LGR in Cambridgeshire and Peterborough, and what that decision will mean for the historic county of Huntingdonshire. Will it continue or will it be consigned to history? Mr Speaker marked Huntingdonshire Day this year, posing with the Huntingdonshire flag. That may never happen again.
I have outlined the concerns about the proposed changes, the manner in which those changes have been discussed in secret between Labour party politicians and members, and the concerns regarding their feasibility. I have outlined why option D—the option we believe the Government are most likely to select based on conversations among officials within Cambridgeshire—or a variant thereof would not work and would leave Huntingdonshire in a far more perilous state than it is anywhere near today. I have outlined how the business case for option D itself repeatedly raises concerns about the viability of a Mid Cambridgeshire unitary authority—something that those within Huntingdonshire widely believe will fail within a few years.
From a scheduling perspective, every day that goes by without a formal decision being taken on the future of local government reorganisation in Cambridgeshire and Peterborough further jeopardises the likelihood of implementing it successfully. It is vital that a swift and uncontroversial decision is made in order to give officers the best opportunity to facilitate the transition if we are to realistically meet the May 2027 election timetable currently in place.
It is evident that I could have spoken about this issue for a good while longer. That is before discussing the effect it will have on both the local plan, which will now likely be voted on before a decision has been taken, and on Project Fairfax, the defence technology cluster at RAF Wyton for which a memorandum of understanding is already in place with the Ministry of Defence. That project is crucial for fuelling growth in Huntingdonshire and facilitating the growth in every postcode that the new Prime Minister has pitched. Can the Minister confirm what discussions his Department has held with the MOD regarding the impact of LGR on the feasibility of delivering Project Fairfax?
Option E—a Huntingdonshire unitary authority—would allow Project Fairfax to flourish. It is the option that Huntingdonshire voted for. Centred around the existing boundaries and an established regional identity, it would create the institutional stability required for long-term investment and growth, and would ensure consistency in leadership, existing teams, partnerships, development pipelines and investor relationships.
This is the third time I have made the case for Huntingdonshire to the Minister, so he knows the arguments well by now. He knows that there is no strong argument for pursuing option D at this late stage. I hope that the Secretary of State heeds the details in this speech. Option D simply will not work, and nobody wants it. It would weaken the direct relationship between a defined region and local government, divide the community and destroy an identity. If nothing else, pursuing it would make his party unelectable in Huntingdonshire for a generation.
“The public deserves better—better policies that support better outcomes and are better connected to the places people live. Putting place over political party demands collaboration and long-term decision-making within a stable governance structure”.
Those are not my words; they are from the Cabinet statement on rewiring the state on 31 July. The Prime Minister should stay true to his word and apply his aspiration to Huntingdonshire.
The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Jim McMahon)
It is a pleasure to serve under your chairmanship, Mr Twigg. I congratulate the hon. Member for Huntingdon (Ben Obese-Jecty) on securing this debate on local government reorganisation in Cambridgeshire. I am grateful for the opportunity to set out the Government’s approach, the progress made so far and the opportunities presented by this once-in-a-generation reform.
Before I get to the main points, let me say that it is clear from the contributions of the hon. Member for Huntingdon and my hon. Friends the Members for Cambridge (Daniel Zeichner) and for North West Cambridgeshire (Sam Carling) that they are passionate about local communities—that is what makes our Parliament great—but that there are sometimes quite different views about how to achieve what they want. Life would be wonderful for central Government if at a local level there was a single answer to the question and our job was merely to say, “Thank you very much for the submission. Everyone agrees on that, and it makes complete sense.” Of course, that is not the position that the Government find ourselves in. We have to arbitrate over many competing views. We receive the proposals without predetermination, on the basis on which they were submitted, and we have to act in good faith. I assure the hon. Member for Huntingdon and others that, as a Minister, I will do that with diligence and in good faith.
I will come to the hon. Gentleman’s exact points later, but let me say that it is not helpful to make accusations in this place or on social media that seem to cast aspersions on the process. I know how passionate people are about their places, their identity and the future of their local authorities, but it is important that we set the record straight. I will attempt to do that and to answer some of the hon. Gentleman’s questions.
Sam Carling
Will the Minister join me in congratulating all Cambridgeshire and Peterborough councils on the collaborative way in which they have worked together on this process? Despite coming up with different options that they may or may not back, they have remained in a position where they have been taking to each other throughout. Those dialogues have been ongoing and I think that is something to be commended.
Jim McMahon
We have seen that across England in the two-tier areas. In many cases, people have come together across party lines because it is far better to agree a comprehensive proposal locally and submit it to Government than to have it done to them in another way. If there is more local organisation and agreement at that level, it is far better for local people and for the decision made later in the process.
Even where there is difference in nuance—there will be differences in some elements—the core fact remains that the two-tier system just is not working. For too long, too many areas have been served by complex two-tier structures that divide responsibilities, duplicate costs and blur accountability. Residents often struggle to know which council is responsible for which services; decisions to build homes or grow our towns and cities take longer than they ought to; and resources can be spread too thinly.
The Government’s aim is simple: to have clearer structures, stronger councils, quicker decisions, more homes and better services for local people. As the Prime Minister said, ending the two-tier system of local government
“is a nettle…that’s got to be grasped.”
If we want to devolve more powers out of Westminster, we need a structure for local government in England that is equal across the board. Reorganisations are the building blocks for devolution, and I am really pleased with the progress made so far. Decisions have been taken in 19 of the 21 areas, and we are now working with councils to get on with the job of implementation.
I turn to the constituency of the hon. Member for Huntingdon. I understand his wish for further clarity about the previous Secretary of State’s decision and the next steps for reorganisation in Cambridgeshire and Peterborough. On the decision itself, the former Secretary of State decided that more time was needed to consider which option, if any, to implement in that area. The decision was not taken lightly, and I say to the hon. Member for Huntingdon now that we will consider decisions on local government reorganisation closely. They represent a fundamental change that will affect residents for generations to come, so it is important that we make the right decisions in the right way.
We will aim to make decisions on which option, if any, to implement on or before October this year. That will still allow for elections to new councils in May 2027 before they go live in April 2028. I am grateful to the hon. Member, and to other MPs and councils in Cambridgeshire and Peterborough, for their efforts to date. I assure him and them that we remain absolutely committed to delivering reorganisation across the area, and we will provide further updates shortly.
On reorganisation more broadly, we recognise that it is a demanding process, and we would not have made the progress we have without the hard work and dedication of local councils and officials. The Government have announced that £63 million will be made available to support the transition across the 21 reorganised areas. As well as the unprecedented £900,000-worth of transition support to each new unitary, areas will receive up to a further £150,000 per each new unitary council to support leadership capacity and continuity in children’s services, adult social care and public health. That will bring the total transition funding for LGR areas to more than £1 million per new unitary created. In addition, up to £1 million of funding in total will be available to support the small number of areas with complex fire and rescue authority transitions, building on the funding already given to Surrey.
Ben Obese-Jecty
Should the Government choose an option that sees the Huntingdonshire area split in two between two unitary authorities, what additional support will be given to fully disaggregate the district council’s responsibilities, given the complexity involved? Could the Minister also offer any clarity on local services? For example, the boundary would go in between Huntingdon and Godmanchester, which are separated only by a small bridge—
Jim McMahon
I am keen not to predetermine what decision we may or may not take. It may well be that a decision leads to disaggregation, but equally it may not, and until we get to the point of reviewing the proposals put forward, we are not in that position. However, as a matter of principle, I accept that having a new unitary authority made up of districts in their entirety, where assets, liabilities and workforces are transferred en bloc, is different from having to disaggregate because it is being split in a number of different directions. I will certainly take that away for consideration; it is a fair point.
Hopefully the hon. Gentleman acknowledges that this is a comprehensive financial support package, which is about supporting local authorities. We should not lose sight of the fact that reorganisation is a real opportunity not just for more efficient services and a clear line of sight on responsibility, but for devolution and our communities. It is an opportunity to give local leaders the funding, powers and capacity to drive growth, to build the homes their communities need, to deliver better public services and to improve the lives of the people we serve.
I hope that, whatever differences of opinion there are, there is the same collaboration at a parliamentary level as I have seen at a local level. I see that local authorities, councillors and officials are working hard and recognising the direction that the Government have set, with many realising the advantages that will come with a unitary authority with a single mandate for their area. Importantly—and hopefully all Members have heard this—the new Prime Minister is coming from being mayor of a major city region, hungry for more devolution and recognising that this country, for far too long, has held power, resources and decision making in this place when it should be out across the country instead.
Question put and agreed to.
Local Authorities: Aluminium Recycling
(1 day, 16 hours ago)
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Tessa Munt (Wells and Mendip Hills) (LD)
I beg to move,
That this House has considered aluminium recycling and local authorities.
It is a pleasure to serve under your chairship, Mr Twigg. I am grateful to have secured this debate, as I believe that what I am about to set out is one of the most significant and least understood failures in our country’s local authority waste and recycling policy. It concerns aluminium, the most valuable material in every household recycling bin in Britain.
We should ask ourselves, what happens to the aluminium cans that residents put out for the council to collect? What do councils do with that aluminium? Is it managed in the best possible way? And how does the disposal of aluminium impact the Government’s critical minerals strategy, aluminium recycling targets and circular economy objectives?
For many years, I have collected used aluminium from businesses in my constituency. Once I have collected enough, it goes to our local scrap merchant, and I donate the money to local charities. Recycled aluminium has roughly 10 times the value of mixed plastic waste and several times the value of paper or cardboard. As aluminium can be recycled indefinitely, it is the most valuable material that councils collect from households by a very wide margin.
I knew that a number of councils in my region, including my own council, had an efficient kerbside collection scheme and return much of the collected aluminium’s commodity value to the council’s coffers, but I wondered about the rest of the country. How much aluminium is recycled each year? What happens to it once councils have collected it? Are councils getting a fair income from its commodity value? Is it recycled in the UK or sent abroad? And what, if any, are the Government’s regulations regarding the export of aluminium? Those are some of the questions to which I wanted answers.
Earlier this year, I submitted a freedom of information request to more than 300 councils across the UK. I asked them what happens to the aluminium collected from their residents’ kerbside recycling. While I waited for replies, I did some further research on the subject. I discovered from the House of Commons Library that about £1 billion-worth of scrap aluminium is sold abroad each year by waste management companies. Industry groups told me that manufacturers are spending about £5 billion importing reprocessed aluminium.
According to the Aluminium Packaging Recycling Organisation, which I would like to thank for being here today, we use around 12 billion aluminium cans every year.
Aphra Brandreth (Chester South and Eddisbury) (Con)
The hon. Member is making an important point about the value of the aluminium we throw away. This is not just about drinks cans; blister packs also contain valuable aluminium but are not routinely recycled at the kerbside by many councils. My constituent, Yvonne, has done amazing work in one of our local villages trying to gather together these blister packs for recycling. Does the hon. Member agree that we should be speaking with councils and encouraging them to recycle things like blister packs at the kerbside?
Tessa Munt
Yes, of course I agree. The more we can do to recycle everything that we potentially throw away, the better.
Around 60% of the 12 billion aluminium cans used each year are exported for recycling, with only 40% recycled in the UK. I also learned that, although we currently have a high recycling capacity, next year we will have the capacity to recycle every aluminium can used in the UK. By this time next year, there should be no need whatsoever for any council in this country to send its aluminium cans abroad. I shall return to that point.
Environmental groups revealed that every tonne of aluminium recycled in the UK saves 95% of the energy needed to produce primary aluminium. Of equal importance, recycling in the UK avoids the carbon emissions of shipping material to smelters in China, India, the USA, Thailand and Greece. I mention those countries because, according to the manufacturers’ trade body, Make UK, and aluminium industry analysts AL Circle, that is where 84% of our aluminium scrap ends up. Exports of aluminium to the USA are particularly worrying, because they have surged by almost 1,200% from 2,000 tonnes to 24,000 tonnes in just 12 months. Aluminium scrap is exempt from President Trump’s tariffs on primary aluminium, so the waste management companies are profiteering by sending as much scrap aluminium there as they can.
In April, answers to my FOI requests began to arrive. The results were revealing. Far too many councils could not say where their aluminium ended up. Too many have no policy requiring their aluminium to be recycled in the UK and, I have since discovered, too many councils that do have a UK recycling requirement are blissfully unaware that their aluminium is being exported abroad by private waste management companies. The most shocking thing my research revealed, however, was the number of councils that do not know the value of their aluminium waste and the number receiving little or no income from the sale of this valuable commodity. Equally alarming was the number of council leaders who refused to answer my question about income, quoting commercial sensitivity.
I found that those councils that understand the value of their aluminium and manage their recycling well are retaining significant amounts of money each year. However, councils of similar sizes and demographics, sometimes using the very same waste management company, are losing money for reasons that simply make no commercial sense. I will give a few examples: Cambridgeshire county council made about £1.6 million from aluminium recycling last year; West Sussex county council made about £1 million; Surrey county council made £2,000; Warwickshire county council made £500; and Lancashire and Kent county councils made nothing.
Mike Martin (Tunbridge Wells) (LD)
As a Kent MP, I am consistently amazed at how rubbish the Reform leadership of Kent county council is, but of particular note is the fact that when Reform came in, Kent was going to be the flagship for its DOGE, which is about saving loads of money. Does my hon. Friend know whether the council got on to that and renegotiated the contract? Are there any other options? Did it look into this? Can she tell me more about her interactions with Kent county council?
Tessa Munt
No, Kent county council has probably done absolutely nothing. In a moment, I will give my hon. Friend an example of where a council has changed hands—control changed hands and the council did a really brilliant job. There is money to be had and, when councils are up against it trying to provide for adult social care, children’s social care and, frankly, every flipping pothole, it is amazing that they do not get on and tune into this.
County councils are not alone in that income discrepancy. It happens in unitary authorities, too: South Gloucestershire council made £500,000 and one of my own councils, North Somerset, made £400,000, but North Lincolnshire made absolutely nothing. Doncaster city council made £300,000, but Coventry city council and Leicester city council made nothing. Another interesting example is that the Labour-led Nottingham city council made an impressive £300,000 from the sale of its aluminium, but the Reform-led Nottinghamshire county council, which serves three times the population of the city itself, made absolutely nothing. Something went awry there.
According to the Local Government Association, aluminium cans are worth some £54 million per year to English councils. If the responses I have received to my FOI questions are anything to go by, that seems to be a sizeable underestimate. I therefore want to return to this question of commercial sensitivity. I understand that contracts between councils and waste management companies can contain some commercially sensitive terms and information; however, surely how much income a council earns from the sale of recyclable materials collected from its residents is a matter of public interest and should not be hidden behind exemptions. Residents who sort their recycling every week are entitled to know where it is going, if for no other reason than it encourages them to keep recycling and to recycle more. Secrecy does not help anyone in this arena. The Freedom of Information Act 2000 rightly provides exemptions for genuinely commercially sensitive information, but I trust that the Minister will agree that income from aluminium recycling is hardly a trade secret. It should be a matter of public record.
Both councils in the Minister’s constituency replied to my freedom of information requests by stating that they could not identify income from aluminium. However, Hull city council informed its own scrutiny committee that aluminium cans are worth £900 to £1,000 a tonne and that it takes 80% of that value, and East Riding of Yorkshire council told its committee that revenue was £1.6 million. Does the Minister accept that councils that publish this information for a council committee meeting should be more transparent with their residents and the public? Can she assure me that she will offer guidance to ensure that councils always release such information? The Local Government Association’s “wealth from waste” review says that councils across the country receive only around 28% of the total financial value of the materials that they recycle. Waste management companies retain the remaining 72%. That disparity cannot be right.
Some councils have refused to accept that financial imbalance and have resorted to going to the courts to receive a fair income for their waste materials, as my hon. Friend the Member for Tunbridge Wells (Mike Martin) referred to in relation to Kent. To give an example, in June 2024, Buckinghamshire council took its waste management company, FCC Environment, to the High Court. The council claimed that the 75%/25% revenue share in favour of the waste management company did not reflect the council’s entitlement. The High Court agreed, and the council was awarded substantial funds for underpayments going back as far as 2016. As the Minister knows, FCC Environment now controls waste management for the councils in her constituency, both of which have extended their contract to 2030.
South Ribble borough council is a clear example of action being taken after political change, as was referred to by my hon. Friend the Member for Tunbridge Wells. When Labour took control of South Ribble, the new administration immediately terminated the contract with the waste management company, brought services in-house and saved £178,000 in the first year. Where there is political will, injustices can be corrected. When local government finances are so tight, I find it puzzling that so many councils let this source of extra income slip through their fingers. I wonder how much children’s and adults’ care could be delivered and, as I said earlier, how many potholes could be filled with the extra income highlighted in those examples.
The issue is becoming increasingly important to our councils because aluminium is fast replacing plastic and glass across a wide range of drinks and consumer goods. Industries are turning to aluminium more and more. It is lightweight, substantially more recyclable and its quality is not time-sensitive, unlike that of plastic and glass. Many brands also see it as increasing their sustainability credentials, especially among younger consumers. In the last few years, the use of aluminium cans has expanded from a few soft drinks and craft beers into spirits, wine, coffee and water. Last year, Diageo sold more than 80 million cans of Baileys alone, and Marks and Spencer sold 35 million aluminium cans containing a variety of drinks—an increase of about 1 million on the number sold in the two previous years. Even the whisky industry is looking to aluminium to replace its traditional glass, although I am not sure what some hon. Members will think of that.
I am sure that the Minister sees my point. Year on year, right across the country, our councils’ residents are purchasing increasing numbers of aluminium cans, our councils are collecting an increasing number for recycling and, at the moment, waste management companies are allowed to sell increasing quantities of that precious resource abroad to the highest bidder.
I anticipate that when she replies the Minister will offer the packaging recovery notes system and the coming deposit return scheme as possible solutions. I plan to seek debates on both topics later in the year, and my research tells me that the packaging recovery note system has been plagued by fraudulent scams that open the doors to even more aluminium exports. The Minister will know that the Local Government Association claims that the system does not channel revenue to councils and has called for changes. As for the deposit return scheme, despite the benefits that it may bring the Government are allowing the drinks companies and the supermarkets to manage it, with no regulations whatsoever to restrict them from exporting as many aluminium cans as they want.
When my constituents put their cans in their recycling bag or bin they consider that recycling, and in one sense they are correct. It has become very clear from my research that when councils hand over their waste to a private material recovery facility most consider that to be recycling, but that is not the case. All a recovery facility does is divide the waste into different components. Consequently, when the aluminium comes out of such private facilities it has not been recycled; it is nothing more than crushed and broken bits of aluminium. I raise that point because the definition of “recycling” is important. The current confusing definition allows councils to be persuaded, whether honestly or otherwise, that their aluminium is recycled, and recycled in the UK, when too often, after it leaves the recovery facility, waste management companies sell it to the highest bidder abroad.
It is important that the Minister and her Government establish some clarity on this issue, so I would like to know the Government’s definition of recycling and its main characteristics, and at what point in the process the Government consider items such as aluminium to be actually recycled. To try to answer those questions for myself I took some of my aluminium to the largest aluminium can recycling centre in the UK: the Novelis reprocessing plant in Warrington. I thank the amazing Allan Sweeney and his team at Novelis for showing me around the plant. I saw how crushed and broken aluminium cans are cleaned, melted down and cast into brand-new 27-tonne ingots—they are huge.
I also saw the almost-completed £75 million expansion of Novelis’s facilities, which is jointly funded by the Government. Once operational it will allow all the UK’s used cans to be recycled in the UK. Each year in Warrington 8 billion cans are reprocessed, ready to be rolled into new aluminium cans and bottles. For me the question was answered right there in Warrington: aluminium is not recycled until it is reprocessed ready to be made into a new product; up to that point it is just scrap metal. That definition would resonate with my constituents and with all those who take the time to recycle their aluminium.
I will return to how that all impacts the Government’s critical minerals strategy and their circular economy objectives. I believe that there is no question but that it does impact them, and in a manner that makes a mockery of the Government’s intentions. I will give the Minister three very clear examples.
First, the critical minerals strategy categorises aluminium as a national strategic asset, central to our defence, infrastructure, manufacturing base, circular economy and net-zero targets. It says that the UK must secure access to such critical minerals; the amount of scrap aluminium exported abroad each year seriously undermines that.
Secondly, one of the critical minerals strategy’s primary pillars is reducing exposure to volatile global markets, yet waste management companies are given free rein by the Government to export unlimited quantities of aluminium scrap into the very volatile markets that the critical minerals strategy says must be avoided.
Thirdly, circularity is central to the critical minerals strategy. As I have already pointed out, aluminium is infinitely recyclable and reprocessing uses 95% less energy than primary production. Exporting scrap aluminium breaks the circular loop that the critical minerals strategy says is essential for resilience.
All the research that my team and I have conducted so far this year has led me to conclude that many of our councils have a good understanding of the commodity value of the aluminium that they collect from the public. They manage it well through prudent procurement agreements and secure real value for money for their residents, but far too many fail to take the management of their waste seriously. They sign contracts that simply hand everything over to waste management companies, which then profit massively from aluminium and other materials’ value. Far too many believe that UK recycling policies are being adhered to, when in reality, the truth is shrouded from them and their aluminium is being sold abroad to the highest bidder, lining the pockets of the waste management companies.
I am well aware that the responsibility for this issue lies not with central Government but with the leadership at local government level. Might the Prime Minister’s devolution initiative help here? I urge the Minister and her Government to act now to stop scrap aluminium from councils all over the UK being exported by waste management companies. What those companies are doing undermines all the Government’s initiatives around the critical minerals strategy and circular economy initiatives.
Aluminium, that vital commodity to our country, should not be sent for recycling or reprocessing abroad while there is capacity to do so here in the UK. In conclusion, I ask the Minister to give me some reassurance that the Government will act on this matter before our national interests are further harmed.
Jim Shannon (Strangford) (DUP)
I thank the hon. Member for Wells and Mendip Hills (Tessa Munt) for setting the scene. The hon. Lady has done the House a favour in highlighting an issue that maybe not many of us were totally aware of—I know that I was not, until I did some research in Northern Ireland.
I will have a specific request for the Minister, as I always do. The hon. Member for Wells and Mendip Hills spoke directly about our environmental responsibilities, our industrial potential and the unique challenges faced by local authorities, and I wish to speak about the situation in Northern Ireland. I thank the hon. Lady for securing this debate, because when we talk about a circular economy, as she did, we must ensure that no part of this United Kingdom is left spinning its wheels in isolation.
I must remind the House of a fundamental structural difference. The 11 councils in Northern Ireland, including my own superb Ards and North Down council, are different animals compared with local authorities across Great Britain. They do not control schools or roads; their responsibilities are different. Instead, waste management and environmental health sits at the absolute pinnacle of their frontline responsibilities. It is one of the largest items on their balance sheets. When waste policy fluctuates, our local councils feel the shockwaves immediately.
Our councils have worked hard. According to the Department of Agriculture, Environment and Rural Affairs in Northern Ireland, our municipal recycling rates sit proudly at some 50%, but they are hitting a brick wall—a wall that is built out of unique geographical and market restrictions that I want to ask the Minister about. The Minister is always helpful in answering my questions. I appreciate that very much, and I know that she will come back to me with some indication of a way forward.
Unlike a council in the English midlands, which can simply chuck its baled aluminium on to a lorry and drive it down a motorway to a domestic smelting plant, a council in Northern Ireland faces severe market isolation. We have a smaller domestic market, fewer local reprocessors and a distinct lack of heavy infrastructure for secondary metal refining. The hon. Member for Wells and Mendip Hills referred to Novelis, and the indication was that it would be able to recycle all aluminium here in the United Kingdom. Northern Ireland needs a methodology for getting into that process. We do not have that at the moment.
To get our high-value aluminium to the main UK or European markets, our authorities must contend with the tyranny—I use this word on purpose—of distance and the shipping costs. Every single tonne of recycled metal must cross the Irish sea. That means that our local authorities are at the mercy of volatile sea freight charges, supply chain disruptions and—let us not mince words—the lingering regulatory frictions of the Windsor framework.
If a local council faces bloated logistical costs just to export its aluminium scrap to a mainland smelter, the economic incentive to invest in advanced sorting facilities begins to collapse. For us in Northern Ireland, this is chaos. It just does not work at all. I thank the hon. Member for Wells and Mendip Hills again for highlighting this issue. We cannot expect Northern Ireland’s ratepayers to foot the bill for structural market disadvantages. Respectfully, I say to the Minister that if the Government are serious about a UK-wide green transition, there also has to be targeted support. We need the Government to work with the Northern Ireland Executive to invest in local reprocessing infrastructure. It is time to focus on this issue.
Let us be clear: the people of my constituency of Strangford and across Northern Ireland want to do their bit for the planet, and our local government stands ready to deliver, but they cannot do it if they are economically stranded by a lack of market access. Let us give Northern Ireland’s councils the tools, freight backing and infrastructure support to ensure that a can thrown into a recycling bin in Newtownards in my constituency has the exact same value and future as a can thrown away in London, the midlands or across this great United Kingdom.
Sarah Dyke (Glastonbury and Somerton) (LD)
It is an honour to serve with you in the Chair today, Mr Twigg. I congratulate my constituency neighbour, my hon. Friend the Member for Wells and Mendip Hills (Tessa Munt), on securing this important debate, her excellent speech and her continued advocacy on the issue.
The Liberal Democrats are committed to delivering a circular economy where value is kept in the system, not thrown away—one that maximises the recovery, reuse, recycling and remanufacturing of products and that cuts costs for consumers and businesses, reducing exposure to volatile commodity prices, protecting the environment and creating new economic opportunities. Aluminium is one of the success stories of the circular economy and has an important role to play in this cycle. Aluminium can be recycled indefinitely without quality loss. Cans can be recycled and back on supermarket shelves within 60 days. Some 75% of all the aluminium ever produced is still in use today. Reprocessing aluminium uses 95% less energy and 90% less carbon than primary manufacturing.
Aluminium is a critical mineral and recognised as such by both the UK Government and NATO. Reprocessing it domestically protects the broader UK supply chain, supporting defence, construction and green energy infrastructure. However, the supply chain is increasingly vulnerable, with scrap aluminium being exported to Asia and the US, while our domestic reprocessing capacity has fallen. UK and EU reprocessing of UK scrap packaging fell from 83% in 2021 to 68% in 2024. Alupro’s projections show a further decline without policy intervention amid the impact of UK tariffs and instability in the middle east. That is despite UK capacity for reprocessing this material having increased in recent years following multimillion-pound investments.
Somerset’s focus on improving recycling rates has been a success. Nearly 150,000 tonnes of waste was collected, with 87,500 tonnes reprocessed here in the UK—over half of it within the county itself. Somerset Waste sends its scrap steel and aluminium to reprocessing facilities within the UK. However, as my hon. Friend the Member for Wells and Mendip Hills stated in opening this debate, the disparity in local authorities’ recycling arrangements varies widely.
Aluminium can be hugely profitable for local authorities. Somerset gains considerable income from its recycled aluminium, while others receive nothing at all. In addition, despite some councils specifically requiring their aluminium to be reprocessed in the UK, it is subsequently discovered that it has been exported to China. With the deposit return scheme due to launch in October 2027, councils stand to lose used aluminium cans, the most valuable material in recycling bins, from kerbside collection altogether. We are going to lose that most important and valuable recycling material, which generates an income for councils when sold as recycling—it is really important.
As my hon. Friend the Member for Wells and Mendip Hills outlined, transparency is really important here and it is much required. A recent poll found that the single factor most damaging public confidence in recycling is the lack of information on what happens to materials after collection. That indicates that greater traceability is not just supported by the public; it could drive higher recycling rates through greater public participation. Local authorities play a vital role in managing waste and reducing pollution, yet too many are being asked to deliver world-class recycling services on a shoestring budget. They must be properly funded and supported to deliver high-quality, consistent recycling services that maximise the value recovered from these materials, not left to patch together a postcode lottery of provision.
The Liberal Democrats have been keen to see changes to the waste management system that encourage more recycling. However, with extended producer responsibility live since October 2025 and simpler recycling live since April 2026, local authorities are already having to adapt to a changed landscape. The next major shift will be the deposit return scheme from October 2027. Once most aluminium is no longer collected at the kerbside, local authorities could lose a valuable revenue stream. Furthermore, despite these changes, some residents will inevitably continue to place their aluminium in kerbside bins, so can the Minister confirm whether local authorities will be able to claim that deposit for the aluminium items they continue to collect?
Aluminium recycling sits at the intersection of our climate ambitions, our industrial strategy and our local government funding crisis. To conclude, I want to ask the Minister to address three things. Can she confirm how the deposit will be treated for aluminium cans left in kerbside recycling after DRS launches, and will it contribute to the local authority collection costs? Will the Department for Environment, Food and Rural Affairs ensure that local authorities are properly funded to sustain high-quality recycling services through the transition, given the revenue that it stands to lose? What steps are the Government taking to close the loophole that allows UK-collected aluminium, including aluminium collected from councils with UK-only reprocessing requirements, to end up being processed overseas? I hope the Minister will give me some answers on that today.
Robbie Moore (Keighley and Ilkley) (Con)
It is a pleasure to serve under your chairmanship, Mr Twigg. I congratulate the hon. Member for Wells and Mendip Hills (Tessa Munt) on securing this important debate, and I thank her for the considerable work that she has done to examine how aluminium is collected, recycled and ultimately reprocessed across the country.
We know that this is a significant issue. In 2024, 287,000 tonnes of aluminium waste was generated in the UK, of which only 54.7% was recycled. Across its different uses, the aluminium industry contributes an estimated £9.4 billion to the UK economy, supporting sectors all the way from packaging to car manufacturing, energy infrastructure and defence. Of course, the Government have rightly recognised aluminium as a critical material.
Aluminium, as has been referenced, is one of the most valuable materials in the household recycling stream, and it is therefore vital that councils have a clear understanding of what they are collecting, what the material is worth and what happens to it when it leaves their possession. If neighbouring local authorities are receiving dramatically different returns from comparable aluminium material, as has been rightly pointed out by the hon. Member and others, why is that the case? It would be very interesting to know whether DEFRA and the Minister are looking at the scale of those differences nationally, as such disparities have been raised throughout the debate.
This is also a matter of public confidence. Residents are repeatedly encouraged to recycle—and rightly so—but they believe that what they are doing is having a positive impact on the environment. Surely they are also entitled to know what happens in the recycling process itself. If a council cannot say confidently where the aluminium ultimately goes, how can residents do so? How can elected councillors scrutinise what taxpayers are receiving and whether it is value for money? I hope the Minister agrees that greater transparency is needed throughout the whole system, and I would like to understand what steps the Government are taking to ensure that councils have the information and expertise they need to properly scrutinise the process and ultimately make the right decisions.
That leads me on to the second major issue that has been raised in the debate, which is the sheer amount of valuable aluminium scrap that is leaving the United Kingdom. The figures are striking: the UK currently exports almost half the aluminium scrap that it produces, and at the same time, the UK spends around £5 billion importing aluminium. Make UK has warned that the rate of export risks affecting future industrial resilience, and estimates that the domestic aluminium scrap sector may need to grow by around 25% every year to meet the anticipated demand from British industry.
To be clear, the Conservatives strongly believe in free trade. Aluminium scrap is traded internationally, and it would be wrong to suggest that every ton of exported scrap represents a policy failure. However, the Government should not ignore the wider strategic consequences when increasingly large quantities of a material that they have designated as critical are leaving the country when demand from British industry is expected to rise. The Government have designated aluminium as critical because it is essential to defence, energy, car manufacturing and other key industries, so it is surely reasonable to ask whether we are retaining enough of our own secondary aluminium to meet our growing requirements.
We have British businesses investing in recycling infrastructure right here. British industries are demanding more aluminium, but councils are exporting large quantities of that material abroad. That cannot be right, so I ask the Minister what proportion of exported aluminium could be processed in this country. What assessment have the Government made of the implications of scrap aluminium exports for British industry and manufacturing, and what conversations is DEFRA having with the Department for Business, Innovation, Science and Trade to ensure our recycling policy and our industrial strategy are pulling in the same direction?
That brings me to the extended producer responsibility and packaging. There is huge concern that the sheer cost of Labour’s implementation of these measures is having a detrimental impact. The Office for Budget Responsibility has estimated that EPR will raise around £1.6 billion a year on average over the first five years, but it also recognises DEFRA’s estimation, based on its own information, that EPR is not likely to have a material impact on recycling rates or packaging waste volumes over that period. If businesses are being charged that much, and the cost of those measures is ultimately being passed on to consumers through higher prices, Ministers must be able to show how they are ultimately improving recycling rates in this country. I therefore ask the Minister how much more recycling of aluminium EPR will actually deliver, and how much of that funding will result in better local authority recycling services and decision making. We cannot end up with a system where businesses, consumers and families pay more, but recycling rates ultimately do not move at all. It is vital for the success of EPR that these measures are open and transparent.
In aluminium, Britain has an extraordinarily valuable and useful material. It can be recycled time and time again and supports industries that are worth billions of pounds to our economy. The Government themselves have designated it as critical, yet we are still exporting almost half of the aluminium scrap we generate. Local authorities do not always know where the material they collect goes, or where it ultimately ends up. Some appear to be securing dramatically better returns for their aluminium than others, while at the same time, British recycling businesses are investing in capacity and British manufacturers are increasingly needing the very aluminium that those local authorities are allowing to leave this country. That should concern Ministers.
The previous Government implemented much of the framework that is in place; the challenge for the current Government is to ensure that that framework works effectively. If businesses are being asked to meet enormous costs through EPR, they must see better recycling rates as a result. If councils are collecting valuable material, taxpayers deserve to know where it goes and whether they are receiving proper value for it, and if aluminium is genuinely a critical resource, Government policy should reflect that reality. We need a system that recycles more; uses that recycled material at home, not necessarily abroad; gives councils better value for money; protects businesses and consumers alike from unnecessary costs; and strengthens British industry. Ministers now need to show that they are capable of meeting that challenge.
The Minister of State, Department for Environment, Food and Rural Affairs (Emma Hardy)
It is a pleasure to serve under your chairmanship, Mr Twigg. I welcome all hon. Members back to Westminster Hall; it is good to start with a debate where there is much agreement.
I thank the hon. Member for Wells and Mendip Hills (Tessa Munt) for securing the debate, and I would like to take a moment to pay tribute to the previous Minister for Nature at the Department, my hon. Friend the Member for Coventry East (Mary Creagh). She did so much to progress the reforms I will go on to mention, including the deposit return scheme, which is of clear relevance to today’s debate—it will play a vital role in increasing the capture of drinks containers, improve the quality of material collected for recycling, and reduce litter. I am a huge supporter of the deposit return scheme, and I will continue that work and her legacy.
I recognise the long-standing interest of the hon. Member for Wells and Mendip Hills in this issue. I was reading about how she has been collecting aluminium cans herself and using that for local charity, which is a brilliant idea and such a nice way to reduce litter in the local area and raise money for charity. We should think about the principle of such materials being viewed as valuable resources; I wholeheartedly agree with that.
I also agree with the comments the hon. Lady made about fraud in the system. She will be aware that, only a couple of weeks ago, the Prime Minister made a big announcement about cracking down more on waste crime. I went to visit Kidlington, which looks a heck of a lot better than it did previously and is nicely cleared up. The hon. Lady is therefore right to talk about fraud and how we can increase transparency in the system by looking at registration. There was a consultation on reforming the packaging waste recycling note system earlier in the year, which is looking at changes to address the issues she mentions.
It seems to me that there are two issues when it comes to recycling. One is how we collect more of the things we should recycle, rather than putting them into landfill. The other, which I am particularly passionate about, is how we recycle more of those things here in the United Kingdom. We still have a throwaway culture in the UK, and we throw away so much stuff that can be reused and recycled. As has been highlighted, we should think about the huge value of what we put into our bins and send to our councils. The hon. Member for Tunbridge Wells (Mike Martin) mentioned the problems he has with his council not recognising the value of what it is throwing away. There are many reforms that we can make in government, but there is not much we can do about incompetence.
Our recycling rate has stalled between 42% and 44% for years, apart from in Hull city council, where we recycle 51% of everything we collect. Considering the area, the demographic and the challenges we have—I could spend the whole debate talking about flats and recycling, but I will not—that is hugely important. I completely agree with the comments from hon. Members that every tonne of aluminium we do not recycle needs to be dug out of the ground somewhere and sent across the world somehow. It makes complete and utter sense to recycle more of what we have here in the UK. It is good not only for the environment but for industry; it is good for the Prime Minister’s ambition to reindustrialise our country, create jobs in different areas, bring back manufacturing and expand our manufacturing base. What is not to love about doing all those things? It is why I am quite passionate about this and so delighted to have it within my brief.
The hon. Member for Wells and Mendip Hills asked about councils losing out through aluminium recycling. As she knows from all her in-depth research, they have different contracts and agreements. I can raise her point directly with the Ministry of Housing, Communities and Local Government Minister to see what more can be done on transparency. From DEFRA’s point of view, we publish a monthly market overview so that councils can see what the market price of aluminium is, which is information that DEFRA has. I will have to speak to the MHCLG Minister about how they can encourage councils to share their information. From my point of view, they would surely want to do so to ensure that a neighbouring council is not getting a better deal.
Tessa Munt
Half the problem is that councils often think they are doing the right thing, and they have put something in their contract that says everything needs to be recycled in the UK. It goes back to my point of how to define recycling. There are problems all the way along the chain. If a waste management company can say, “Yes, we have recycled everything,” because it has put everything into a facility, separated it and sorted it, and the council is happy to accept that, then something has to change.
Emma Hardy
Absolutely. We need to keep building on the reforms we have introduced and make things simpler and more transparent for everyone. I completely take the point that local people need faith. If someone is living near an aluminium recycling factory, they will be really incentivised to recycle all their aluminium. I will raise the point with the MHCLG Minister about how we can encourage councils to be more transparent.
Before I move on to the next point, I want to address the points from the hon. Member for Strangford (Jim Shannon), who raises a serious issue. It is great that recycling rates in his area are at 50%, which is really impressive, but I recognise the point he makes about how easily aluminium can be recycled and, if that material is collected, how quickly it can be recycled. DEFRA officials will meet and work with officials in Northern Ireland on the implementation of the deposit return scheme and see how we can support them to be as successful, if not more successful, than here on the mainland.
Lots of Members raised concerns about exports and what we are doing about them. Legitimate exports of waste for recovery are permitted when they comply with domestic and international controls. Reprocessors and exporters must be accredited by the relevant regulator. Hon. Members have heard me mention the packaging waste recovery note reforms as well. Where the UK cannot recycle materials economically, exports help those materials to be recycled rather than sent to landfill or incineration, which is the worst of all worlds. The new fit and proper person test for operators, together with monthly reporting requirements, further strengthens oversight of that part of the market. However, I will say again that my personal feeling is that I would love to see more of it recycled here in the UK.
Tessa Munt
As I explained, one place I went to was Warrington. It is clear that next year that plant, Novelis, will be able to take all our cans, for example—we do not need to think about the other bits of aluminium that there are around the place. That is a Government-funded expansion, and it is brilliant. Can we not do something that stops this stuff going abroad on the basis that it is a critical mineral?
Emma Hardy
Absolutely. Our aim is for 65% of municipal waste to be recycled, and 67% of aluminium packaging. The hon. Lady mentions Novelis, which is the leading aluminium producer and recycler, and it has committed, as I think she was alluding to, £66.5 million to upgrading its aluminium recycling plant. One of the things we are hearing is that the changes we are making through the deposit return scheme—the higher-quality collection of aluminium because of the way the scheme works—mean that recyclers are looking to expand and do a lot more, which is fantastic because that is creating highly skilled jobs in those areas.
I have already mentioned some of the other reforms: extended producer responsibility, simpler recycling and the deposit return scheme. Industry estimates that those three different reforms will underpin £10 billion of investment in recycling, with new sorting and processing facilities, and will create 25,000 jobs. Those are jobs here in the UK—UK jobs for people in this area—creating and supporting growth in every postcode, which is exactly what the Prime Minister is talking about. That is really quite exciting, and it is because of those three reforms introduced by this Government.
Aluminium demonstrates exactly why the transition to a circular economy is not some academic theory, but something that matters to us all. Capturing that valuable resource gives us the opportunity to reduce waste, lower emissions and strengthen industrial supply chains. That is good for local authorities, manufacturers, economic growth and the reindustrialisation of this country. Bringing together stakeholders from the steel, aluminium and critical minerals sectors, the Government have created, under my predecessors, the metals circularity group to look at how we can create high-quality scrap, because that matters a lot as well.
I thank the hon. Member for Wells and Mendip Hills. It is great to kick the year off with something that we all agree on and that we are all pushing in the same direction on: how can we recycle more here in the UK? Our existing circular industry already delivers tens of billions of pounds in economic value and hundreds of thousands of jobs, but I know there is more potential that we can unlock. If we get it right, we can build something durable: a circular economy that turns yesterday’s rubbish into tomorrow’s raw material and delivers growth, resilience and jobs in every corner of this country—in fact, “growth in every postcode”, to borrow a phrase from the new Prime Minister. That is the outcome I am focusing on delivering for every council and corner of this country.
Tessa Munt
I thank the Minister for her summary and her wind-up speech. I will give her a copy of my questions —I think she may have them already—and ask her to consider writing to me with the detail, because this is so important and so good for the UK that we cannot miss the opportunity. I would be hugely in favour of us getting to the point—next year, the year after or any time in the future—where we are not sending our aluminium by any means whatsoever to places such as China and the US, because it is not good for the UK. We can do it here. We should keep it here and use it again here.
Question put and agreed to.
Resolved,
That this House has considered aluminium recycling and local authorities.