Bank Closures and Banking Hubs

David Mundell Excerpts

Thursday 5th June 2025 Commons Chamber

[Ian Lavery]

That sounds like the same sort of situation as the one we had in Blyth. There were cash machines outside and inside, but the cash machines outside ran out of cash. There were people knocking on the shop windows asking the people who were filling the shelves to get some money for them from the cash machines inside—how ludicrous is that? How ridiculous!

[David Mundell (Dumfriesshire, Clydesdale and Tweeddale) (Con)]

I welcome the point that the hon. Gentleman is raising. There is also an issue with cash machines inside shops that may be open for longer, but they are stocked from the shop by the cash received in the premises. There can be cash machines in a shop that have no cash in them, but Link has to take them into account when assessing whether there should be a free-to-use cash machine in a community.

[Ian Lavery]

I totally agree with the right hon. Gentleman’s point. I like bringing school kids into Parliament. Down in one of the corridors there is an ATM that says “Free cash”, and I tell all the kids, “That’s what you get if you are an MP—you can get as much cash as you want from here—it’s free, it’s free!” [Laughter.] And they all ask me if I can get them some cash before they go to their mams. Free cash? There are ATMs where people have to pay a huge percentage to get their own money. That is an issue that I will cover very shortly.

My own experience of dealing with Link saw me almost guaranteed that a banking hub would be delivered in Bedlington just before the election, but on receiving the assessment, no such facility was proposed and instead worried locals were asked to travel to nearby Cramlington to conduct their financial affairs. That is not acceptable. It is correct to say that banking hubs are an innovative solution for high streets left without banking facilities, but Link’s briefing note on banking hubs published on 2 June 2025 says:

“Banking hubs are shared services that enable customers of any of the major high street banks to access basic banking services and advice from community bankers. Hubs are delivered by a bank-owned company called Cash Access UK, and are currently operated by the Post Office.”

The Government have stated that they expect 350 banking hubs to be open by the end of this Parliament. We are well on-track to surpass that figure. Link has already identified a need for 226 banking hubs across the UK, and a similar number of other cash services, such as new deposit services. Over 150 banking hubs are already operational. There is no doubt that that is progress, but we need far more to provide the service that our constituents deserve. The figure of 350 banking hubs might sound impressive, but there are 650 constituencies represented in Parliament. In my constituency alone, banking hubs should be at the heart of the high streets in Ashington, Bedlington, Blyth, Guidepost and Newbiggin- by-the-Sea, but at the current rate, we will need 10 times the amount being talked about by the end of this Parliament. Our high streets have been hollowed out by online and out-of-town shopping.

--- Later in debate ---

[David Mundell (Dumfriesshire, Clydesdale and Tweeddale) (Con)]

In that case, Madam Deputy Speaker, I will start with my ask of the Minister, which is that the criteria for assessing whether there should be a free-to-use cash machine in a community be reassessed. For example, in my constituency, the Bank of Scotland closed its branch in the community of Moffat on the same day as it closed four other branches. At the moment, Link has to take into account every other cash machine in the vicinity, regardless of whether there is any cash in those machines—often, machines in retail outlets are not fully stocked with cash all the time; they rely on cash coming in through the till to go into the machine—or whether premises are open for 24 hours or are particularly disabled or vulnerable people-friendly. At this moment, we cannot get another cash machine because it has been assessed that the number is sufficient, without any assessment of those cash machines.

The closures I referred to mean that for 75 miles along the M74 motorway, from the border to Hamilton, you will not find a bank branch. When it comes to bank buildings being taken up by others, I have not been as lucky as my right hon. Friend the Member for Tatton (Esther McVey): they are often very large buildings on small high streets, and unless the banks are willing to do something themselves, there are not often other users. The Bank of Scotland previously said that it would allow the Peebles branch that is closing to be for community use, and the community have engaged, so I am disappointed to hear that they find today that a “For sale” sign has appeared outside that branch. I hope that the Bank of Scotland will keep that community access.

My third point is that we need to join up what is happening. The Bank of Scotland in Sanquhar in my constituency is closing. The bank is putting a bank consultant into the community to look after its customers, it says, but that person will not be in the post office that has been designated by Link as the effective banking hub in that community. That person will hold separate meetings in a council office. There just is not joined-up thinking.

My final point is that we talk about post offices when many people do not have a physical post office, but a temporary post office delivered out of the back of a van, which is not capable of providing a banking hub service.

--- Later in debate ---

[Mark Garnier (Wyre Forest) (Con)]

I also congratulate the hon. Member for Blyth and Ashington (Ian Lavery) and my right hon. Friend the Member for Tatton (Esther McVey) on securing this debate.

A great strength of feeling about banks has been evident in this debate, and it is important to remember the importance of banks not just to our communities but to the wider economy. Banks provide services for businesses and individuals, but they also provide two other fundamental services. First, banks and building societies take money from where it has accumulated and distribute it to where it is needed for investment in infrastructure, businesses and jobs. Secondly, banks take overnight deposits and turn them into 25-year mortgages—so that our constituents can create a home and build a family—which is quite difficult for banks to do.

The hon. Member for Blyth and Ashington made a couple of important points that I would like to address. The first was about the profits that banks make, and the second was about the policing of banks and the fact that banks apparently police themselves.

Following the 2008 financial crisis, there was obviously a huge number of problems in the banking system. The Financial Services Act 2012 created two regulators, the Financial Conduct Authority and the Prudential Regulation Authority, both of which—and particularly the PRA—are responsible for making sure that our banking system is sound. Banks need to have strong balance sheets, and to do that they need to make profits to a certain extent. I agree that some of those profits look obscene, and perhaps some banks could put some of that money back into our communities. None the less, if banks spend their money unwisely, we potentially run the risk of another banking crisis.

Along with the right hon. Member for Wolverhampton South East (Pat McFadden), I am one of only two Members left in this House who sat on the Parliamentary Commission on Banking Standards from 2013 to 2015. Our work on that commission underlines the importance of banks in modern life, about which we have heard so much today. The commission found that holding and operating a bank account is now essential to participate in society and the economy, whether it is receiving wages, paying bills or accessing benefits. But we also found that people’s views on banks are shaped by their direct experiences. The more a person knows their bank, the more likely they are to have confidence in it. That means that if banks want to retain their customers, they must provide good, wide-ranging services. An inability to access banking services risks eroding that trust and confidence, as we have heard today, especially among the most vulnerable.

[David Mundell]

Does my hon. Friend understand that people are very angry about bank closures, and about the fact they feel that the banks just do not listen to them when they go through some consultation exercise? That is why in Moffat, at 2 pm tomorrow, there will be a protest outside the closing Bank of Scotland.

[Mark Garnier]

I agree 100%. My right hon. Friend is absolutely right.

Let us be clear that the decline of our high streets and the decline of bank branches have run concurrently as behaviour has changed over the last couple of decades and retail activity has increasingly moved online. Banks are, of course, commercial entities, and their decisions to close branches are often driven by commercial imperatives, which is not necessarily what we want to hear in this debate. Falling footfall, the rise of digital banking and the need to be cost-effective are just some of those reasons.

As we have heard so often, there are now just 3,000 bank branches remaining in the UK, and that number is expected to drop even further in coming years. ATM numbers, especially free-to-use machines, have also declined. Only 14% of payments in the UK were made with cash in 2022, and withdrawals from the Link network are down 50% on pre-covid levels.