Caroline Flint: Small town Britain suffers as bank branch closures continue

For Thorne, a town with a huge range of retail businesses, local manufacturers close to the town centre, and surrounded by farm businesses, this was the second blow in six months. In June, the HSBC branch closed. The nearest NatWest branch is 10 miles away in Goole.

For Bawtry, with a busy high street and a thriving evening economy, and a wide range of small businesses, NatWest represents the last bank in town. The nearest NatWest branch is Doncaster town centre nine miles away. In 2015, the neighbouring market town of Tickhill lost its last bank.

This is not a parochial story. RBS are closing 195 more NatWest and 41 RBS branches. This story is repeated all over the country. In 2017, over 700 bank branches closed, an unfortunate record. Every wave of closures leads to more parts of small town Britain without a bank.

In 2015, after a wave of local closures, and with a general election imminent, the coalition Government made noises about ensuring communities had a say. The banks and Government agreed an “Access to Banking Protocol”. This included sentiments about “working with the community to establish the impact of the branch closure”; finding “suitable alternative provision” and putting “alternative banking services in place.” All fine words, but it did nothing to reduce the relentless pace of closures.

The pattern of closures is insidious. Ninety per cent are in communities with lower than average incomes. In 2015/16, some new branches did open, for example, Chelsea, Canary Wharf, St Paul‘s, Marylebone and Clapham, among the wealthiest neighbourhoods in Britain.

But Bawtry and Tickhill are not on their uppers. So what is going on? The answer is size. In 2016, one banking chief executive explained in not so many words that a town with fewer than 10,000 people probably wasn’t worth having a branch. Yet, the major banks will say the average distance between their branches is around two to two-and-a-half miles. The problem is the figure is distorted by the banks clustering branches in city centres and prosperous suburbs. More and more small towns, especially in rural areas, are left with no bank.

And small businesses suffer. In June 2016, Reuters reported that lending to small business halved following branch closures.

But what of online banking? NatWest reports that up to 88 per cent of customers in Bawtry and Thorne bank in other ways. Well, doing a direct debit online or checking your balance on your phone may be more common. But that doesn’t mean you don’t need a local bank.

Many people, predominantly older citizens, are not online. I still have lots of constituents who have never used email. The ONS report that 4.8 million people have never used the internet; and half a million more have not used the internet in the last three months. Over half a million Yorkshire residents don’t use the internet. And if you are a shop, you can’t virtually transfer a bag of takings to the bank.

I believe bank branches should be at the heart of the community. I’m repeatedly told by banks about their marvellous community programmes. I’m also told that the banks promote financial literacy and back innovation. So why are they so lacking in innovation in their own branches?

Why can’t a NatWest branch share a premises with an estate agent or another enterprise, even if the NatWest only opened certain hours or days? Why do so few small town branches open on a Saturday? I don’t think it’s economics; I feel it’s about a conservative business practice – “we don’t need to do this, so we won’t”.

Just nine years ago, the Labour government stopped our cash points drying up overnight and bailed out the banks. They imposed a bank levy on the major banks’ liabilities.

In 2015, the Government started a phased reduction of that levy. I challenged Theresa May on this very issue. When the ‘big four’ banks reported £13.5bn half year profits, and a further £6.99bn in the last quarter, why reduce a bank levy, at a cost of around a £1bn in lost revenue each year?

Just a small part of this revenue could keep many branches open, especially supporting the last bank in a town. The fund could support new partnership arrangements, so banks reduce overheads and new ways are found to keep a branch presence.

The banks and the Government have already failed too many small towns and villages. How many more will follow Thorne and Bawtry before something is done? It’s not too late.

Caroline Flint is the Labour MP for Don Valley. She’s a former Cabinet minister