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§ Mr. A. J. Beith (Berwick-upon-Tweed)
I am glad to see a north-east Member in the Chair, a north-east Minister here to reply to the debate and at least one other north-east Member in this Chamber.
At the beginning of March, Barclays customers in Belford, Lowick and Norham received a patronising letter telling them that their branch would close in five weeks' time. A map was enclosed showing that there was another branch between eight and 16 miles away, No bus timetable was enclosed, as that would have revealed the near impossibility of getting there and back again and transacting banking business. The branches recommended were in Seahouses and Wooler. The Seahouses branch presents additional practical problems for anyone needing to park their car and deposit cash at the bank.
To add insult to injury, Barclays customers found in the newspapers at about the same time a two-page full colour advert saying:A big world needs a big bank: with more offices in Europe than any other bank.As far as Barclays current management is concerned, rural Northumberland is not in the big world or in Europe, so it does not deserve any offices or branches of the bank.
The implications of the Barclays closure programme for the Government's policy for regenerating rural areas are devastating, particularly when combined with threats to post offices. They affect pensioners and families, particularly given the Government's plans to have benefits paid through bank accounts—what bank accounts at what banks?
My constituency is not alone in this deprivation. There are 17 motions and many amendments on the Order Paper attacking Barclays bank closures—more than I have seen on any other single issue in 26 years in the House. Whatever else it has done, Barclays has scored another public relations disaster to rival its grasping plans for cash machine charges.
Who on earth will want to bank with an institution that is so disloyal to its customers? Some people have no choice. Since the days of Martins bank, which Barclays took over, Barclays has been the dominant banker in the rural communities of Northumberland. Outside the three main towns there are only two branches of banks other than Barclays and no building society branches. There are no cash dispensers. In the three communities where Barclays branches are being closed, there are no other banking services apart from those provided by the invaluable local sub-post offices, which are themselves deeply worried about the future.
The two smaller communities of Lowick and Norham are nevertheless larger villages by Northumberland standards. I know that the Under-Secretary, the hon. Member for Sunderland, South (Mr. Mullin) is familiar with them. He likes to spend his spare time in my constituency and I often encounter him around the countryside of Northumberland, so he knows the distances involved and the communities that I am talking about.
99WH Lowick used to have many shops and businesses and no fewer than six churches. It still has several businesses, three churches and two pubs. There are many pensioners and numerous disabled people who need access to a bank, with the part-time sub-branch of Barclays meeting their needs. It is many miles to the towns where there are banks. Norham still has a butcher, a baker and several shops and needs its banking services. Again, many pensioners there depend on the bank.
Perhaps the most extraordinary closure plan is at Belford, which is thought of as a large village, but has many of the features of a small market town, with quite a wide range of shops and businesses and large numbers of summer visitors. It is a community that is determined to build for the future with the very active Belford Trade Association working enthusiastically with local councillors and with me to promote improvements. With an active rail users group, it is well on the way to getting Belford station reopened for passengers. New signs that have been planned for the A 1 will bring many more visitors to use the local services, and they will expect a bank to be one of those services. The community is working on funding to revive the town's industrial estate. The community is designated for growth by both borough and county councils, yet Barclays wants to abandon this growing and strengthening community where more than 700 people hold Barclays accounts and many more Barclays customers use the branch to service Barclays accounts elsewhere.
§ Mr. Denis Murphy (Wansbeck)
Does the right hon. Gentleman agree with my constituents in Newbigginby-the-Sea and Guide Post who have also been affected by a recent Barclays closure announcement? They were absolutely dismayed to see Barclays spending tens of millions of pounds on an advertising campaign to attract new customers, having turned its back on customers who have been loyal for many years. Does the right hon. Gentleman further agree that that money would be better spent on providing a service for existing customers, and that Barclays should immediately lift the threat of closure from those branches and reopen the banks that it has recently closed?
§ Mr. Beith
I agree with the hon. Gentleman. Indeed, some of my constituents in the village of Lynemouth used to use the Barclays branch in Newbiggin-by-theSea, which is also threatened with closure. Barclays' advertising campaign must have been one of the most wasted in history as its actions speak so much louder than its words. The two-page advertisements telling you to open an account at Barclays will be totally unconvincing to my constituents who will see that as soon as you open an account, the branch will be closed—
§ Mr. Deputy Speaker (Mr. John McWilliam)
Order. The right hon. Gentleman is referring to me. I can reassure him that I have no such intentions, particularly in current circumstances.
§ Mr. Beith
Indeed. I was referring to you figuratively, Mr. Deputy Speaker. I am sure that you apply your customary shrewdness in choosing where to bank.
100WH There is no evidence of decline in the use of the Belford branch. Indeed, it is such a busy place that it is a recognised community meeting point. Many pensioners depend on the bank's facilities and are unable to travel elsewhere. A large number of local businesses depend on being able to deposit cash at the branch and do not want the wasted time and greatly increased risk of a 20 or 30-mile round trip, sometimes daily, to bank their cash. Closure would be a real setback to village regeneration. That is an issue for the Government's rural policy as well as for Barclays.
What is particularly indefensible about all the closures going ahead so quickly is that the programme takes no account of work in which Barclays is currently involved to look at banking in rural communities, including the British Bankers Association report "Banking without Branches". The British Bankers Association commissioned an independent study from Bristol university into the effects of bank closures and how communities cope without a local branch. The major banks asked for time to consider the report, but they are not giving their customers time to consider before removing their services.
The report highlighted the disproportionate effect of closures on the most vulnerable—the elderly and the disabled—and on small businesses. That was assuming that there would be a bank within four miles, even after the local branch had closed. In my constituency, the distances would be much greater. The report showed that 70 per cent. of small retailers visit their local branch more than once a week, and 80 per cent. of those surveyed use paying-in facilities. Barclays is ignoring all that.
In addition, Barclays is involved in an experiment in Cornwall looking at community banking services. There is a proposal for up to 200 Cornish post offices to take over the four basic functions of a bank for Barclays' personal customers—not business customers—such as withdrawals, paying in, cashing cheques and so on. I think that it begins this week on 16 March—and is supposed to be in place throughout Cornwall by the end of April. It has been agreed between Post Office Counters Ltd. and Barclays, but it has not yet been agreed by all the postmasters in Cornwall. Questions are being asked about how logistically possible the arrangements are. There is no time scale for evaluating the experiment and there are security and other problems associated with it. Why is Barclays not awaiting the outcome of its own experiment before going ahead with rural closures at the other end of the country?
Barclays also make much of online banking. A survey of the 767 Barclays customers in Belford revealed that only a tiny proportion of them were engaged in online banking and most of them did not depend wholly on it; they continued to use the bank for cash facilities. One cannot pay cash into or get cash out of a computer screen. If anyone has found a way of doing that I would be fascinated to observe it. People still require a bank branch. Barclays is leaping ahead of its own customers in assuming that they do not require services that are clearly still needed. I have pleaded with the chairman of Barclays to defer the rural closures until there is a response to the survey and some results from the Cornish pilot scheme, and until there has been some 101WH consultation between the bank and local communities about alternatives to closure and services that could continue through local agents such as the Post Office.
I ask the Government to put pressure on Barclays to give us a breathing space and to start thinking more sensibly about rural communities. With a 30 per cent. profit increase to £2.5 billion, the bank can hardly plead poverty; it has room for manoeuvre, which it should use to help its own customers in rural communities.
I also ask the Government to give very careful consideration to the impact on rural communities of banking closures and to the measures that could be taken as part of Government rural policy. I ask them to look, for example, at United States legislation which I believe requires banks to assist in setting up alternative arrangements if a closure would leave a local community without a branch.
There is concern both nationally and regionally. The Newcastle Journal "Save our Villages" campaign underlines how strong the concern is throughout the north-east. With such widespread concern, the bank really ought to realise how much damage it is doing both to itself and to rural communities by rushing ahead with closures without consultation of the kind that I have described.
I hope that the Government can apply some pressure in their current discussions with the banks to get Barclays to give us some more time. The discussions have of course extended to the whole cash machine charges issue and have not been a very good omen for any further discussions that might take place.
Barclays, in particular, has not demonstrated a responsible attitude. It now has an opportunity to show that it cares about its customers and about the communities in which it has traditionally been dominant for many years. If it fails to respond, it will pay a heavy price and many people throughout the country will feel that it is not an institution with which they want to be associated in any way.
My most urgent plea of all is to Barclays: defer the closures and give rural communities a chance.
§ The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Chris Mullin)
The right hon. Member for Berwick-upon-Tweed (Mr. Beith) represents one of the most beautiful constituencies in the country and, as he said, I am very familiar with it. I want to say at the outset that I share his disappointment with the attitude of Barclays towards its rural customers, and in particular the ones who will be affected by the closures.
The Government readily accept that ease of access to financial services is important in maintaining rural businesses and in encouraging rural regeneration, and that it is an important part of rural life. Barclays justifies its closure proposals by saying that it is concentrating investment in its busiest branches. It identifies what it describes as its "lowest performing branches", where it says that the number of transactions is declining. Those are the branches that have been chosen for closure.
102WH Although Barclays has traditionally been well represented in the north-east of England, it now claims that it isre-aligning the number of branches to get best use of them.At present, the branches in Belford and Choppington offer banking services six days a week, while those at Lowick and Norham are more restricted. Lowick opens for two hours twice a week and Norham offers two hours three times a week. None of the banks has automatic cash dispensing facilities.
Belford in north Northumberland is a typical small rural village—it says "village" here but, as the right hon. Gentleman said, it thinks of itself more as a town, as do I, of about 1,000 inhabitants, with two financial service providers: Barclays and the Post Office. The post office has longer opening hours than Barclays bank: it is open six days a week, usually until 5.30, whereas the bank closes at 3.30.
The local post office has made arrangements with Lloyds TSB, Co-operative bank and Alliance and Leicester, offering free banking services to customers of those banks. Services include both withdrawals and paying in. That shows that it is possible to make alternative arrangements if one lives in Belford, and I recommend that, if Barclays persists with the closure, those who currently bank with it consider switching to one of the three banks that have that arrangement with the local post office. I notice that Lord Walton already has plans to do that, and it may well be that others will want to follow his example.
§ Ms Glenda Jackson (Hampstead and Highgate)
No such alternative arrangements will be available to my constituents if Barclays goes ahead with its proposed closure of its Hampstead Heath branch. The effects that the right hon. Member for Berwick-upon-Tweed (Mr. Beith) described will be replicated in my constituency, albeit it is not rural, and those who will be damaged most will be the bank's most loyal customers, pensioners and the small businesses in the area, the majority of whose transactions are in cash. They will face additional burdens because of their need to go to the nearest alternative branch. There is also a security element should Barclays indeed install an automatic cash machine.
I strongly endorse everything that the right hon. Gentleman said. The Government should at least ask Barclays to consult before going ahead with closures that could do enormous damage to not only rural but urban regeneration and impact against the Government's proposals for tackling social exclusion.
§ Mr. Mullin
My hon. Friend makes an important point. The problems in her constituency are a bit different from those in the right hon. Gentleman's, but it is true that banks are also withdrawing from some urban areas, which could have some of the effects that she outlined.
In small communities such as those that the right hon. Gentleman described, it may well be that the future of banking lies with the Post Office. The Government are providing £500 million to the Post Office for computerisation, and that will in due course enable a wider range of services to be offered. The Post Office has 103WH about 10 times as many branches as the largest bank, which may provide an alternative for those without access to traditional bank branches.
The Post Office is currently implementing arrangements nationally and hopes to have them completed within the next 18 months. Belford post office is already connected and the postmaster there, to whom my officials have spoken in the past 24 hours or so, hopes to introduce a wider range of banking services in due course. The picture is not entirely gloomy.
As the right hon. Gentleman said, Barclays is currently carrying out a three-month trial in 270 post offices in Cornwall to see how services can be delivered through post offices. I agree that it is unfortunate that it should choose this time to close so many branches, before seeing how the experiment is working. Other banks are able to make use of the Post Office and I am disappointed that Barclays is taking what I regard as premature action in announcing the closures. At the very least, it would have been better if it had waited until its experiment in Cornwall could be assessed and alternatives set up to minimise inconvenience to customers.
In addition to the situation at Belford, Barclays proposes closing its branches at Choppington, Lowick and Norham. There are post offices or sub-post offices at all three villages and they, too, may be able to offer alternative and expanded banking services in due course. That may well be where the future lies if the big banks, or some of them, are no longer interested in customers in rural areas.
Perhaps I should say a few words about the wider picture. There is pressure not only on rural banks but on rural shops, pubs and other services, to say nothing of the current difficulties in farming. The Government intend to address the wider issues of the countryside in the rural White Paper to be published this summer. The White Paper will focus on sustainable growth and regeneration in rural areas and new directions for agriculture. It will establish service standards in rural areas and address, among other issues, social exclusion, ensuring a co-ordinated approach across Government.
My right hon. Friend the Prime Minister has established a new Cabinet Committee, chaired by my right hon. Friend the Minister for the Cabinet Office, to co-ordinate Government policies affecting rural areas. We have already greatly increased spending on rural programmes.
On rural transport, an additional £170 million will be spent over three years, including new support for rural bus services and encouragement for community transport initiatives. An additional £100 million has been provided for the rural bus subsidy grant to enable it to continue for a further three years past March next year. That has allowed Northumberland county council to provide improved bus services in some of its rural areas, including a post-bus service. I shall not go so far as to say that the Post Office will take over public transport as well as banking, because that would be asking too much.
The Government are encouraging local authorities to deliver improvements through local transport plans. In Northumberland, that has provided an additional £1.6 million, which may lead to an improved public transport interchange at Berwick-upon-Tweed's railway station— 104WH I expect that the right hon. Gentleman knows about that—and the possibility, to which he referred, of the re-opening of the station at Belford for passenger traffic.
The Government are implementing mandatory rate relief for village shops and post offices. Sole shops and post offices with a rateable value of less than £5,000, which will be increased to £6,000 from 1 April, in a designated settlement of under 3,000 people, are eligible for 50 per cent. rate relief. That must affect some of the shops in the right hon. Gentleman's constituency, perhaps in some of the villages where the banks are about to close. Local authorities have discretionary powers to increase that relief up to a level of 100 per cent.
On a wider front, my right hon. Friend the Minister of Agriculture, Fisheries and Food recently announced plans for £1.6 billion of spending over the next seven years—a 60 per cent. increase—on rural development measures in England. The north-east section of the rural development plan identifies "improved access to services" as one of the goals for the north-east. That will be achieved through improvements to information technology services and increasing the number of multiuse facilities. It may be possible to use community centres and village pubs as local service centres, for example.
§ Mr. Beith
I would be out of order if I strayed too far into the wider issues of the agricultural crisis that our countryside faces, but I wish to press the Minister to make it clear to Barclays, perhaps through his ministerial colleagues who appear to have regular discussions with the banks, that the Government see the need for the bank to offer a breathing space to communities and allow time for consultation before closures. The Minister has expressed his approval of that proposal, but I hope that it will be made clear to Barclays that that is the Government's view. I hope also that the Government will indicate their interest in the Cornish experiment and the need to see some results from it before drastic decisions are taken. I also hope that the Minister's officials in the region, who have obviously looked into the matter in detail, will be encouraged to continue to take an interest in helping us to ensure that banking facilities of some kind remain available in the villages.
§ Mr. Mullin
I shall certainly make sure that the message is passed to Barclays, and I have said on the record today that the Government's view is that Barclays should delay the closures until the result of the experiment is known. We are disappointed by the approach that Barclays has taken in this and other cases.
The right hon. Gentleman asked me about some legislation in the United States of America. We have briefly considered that, but we do not see that legislation would help to solve the problem. We are watching progress in the area, but there is no evidence that the US legislation has led to better access to banking in rural areas. More than 20 years after the community reinvestment legislation, the percentage of the US population without any kind of bank account is twice as high as it is in the UK, where we do not have such 105WH legislation. The difficulties, and the distances, are on a wholly different scale in the US, but legislation may not be the right way to proceed.
§ Mr. Mullin
That is a fair point, but I shall not digress into the subject of the American banking system because I would swiftly be out of my depth.
§ Mr. Mullin
I hope that I have said enough to indicate to the right hon. Gentleman and others that the Government take seriously the problems in rural areas in general, as well as the specific ones to which he has drawn attention. We consider that access to financial services is a vital element in achieving rural development and eliminating social exclusion. I thank him for raising the issue and I hope that Barclays is prepared to reconsider its proposals until such time as realistic alternatives are available, but if it is not, customers must vote with their feet.
§ Sitting suspended.