Lord Lea: Enough with the crocodile tears, the Chancellor must support our communities abandoned by the banks
Doesn’t the Chancellor realise that it is the public purse that will sooner rather than later have deal with the social and political consequences of bank closures, asks Lord Lea.
Karen Doyle runs a small bakery on the main street in Sowerby Bridge in West Yorkshire, a town which had six banks a decade ago, but the last one closed in July. She told BBC News on October 19 “Bank closures have just ripped the heart out of the town. What really annoys me is that as tax payers, we bailed the banks out when they were in trouble and now they’ve left places like Sowerby Bridge behind.”
“It used to be a ten-minute job taking the weekends cash into the bank, but it can now take most of the morning” said pub landlord Dan Shackleton, “and with every bank closure, we have lost another cash machine as well. This is a tourist town and I have lost count of the number of times that all three cash machines have run out.”
Figures compiled by the consumer charity Which? show that the UK has lost nearly two thirds of its Bank and Building Society Branches over the past 30 years, from 20,583 in 1988 to 8,837 in 2012. To add insult to injury, the Bankers own trade association ceased publication of the figures in 2014.
Bank branches have been closing at a rate of almost sixty a month . The Which? Report further commented “We are concerned some people are being disenfranchised and excluded from accessing finance.” These are, by the way, the very parts of the country that are “left behind,” if not abandoned, where politicians of all hues are claiming that they want to give top priority to these areas.
So, on the one hand we have ‘too big to fail’ and on the other hand, no social responsibility, no recognition by government that this is two-way traffic. One law for the rich etc.
Side by side, with this in the same towns we have post offices closing or possibly being tucked into the back of WH Smiths where there are long queues and congestion in the rest of the shop, but with the footfall all helping its business
‘Ah’, the banks reply, ‘haven’t you noticed that everybody is moving to telephone banking and it is only the senile or half-witted who don’t get the hang of it.' Well, I put my hand up to being both of those - but the fact remains that it is a half truth.
The banks are ‘too big to fail’, but one doesn’t have to be a political genius to figure out that the communities in which they have operated for two hundred years or more cannot be too big to fail. They can be abandoned, but leaving aside the venality of the banks, doesn’t the Chancellor realise that it is the public purse that will sooner rather than later have deal with the social and political consequences –‘social externalities in the market’ as I guess the bankers describe them. Or perhaps he believes in the fashionable economic theory of creative destruction.
We also know from the survey ‘Abandoned Communities’: that it is the least affluent third of the population that has borne the brunt of two-thirds of net closures. The same people who find it hard to get to a bigger town miles away but with no bus services, they probably do not have cars and they are indeed abandoned. They are concentrated in poorer areas less profitable to major banks: more than ninety percent of six-hundred closures between April 2015 and April 2016 were in areas where the median household income is below the British average. And it all becomes a vicious circle; we all need to go into a bank from time to put in the cash from the local church or pub or arranging a standing order.
So enough of crocodile tears and talk of ‘social responsibility’ from the Chancellor. When is he going to make a tour of these abandoned communities and put some of the Treasury’s - and indirectly the Banks’ - money where their mouths are when it comes to that much vaunted concept of ‘innovation’ – whether by using a roulette wheel or some other means - to share out the load among the banks and redress part of their increasingly toxic reputation?
Lord Lea of Crondall is a Labour member of the House of Lords.
PoliticsHome Member, Reponsible Finance have responded to Lord Lea, saying "Bank branch closures in low income communities and rural areas are leaving people unable to access basic financial services". Read the full response here.