Bank Closures and Banking Hubs

Mark Garnier Excerpts

Thursday 5th June 2025 Commons Chamber

[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.

[Sir John Hayes]

The clue is in the phrase “banking service”. It is about providing a service to people. As the hon. Member for Lichfield (Dave Robertson) said, banks dignify communities too. This is about personal interactions, trust and building relationships. That is what we do when we go into a bank, and we could never do that in the same way online.

[Mark Garnier]

My right hon. Friend makes a good point. This is about face-to-face relationships, not something done through an app.

Behind the statistics I cited are real people and real communities. The digitally excluded, older people, those in poor health and people with lower financial resilience mostly rely on cash. Small businesses and rural communities are hard hit. The question for Members who want to compel banks to keep branches open is how much digital-first customers should be charged to retain loss-making branches—notwithstanding, of course, that profit question.

Of course, the answer cannot simply be to do nothing and to walk away from our responsibilities to those who are left behind. The previous Government recognised the importance of maintaining essential banking services as a foundation for public confidence in this sector. Through the post office network, we provided a system of free and convenient access to banking services, and the banking framework partnership between the Post Office and over 30 of the UK’s banks and building societies means consumers and businesses can access basic banking services through the post office network. The Post Office now has more branches than all the banks and building societies combined, and according to the Financial Conduct Authority, post office branches make up more than 66% of all branch-based cash access points in the UK. The last Government also introduced banking hubs, which we have heard a great deal about.

I am conscious of time, and I do not want to incur your wrath, Madam Deputy Speaker, so although I have a lot more to say, I think it would be prudent for me to step aside and allow the Minister to face up to the passion about this issue from Members representing their communities.