Financial Inclusion

As this is a 30-minute wonder, there will be no time for a concluding speech from Martin Rhodes. I remind other Members present that they cannot make a speech; they can only intervene, with permission from the Member who has the floor.

I beg to move,

That this House has considered financial inclusion.

It is a pleasure to serve under your chairship, Dr Huq. We need a financial system that removes barriers to accessing affordable financial products and services. Those on lower incomes, older people, those with health issues and people with disabilities all have unique needs that an inclusive financial system should be engineered to support. The Building Societies Association reports that 14 million people have less than £100 in savings. According to Fair4All Finance, there are certainly more than 20 million people in financially vulnerable circumstances in the UK.

I thank my hon. Friend for securing this important debate. In my constituency of Southend West and Leigh, nearly 30% of people who are financially vulnerable are in the “squeezed and sliding” group—people with mortgages and rent commitments but on a low income and, most importantly, with limited savings. Does he agree that more needs to be done to encourage saving for a rainy day, perhaps including an opt-out payroll savings scheme?

I agree that we need to do more to encourage savings, but we also need to encourage the incomes that are required for people to make those savings.

The driving reason for this level of financial exclusion has been attributed to an increase in low or unstable incomes, lack of savings and life events such as loss of work or bereavement.

I commend the hon. Gentleman for securing this important debate. I am a firm advocate of local credit unions that provide access to affordable loans and help with learning how to save. Does he agree that financial inclusion must be available in small villages and towns through sound help and advice? Does he also agree that banks need to come back to the villages and stop the centralisation of services, which isolates people from the guidance they need?

I agree that we need to look right across the board at the different ways in which people are excluded from financial services, including people living in smaller villages and towns. I also agree about the importance of credit unions to financial inclusion.

It has been reported that 41,500 people in Glasgow North are in financially vulnerable circumstances. That is 44% of the adult population, which is far higher than the national average of 38%. With financial exclusion increasing, the Government must take steps to mainstream inclusive policies and practices in our financial system, which is why I support the Government’s appointment of the Financial Inclusion Committee and the soon-to-be-published financial inclusion strategy.

I congratulate my hon. Friend on securing this important debate. Does he agree that the publication of the Government’s financial inclusion strategy is welcome, given the urgency of the circumstances that many people face? For example, 37,000 people are affected in my constituency of Watford, and we are higher than the national average in three major metrics of need for this vulnerability.

I agree that the financial inclusion strategy is a very welcome step in developing, co-ordinating and implementing interventions to support financial inclusion in the UK.

Subsequent policy decisions stemming from the strategy will have to work for a broad range of groups in society. Many face financial exclusion for different reasons, including older people, disabled people and young people.

I thank my hon. Friend for raising this important subject. In Ayr, Carrick and Cumnock, 30,000 adults—40% of the population—are financially vulnerable. That is higher than the national average, and it is hitting older residents and carers especially hard. There are too many forgotten families struggling to access credit, savings and insurance. The upcoming financial inclusion strategy is a vital chance to make a change. Does my hon. Friend agree that we need to work with the Government to ensure that those communities have the financial safety nets they need to thrive?

I agree that we need to make sure that all communities have access to financial services, wherever they are and whoever they are. Everybody needs access to those services. I will welcome hearing from the Minister later about the financial inclusion strategy.

I hope that the hon. Member agrees that the Financial Conduct Authority’s work on access to cash is a useful step in the right direction. Does he also agree that provision should be widened to include face-to-face services, whereby people can see someone across the counter and receive advice?

I certainly agree. Later in my speech, I will come on to the issues of access to cash and face-to-face financial services.

All the groups that I have mentioned face barriers, but an area of particular concern that I wish to focus on this morning is financial inclusion for disabled people. Much of my thinking on the issue has been informed by the hard work of the Advisory Group, or TAG, a Scottish charitable incorporated organisation run by and for people with disabilities and abilities. Glasgow TAG’s banking campaign steering committee came together in response to growing frustration among TAG members about how banking is excluding them, both in terms of access and in terms of treatment. They have highlighted to me the very real financial exclusion that they face in everyday life.

A key issue that the group has raised with me is access to cash. Many members rely on cash for daily budgeting. The shift to card-only businesses and the closure of free-to-use ATMs are leaving people unable to spend their own money. Quarriers, one of Scotland’s largest social care charities, reports that 76% of people with learning disabilities rely on support with their finances, and the same proportion use bank cards to withdraw cash. In my constituency, we have seen a 22% decrease in free-to-use ATMs between 2019 and 2025. This has created cash deserts, where communities are left without access to cash machines, and those that remain often charge for withdrawals or are inside premises with closing times. I hope that the Minister will engage with the issue and acknowledge the importance of continued free access to cash for financial inclusion.

The second issue that TAG has raised is discrimination in branches. TAG members have shared experiences of being ignored in favour of support workers, denied access to their own accounts or treated with suspicion. There is a strong feeling among TAG members who have spoken to me that financial institutions are not doing enough to meet their obligations under the Equality Act 2010. Will the Government consider supporting mandatory disability awareness and equality training in banking institutions, to help prevent such incidents?

I thank my hon. Friend for bringing to the House this important topic, which is very close to my heart. I have had a lot of representations from disabled constituents in Hampstead and Highgate who are very worried about similar issues to those that he describes. They are also worried about the poverty premium in the insurance market, which I am sure my hon. Friend will touch on. Does he agree that any future inclusion strategy needs to address the poverty premium that exists in the insurance market, especially for our disabled constituents who have urged us to make a difference to their life?

Yes, I agree that we need to look right across the whole range of financial services, including insurance, as well as those that we have touched on. Exclusion from one service can often lead to exclusion from another and then another. Failing to get access to one service means that people are less likely to get access to another, and the problem becomes greater.

Does my hon. Friend agree that it is totally unfair that many people, including many constituents of mine, find themselves excluded from some of the best utility deals because they do not have a bank account, so they are unable to pay by direct debit? Effectively, that cuts them off from some of the best deals that are available across a range of products and services.

I agree. Financial exclusion has a cumulative effect: if someone is excluded from one financial service because they do not have access to a bank account, they may well find themselves excluded from others. As my hon. Friend says, they may be unable to pay for utilities or other services by direct debit, which would allow them to get the best deals. That cumulative impact is a very big issue.

The last issue that has been raised with me by TAG members is digital exclusion and branch closures. The transition to online banking is simply not accessible for many TAG members, and the closure of local branches has made it harder to get support in person. With the closure of high street banking, we are seeing the loss of the important face-to-face contact that can support people with learning disabilities with access to financial activities.

I support the Government’s work with industry to roll out at least 350 banking hubs that will provide communities with critical cash and banking services. I would welcome any reflections from the Minister on what the Government are doing to ensure that digitalisation does not leave people behind and to support the role of banking hubs. I acknowledge that for many people digital access increases the ability to get services, but for others it does not. That shows the need for a range of ways to access financial services, so everybody can access them.

I thank the hon. Member for securing the debate and for highlighting the importance of addressing branch closures. In the market town of Halesworth in my constituency, the post office closed its doors for the final time last Saturday—I have been pressing the Post Office for a replacement facility as soon as possible—while Barclays, which is the only bank provider in the town, will cease its weekly facility at the library in the coming weeks. This reinforces his point about the importance of banking hubs as a potential solution for in-person support. Will he reiterate the importance of the Government speeding up the roll-out of banking hubs, particularly for rural communities?

I agree that there is a need for face-to-face services. Many people rely on that face-to-face support, so access to banking services through banking hubs is important. I welcome the Government’s roll-out of the hubs, and I look forward to what the Minister has to say about how the scheme will be developed.

Beyond the issues that TAG raised with me, there are many other disabled groups with particular needs, such as blind and partially sighted people. The Royal National Institute of Blind People has reported that only two in five blind and partially sighted people manage their finances independently, and over half of those who do not do so say that it is because of their sight loss. The common reasons that they cite are a lack of confidence and facilities no longer being available. Other experiences of financial exclusion that they report include information not being in an accessible format, a lack of trained bank branch staff and a lack of digital literacy for the transition to digital banking. That is just one example that shows how a truly inclusive financial system will have to be tailored and adaptable to the needs of a diverse range of people.

These are reasons why the financial inclusion strategy must be informed and shaped by the experience of people with disabilities and abilities. The Government must facilitate a proper dialogue between banks and disability groups. Disability-sensitive staff training is needed. Access to cash needs to be protected, including with more free ATMs and inclusive banking hubs. More broadly, the Government must tackle barriers to individuals’ and households’ ability to access affordable and appropriate financial products and services.

My partner, who is a financial adviser, often tells me that people come to her far too late in life, when they are in trouble. Does my hon. Friend agree that we need to be more inclusive with education on finances, to gear up the next generation to support themselves, set up pensions and so on?