Baroness Noakes (Con)

My Lords, in moving Amendment 18, I will also speak to my Amendments 19, 20 and 25 in this group; I am grateful to the noble Lord, Lord Vaux, for adding his name to them. We now move on to Clause 3, which gives a very wide power for the Treasury to make pretty well any provision it feels like about providing access to banking services. It is a fact of life that major banks in the UK have been reducing their branch footprints for several years, in response to the massive shift from in-person banking to online and mobile banking. Branch visits have fallen by more than 90% since the 1980s, and debit cards overtook cash transactions in the 2010s. In 2024, only 9% of transactions were made in cash, while 93% of adults used online or mobile banking. At the same time, the activity that banks could conduct safely via branches diminished. Some might think nostalgically of the era of autonomous bank managers making lending decisions and offering investment advice, but those days have been largely risk-managed out of retail banking. Noble Lords will be aware that the 2023 Act gave the FCA powers to protect access to cash services. I did not think that those powers were necessary, because I could see that cash was definitely on its way out, but I accept that banks have to continue to provide cash until cash-only users drop to an insignificant number. The banks have agreements with the Post Office and have voluntarily signed up to the provision of 350 joint banking hubs that provide not only cash services but, to a more limited extent, the services of community bankers. I know that some consumer lobby groups have had statutory protections for more than cash services in their sights for some time, but it is far from clear whether more needs to be done beyond the banking hubs, which are still being rolled out. I have never seen a clear exposition of what services are missing, so I have no idea whether they are realistic in terms of continuing provision, hence I am unconvinced about the case for either statutory intervention or further regulatory powers. The case may be made when the review being undertaken by Mr Richard Lloyd reports, but that is the time for the Government and Parliament to decide whether a statutory remedy is necessary. Frankly, it is bizarre that the Government set up the Lloyd review in the very month when they announced in the King’s Speech that they intended to legislate. Normally, we consider matters then determine whether legislation is necessary, but not in this case. Even if Mr Lloyd’s review finds that further banking services are needed, that does not inevitably lead to the need for further laws. The banking hub arrangements that I referred to are not in existence as a result of the 2023 Act, as the banks had already started to set them up. The banks are generally well aware that they are an essential part of the fabric of our society and that responsibilities go with that. I turn to my amendments. Amendments 18 and 19 are straightforward. Amendment 18 says that the Treasury would have to consult the banks and anyone else who might be affected before making regulations. I am quite sure that Mr Lloyd will be diligent in discussing the issue of banking service provision with the banks during his review, but that is no substitute for the Treasury itself being required to consult the banks before any regulations are made. Whatever Mr Lloyd’s review concludes, it is the Treasury in the first instance that needs to decide what, if any, burdens to impose on banks, hence it is absolutely necessary that they are consulted. Amendment 19 would require the Treasury to be satisfied that the banking services which might be covered by regulations would not be provided voluntarily. There is no need to create regulatory burdens where the desired outcomes can be achieved by other means. As I have already said, retail banks are aware of their societal responsibilities; they will also be aware of the Treasury’s power under Clause 3 to require them to do things. Hence it is highly likely that, if Mr Lloyd comes up with reasonable recommendations, there will be a voluntary agreement. That would in effect leave the power in Clause 3 to make regulations in place to make less than reasonable recommendations into law, which is particularly why Amendment 18, which requires consultation, would be essential. My other amendments in this group, Amendments 20 and 25, are intended to ensure that any use of the regulation-making power in Clause 3 is rooted in the findings of independent reviews. At present, the regulation-making power is unlimited and its only restriction is to have regard to the findings of the Lloyd review. It does not even have to follow the findings of the Lloyd review. That review might make recommendations which the Treasury does not wish to pursue at this time. Amendment 25 would ensure that if the Treasury wished to resuscitate such recommendations at a later date, or indeed to pursue other approaches to the provision of banking services, then it would have to have another independent review to validate the necessity for using the power. Amendment 24 in the name of the noble Baroness, Lady Bowles of Berkhamsted, would tie the use of the Clause 3 power to the Lloyd review. I see the rationale for that, but I wonder whether her amendment might ossify the concept of banking service provision into mid-2026. I am sure that the need for in-person banking services will carry on changing long after Mr Lloyd has submitted his report. I predict that we will end up with only a very small number of bank customers who actually need in-person services. The last thing that we want to do is to make the banks carry on providing them if those services are not generally needed, because the costs would be borne not by the banks but by all bank customers, so we would be shifting burdens from one small set of consumers to another. The noble Lord, Lord Vaux of Harrowden, has tabled a Clause 3 stand part notice, with which I have very much sympathy. The Government have stated in the Explanatory Notes, and the Minister repeated at the Dispatch Box at Second Reading, that the Government intend to narrow the power during the Bill’s passage. My own view is that it is unacceptable for the power to leave your Lordships’ House in its current wide form. The Government must narrow the power while we are scrutinising it in your Lordships’ House, since it is unacceptably wide as it stands. I beg to move.