Labour will bring banking back to the high street with 350 banking hubs

Labour will bring face-to-face banking back to the high street with 350 ‘banking hubs' to be open in towns and villages across Britain over the next five years.

Under the Tories, since 2015, 6,000 bank branches have closed, contributing to the creation of ‘ghost high streets' across Britain.

High street businesses - from pubs, to hairdressers, to grocery stores - depend on access to face-to-face banking.

Banking hubs are bricks and mortar, face-to-face banking services that provide access to cash withdrawals, cash deposits and banking advice and support.

Funded by the major banks, they are run by Cash Access UK and the Post Office. They allow customers from more than a dozen different banks and building societies to access face-to-face banking services on the high street.

Labour announces today that it will give new powers to the regulator - the Financial Conduct Authority (FCA), and strengthen regulation to support LINK - the UK's largest cash machine network, to proactively source locations for new banking hubs.

The banking hubs are part of Labour's plans to breathe new life into Britain's high streets by:
 

• Replacing business rates
• Stamping out late payments to SMEs
• Cracking down on anti-social behaviour
• Allowing communities a new ‘right to buy' beloved community assets like pubs
• Creating 350 banking hubs.

All of Labour's policies are fully-costed and fully-funded, as set out in 'Change', Labour's manifesto that was published last week. 

Rachel Reeves, Labour's Shadow Chancellor of the Exchequer, said:

 “After 14 years of the Tories, many of our high streets have been reduced to ghost towns. This election is a chance to vote for change to end the chaos and decline and make our high streets better off.

 “Labour's plan for growth means bringing banking back to high streets, with hundreds of new banking hubs that can support local communities and their businesses.

“Change will only come if you vote for it on 4 July. It's time for change with Labour.”

Angela Rayner, Labour's Deputy Leader and Shadow Housing Secretary, said:

“The Tories have turned their backs on the small business owners working to keep our country's high streets alive. 6,000 bank branches have closed - a symbol of Tory decline. 

“Labour is the party on the side of small businesses. With our plan to bring banking back to the high street, replace business rates and cut energy bills for good, we will breathe new life back into Britain's high streets.”

Labour's announcement today follows research by London Economics that shows the move is expected to be worth £415 million for Britain's high streets. 

The Conservatives have delivered just 50 operational banking hubs as part of their voluntary arrangement with the banks.

Under the Conservatives' scheme, numerous communities have seen their application to LINK for a banking hub unfairly denied. This includes Todmorden in West Yorkshire and Harpenden in Hertfordshire.

In contrast, Labour's plan could see at least 350 banking hubs quickly established on local high streets. Labour is proposing an update to the qualifying criteria to ensure fair treatment for bankless towns and underserved communities. 

The Labour Party also said it will give LINK and the FCA the powers they need to proactively identify areas that need a hub, in order to turbocharge the roll-out. Areas that currently don't have any high street banks will be first in the queue.

Labour will explore how hubs can support financial inclusion through digital training and debt advice.

Ends

Notes:

1. LINK currently operates a reactive model of deciding where banking hubs should be located:
   https://www.link.co.uk/initiatives/bank-hubs-assessment-process
2. Harpenden in Hertfordshire was denied a hub because it has a Nationwide branch:
   https://www.wiltshiretimes.co.uk/news/23878336.town-gutted-campaign-banking-hub-fails
3. There are 84 towns in the UK where the last local bank branch is a Nationwide. See full list of towns and communities published by Nationwide here: 
   Nationwide - Windsor's ‘one and only' branch - launches new community fund that donates £200 for every new account opened (nationwidemediacentre.co.uk)
4. As part of the government's voluntary agreement with the banks, LINK has been asked to analyse the impact of planned bank branch closures on local communities. If a branch of Nationwide Building Society remains in the local community they are unable to recommend a banking hub:
   LINK / Overview of branch closures announced by banks since January 2022
5. London Economics research is available here: https://londoneconomics.co.uk/blog/publication/the-value-of-banking-hubs-for-consumers-and-smes-june-2024/ 

Key findings are as follows:

The average value of an individual Hub to the local high street is up to £237,000 per year. The estimated value of 350 Hubs would therefore be up to £83m per year to high streets – or £415m over the course of a Parliament.

The estimated value of 500 Hubs would be £119m – or £593m over the course of a parliamentary term. These figures are likely underestimates and as the range of services evolves and the role of Hubs expands, their value could rise further (e.g. if banking hubs were to support financial inclusion outreach and as banks standardise and expand the offer in Hubs).

The figures may also be an underestimate of banking hubs' value to high streets, because the research does not provide a direct estimate of the economic activity that is supported by banking hubs by enabling local small businesses to operate.