Meeting of the Parliament

Meeting date: Tuesday, December 5, 2017

Official Report 880KB pdf

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Topical Question Time

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Royal Bank of Scotland (Branch Closures)

To ask the Scottish Government what impact it expects the branch closures announced by RBS will have on communities across Scotland. (S5T-00811)

Last week’s announcement by RBS that it is to close a further 62 Scottish branches is a body blow to communities across Scotland. That most recent announcement is the latest in a long line of branch closure announcements—a programme that is rapidly accelerating. The closure announcements by RBS and other retail banks are affecting communities the length and breadth of Scotland. I welcome the decision that a members’ business debate will be held next week to allow all members to raise the concerns of their constituents.

As members will know, the United Kingdom Government retains legislative and regulatory responsibility for banking and financial services, and is the majority shareholder in RBS. However, although the matter is not a devolved responsibility, the Scottish Government stands ready to work constructively with UK ministers, RBS management, unions and wider stakeholders to support and reassure customers, in the light of the planned branch closures, and to minimise the negative impact of closures on the wellbeing of the communities across Scotland that will be affected.

In our view, the UK Government should not be a passive bystander; it should take immediate action to defend customers and ensure that communities—in particular, the most vulnerable members of those communities—continue to have access to day-to-day banking services, including ATM provision, and that businesses have the ability to deposit their takings safely, locally.

While respecting that commercial decisions have been taken by RBS and acknowledging that the use of online banking is growing, the Scottish Government remains steadfast in its opposition to the planned closures proceeding until such time as a guaranteed minimum level of service provision for essential banking services is in place.

I thank the minister for the reminder that banking is a reserved matter and that the UK Government owns a 71 per cent stake in RBS on behalf of taxpayers. Many of those taxpayers—for example in Kyle, Mallaig, Beauly and Aviemore—whose local branches are being closed may now have to travel for over an hour to the closest branch. Has the minister been able to speak to his counterpart in the UK Government about his views on the matter?

Yes. I spoke to Stephen Barclay, the Economic Secretary to the Treasury, yesterday afternoon to press the case for a guaranteed level of access to essential banking services. The UK Government has made it clear that it will not, despite its having a majority stake in the RBS, exercise any influence that it may have to support RBS’s customers at this time. I appreciate that RBS does and must operate on a commercial basis. However, the UK Government, as the Government with responsibility for regulation for the financial sector, has a duty to ensure that the banking system meets the needs of all users, whether they are in Aviemore, Beauly or other vital local communities across Scotland. Although we respect the commercial relationships that the banks have with Government, we believe that the Government should work to ensure that robust alternative options are in place before it allows the bank-branch closures to take place.

Thank you. I have eight members—

I am sorry. Does Miss Forbes wish to come in again?

I will, if I may.

It is worth noting that the announcement by RBS is just the latest in a series of announcements about branch closures in which we have seen banks totally deserting rural communities—including in my constituency—in which elderly people, cash-based businesses and rural residents have the most to lose. How important is it that there is a minimum level of banking services in the most rural dependent communities?

I apologise again, Miss Forbes. I was ahead of myself.

I certainly agree with Kate Forbes and, indeed, with my colleague beside me who represents Argyll and Bute. I know that in communities such as Inveraray, and in communities in the Borders, where I live, the announcements are being very acutely felt. I agree that the closures will have the greatest impact on those who are least able to make use of alternative services. We are aware of customers of RBS in those communities for whom online banking is, depending on their perspective, something entirely new and frightening. Clearly, their ability to use the online services may be limited.

I have been reassured to some extent in conversations with RBS that it will make great efforts to train those customers on how to access services, but we all know that in areas of rural Scotland there are still challenges in terms of digital access. Progress is being made, but we are aware that there are still households and customers around the country who have limited access to digital services, so we need to ensure that suitable and accessible alternative provisions are made to ensure that no customers are left unbanked by branch closures.

Further to that, I am aware of the work that RBS is doing with the Post Office in looking to expand the services of the post offices that cover areas that are losing bank branches. That is welcome, but I am also aware that there are limits to how much cash can be banked at post offices, which I raised with Stephen Barclay yesterday. There are also challenges in respect of the range of services that are available in post offices, in which there is, in effect, a basic banking service rather than a full-range service. We have also raised that concern with the UK minister.

Although there are commitments by RBS to extend its mobile banking network, we have concerns that it may not have enough vehicles, including vehicles with disabled access, to allow all customers, regardless of their vulnerabilities, to access services. There is much to be done; we want a dialogue with RBS and the UK Government to make sure that those limitations are addressed before the closures take place.

Thank you. At least eight members want to ask questions, so I respectfully ask the minister to be briefer in his comments—I am sure that they will be duplicated. I will try to get through as many questions as possible, bearing it in mind that there is a debate on the matter next week.

In his reply to Kate Forbes the minister mentioned internet banking, which is cited by RBS as being one of the reasons for its closing branches. However, as I am sure the minister will appreciate, in many parts of rural Scotland, including in Perth and Kinross, where a number of branches are closing, both mobile and broadband connectivity are such that people cannot do internet banking, even if they want to. Will the minister make those points forcefully to representatives of RBS when he meets them, as I and my colleagues have already done?

That is a fair point, which I made it in my response to Kate Forbes’s second question. Progress is being made on ensuring digital access, but we are all aware that the reality on the ground is that there are communities in Perthshire, the Highlands and other parts of rural Scotland, and some urban communities, where mobile banking via mobile phones or broadband is still a challenge. We strongly encourage RBS to consider that matter. I have raised—and will continue to raise—that with the bank, and I hope that we will make progress.

I have written to the chief executive of the Royal Bank of Scotland asking him to examine the possibility of working with other businesses—even his competitors—to establish shared premises from which to operate. Does the minister support such an initiative, which would include sharing of costs and would allow banks to remain in towns and villages across the north-east, which will be particularly hard hit by the proposed closures?

I would certainly welcome that. Mike Rumbles’s point is similar to one that I have raised with RBS. He is right to try to challenge the bank on those issues. Is it strictly necessary to close all the branches if there could be collaboration to provide a central facility? As I understand it, changes to primary legislation would be needed to allow that to happen. That is a matter for the UK Parliament: the regulatory and legal powers over banking and financial services rest at Westminster. We have commented on the issue, and I would welcome dialogue with RBS.

Mike Rumbles was right to identify the need for banks to collaborate. Traditionally, they have seen themselves very much as competitors and do not talk about collaboration, whether on ATM or branch provision. There is an opportunity arising from the very strong public concern that has been expressed about not only the latest tranche of closures, but about the previous tranches, for the banks to seek to collaborate to try to address the issue.

We are not blind to the growth in online banking—we accept that it is happening—but the pace of change is catching out customers. That is the key challenge that we all must face.

The proposed closures do not affect just small villages. I have calculated that 16 branches across my South Scotland region will be affected, including in market towns including Lockerbie, Annan and Langholm.

Last year, the Royal Bank of Scotland tried to improve its image with a brand campaign in which it called itself the “Royal Bank for Scotland”. Does the minister agree that many people will feel very cynical about that and regard it as, at the very least, a breach of advertising standards?

Unfortunately, I am not the advertising regulator, but I take Joan McAlpine’s point. I point out that the nearest branch in my area—the eastern part of the Borders—is in England, which is ironic, given Joan McAlpine’s point about branding.

The closures are a concern. As part of the programme, six of the eight branches that are left in the Borders will be closed. Although, overall, a quarter of Royal Bank of Scotland branches are to close across Scotland, six out of eight branches are to close in one local authority area. Other local authorities—South Lanarkshire, for example—will lose seven branches in the latest programme. The programme has raised so much concern because it has potentially devastating local impacts.

When the previous closures were made, we were reassured that the nearest branch would be in the local town and that villages therefore need not suffer too badly. However, now that those branches are to go, there will be serious consequences for vulnerable customers, as well as for small businesses, which will have to travel lengthy distances in order to bank their cash. That will be a real challenge, given that the economy in much of rural Scotland is tourism driven.

The RBS has bailed out of West Lothian, leaving branches only in Bathgate and Livingston. In each of the places the bank has vacated, we have properties lying vacant in their high street. Many community groups want to take over those properties for community use, but they have been refused by RBS because of its greed. It wants its hands on the cash. Is not it a disgrace that no legacy is being left by it after years of loyalty from customers in those communities?

That is an issue. Other banks, and not just the RBS, have had loyal customers for many generations who have supported the banks, although we should not forget that they have been supported by the banks in return.

Neil Findlay makes a valid point about what happens to vacant branches once they close. It need not be a black-or-white situation. Funding is potentially available through the Scottish land fund for communities that are interested in taking over facilities. If there is a willingness on the part of banks to sell to those communities, we can perhaps find a way.

Parliament can make its view clear to the Royal Bank of Scotland and to other banks that we look to them to engage in those opportunities with communities to see whether facilities can be used to house community facilities, credit unions or alternatives. That dialogue with RBS would be welcome, just as it would—because it is not just RBS that is closing branches, unfortunately—with other retail banks.

What reassurances can the minister give to island communities, including Barra where the RBS branch is under threat, that are particularly vulnerable to closures of services?

As I have explained, because this Parliament and Government do not have regulatory or legislative powers, unfortunately, there is nothing that we can do directly to force banks to change their minds. Parliamentarians can all make our views and concerns known to the senior management team at RBS.

I recognise the ludicrous situation for an island community such as Barra—the point has been made by Angus Brendan MacNeil, the MP for the Western Isles—that it would probably be easier for someone from Kent to travel to Calais to do their banking than it is for someone from Barra to get to the mainland. Such is the challenge that we face in our most remote and rural communities, which is why it is so potentially devastating to lose our branch network. There needs to be a concerted effort to make sure that there is adequate provision left for communities once those branches go—if they go. We have no direct power to influence the decision, so it is down to UK ministers, who have a controlling stake in the bank, to make their influence felt.

I am sorry, but that answer must conclude topical questions. I apologise to Alex Neil, Alex Rowley and Richard Lyle because I am unable to take their questions. I hope that they are in the debate next week.