Simon Read: Leaving customers in the lurch should not be the mutual way

Closing branches and leaving customers in the lurch is what we expect from our profit-hungry banks. So hearing that some 670,000 people in south-east London will lose all seven branches of a financial institution in the next two months, it sounds like business as usual. Until you discover that the firm pulling out of the area is the UK's biggest building society.

The Nationwide has announced plans to shut its branches in Blackheath, Catford, Elephant & Castle, Greenwich, Lewisham, Peckham and Woolwich by the end of May. The latter only opened three years ago in what Nationwide's boss, Graham Beale, described as "a prime example of the investment and commitment Nationwide has in its branch network".

Does the withdrawal mean that the Nationwide no longer has a commitment to its branch network? News that it is shutting branches in north London as well as two in Swindon, where the mutual has its head office, is also of concern. The society says it has advised customers of "branches nearby", but the nearest are in Bromley or Eltham. Labour MP for Greenwich and Woolwich, Nick Raynsford is angry.

"How can a building society, with cooperative roots and a supposed commitment to mutual banking, effectively walk away from the whole of the inner south-east London region?" he asks. Yesterday he took his concern to Parliament, hosting an adjournment debate on the issue in the House of Commons.

The Nationwide defended the closures by saying that the branches are "no longer economically sustainable". But the move will leave many of its customers too far away from their nearest branch. Does that mean they will be financially excluded? In all the south-east London areas affected, there remain bank banches so the short answer to that is no.

It means the building society's withdrawal won't leave local people without access to banking services. But it will leave their customers in the area with a stark choice: bus or train to their nearest branch or shut their accounts and move to one of the banks that still offers local services. I wouldn't normally advise people to close their building society account and move to a bank, but for anyone in the affected areas who needs to visit a branch, that looks like their only option.

But doesn't the Nationwide have the right to shut branches where it is losing money? How would customers feel if they were told that the cost of their mortgage was rising to cover the expenses of keeping uneconomic branches open? The short answer, I suspect, is that most would rather have better value financial products than know that their mutual was serving customers across the country, even in disadvantageous areas.

It's clear that the Nationwide has to remain profitable to continue, so closures of branches are inevitable. If it was the last branch in town, that would be a different issue, and then I would hope the government would step in to help ensure that the building society – or indeed any bank in a similar position – could afford to maintain the branch.

But accepting the loss of a few branches is a little different to accepting that the Nationwide is right to reduce its branch network. Some worry that May's move may only be the tip of the iceberg as the Nationwide streamlines its business even more into concentrating on profits rather than people. So I'm happy to remind the mutual of its commitment to its customers who do, after all, own the business.

Children will suffer most from cuts

next week's Budget is Chancellor George Osborne's opportunity to reverse policies that are threatening Britain's poorest families. As children's charity Barnardo's points out, things will get tough for struggling families in April due to the Government's reforms.

From next month working parents will only be able to claim for 70 per cent of their childcare costs, rather than the current 80 per cent. On top of that they will need to work longer – for 24 hours instead of 16 a week – just to qualify for working tax credits.

"If this mounting pressure on poor families is ignored, we are storing up even greater trouble for the future," warns Anne Marie Carrie, chief executive of Barnardo's. "Employment is the only long-term route out of poverty.

"With almost 60 per cent of children living in poverty having a parent with a job, it is imperative that they are not left worse off through work – yet the Government has created disincentives to work which need to be re-assessed and fast."

s.read@independent.co.uk

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