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A Labour government would accelerate the roll out of “banking hubs” and give new powers to financial regulators to guarantee access to cash for people across the UK if it wins the next general election, the party is set to announce.
Shadow chancellor Rachel Reeves will say that a Labour government would expand the national network of banking hubs, which enable people to deposit and withdraw money as well as get help with banking services, according to people with knowledge of the plans.
Labour’s expected announcement comes amid the continuing closure of bank branches across the country, with almost three-fifths shutting since 2015, according to analysis by the Financial Times, raising concerns over access to banking services.
Britain has 24 banking hubs, run jointly by lenders, Cash Access UK and the Post Office, which allow customers from more than a dozen different banks and building societies to pay their bills, seek banking advice, and deposit cash and cheques.
Campaigners and regulators have, however, said the provision of banking hubs has been too slow. Nikhil Rathi, chief executive of the Financial Conduct Authority financial watchdog, last year urged lenders to speed up the delivery of new centres.
Under the proposals, due to be announced as soon as Thursday evening, Labour would oversee the creation of at least 350 extra banking hubs on local high streets. Areas that do not have high street banks will be prioritised for new infrastructure.
The party is also expected to promise new powers for the FCA to stop people being left in “banking deserts” ensuring local access to face-to-face services.
The closure of bricks and mortar banks has worried consumer rights campaigners. About a quarter of Britons still use cash at least once a week and about 10 per cent, or 5mn people, use it daily, according to ATM network provider LINK.
The use of cash grew for the first time in a decade in the UK last year, according to data released by trade body UK Finance, as consumers turned to physical money in an effort to control their finances as living costs rose.
John Howells, LINK chief executive, said it had recommended 100 banking hubs to make up for branch closures so far. LINK identifies where facilities are needed and then makes a formal recommendation to Cash Access UK, a group established by lenders to provide banking hubs and other resources in communities.
“They [hubs] are already having a positive impact on communities, meaning customers no longer have to travel long distances to access cash or face-to-face services,” said Howells.
Gareth Oakley, chief executive of Cash Access UK, welcomed Labour’s proposals, adding that the company had already moved forward with plans to bolster cash services. “We’re currently opening more than one a week and we’re on target to have 50 open by Easter,” he said.
Reeves will acknowledge the government has taken steps to protect people’s right to access physical money services. In August, ministers announced plans to enshrine in law most people’s right to have facilities within a reasonable distance of their homes and businesses.
But she will add that not enough action has been taken to ensure that “essential face-to-face banking services” are being maintained, particularly in town centres.
Economic secretary to the Treasury Bim Afolami said the pledge was “another example of Labour taking the easy way out and just saying what they think people want to hear — without saying how they would pay for it”.
He added that the Conservatives were working with banks to open banking hubs across the country while ensuring access to banking services is available in almost 12,000 Post Office branches.
