MPs committee urges RBS to reverse branch closure plan

RBS branch on Barra

A threatened RBS branch on Barra


UK government ministers have been urged by a committee of MPs to pressure the Royal Bank of Scotland to reverse the closure of branches in Scotland.

The Scottish Affairs Committee has today published a report saying the plan to shut 62 branches will have an adverse impact on communities.

MPs want the government to use its 71% shareholding in the bank to intervene and force it to reconsider. The bank plans to close 52 branches while a further 10 initially scheduled to shut are under review.

Colin Borland, head of devolved nations at the Federation of Small Businesses, said: “The committee rightly recognises that RBS branch closures will have an adverse impact on individuals and communities. The RBS closure programme will also make it more difficult to run a business in many parts of Scotland.  

“We are therefore pleased that the committee agrees with us that the UK Government should step in and get some value from its shareholding. Ministers must stop sitting on their hands and ask hard questions of the taxpayer-backed bank.” 

The report argues that the running of these branches is a cost RBS can easily afford after the bank made profits of £792 million in the first quarter of 2018, three times higher than profits made in the same period last year.


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The committee has also noted its disappointment that the UK Government did not use its influence to prevent branch closures. It has recommended that Access to Banking Standards, a voluntary regulatory standard for banks should be transferred into statute should public confidence in the current regime fail.

Ross McEwan has stated that there will be no further reviews of branches until 2020. The committee has said that should any future review lead to more branch closures in Scotland, RBS must provide detailed information about how the local or technological situation has changed to such a degree as to justify a further round of closures.

It also emerged after the last hearing that RBS’s claim not to have targets for switching customers to online banking was contradicted by a leaked document which showed precisely such a goal for staff. 

Labour MP on the committee Ged Killen said:  “RBS has claimed in its advertising campaigns to be the ‘Royal Bank for Scotland’, however these closures have seen those warm words turn into hot air.

“If RBS was the ‘Royal Bank for Scotland’ it would halt and reverse these closures, instead RBS will, I have no doubt, close those 10 banks it has given a stay of execution to irrespective of how they are used. 


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“Throughout this process Ross McEwan has dragged his feet when we have sought to engage with him. As a Labour group we will demand that he is re-summoned before the committee should any further branches be put under threat. 

“RBS’s actions have demonstrated that it is not the ‘Royal Bank for Scotland’ but the Royal Bank that left Scotland.”

Mr Killen last week introduced a bill in Parliament (Banking (ATM Charges and Financial Inclusion Bill) that would have transferred the Access to Banking Standards to the Government regulator, as well as introducing a penalty requiring banks to provide funds for communities to set up new banks if they fail to meet minimum standards.

He said: “Under these plans Scottish communities would have been left with funds to set up their own community banks, rather than nothing.”

Labour MP Danielle Rowley, who also sits on the committee, said: “We’ve watched RBS representatives twist and turn in front of the committee but it does not feel like we are much closer to the truth.

“Indeed some of the evidence given just the other week about there being no targets to switch customers online was immediately contradicted by a leaked document which showed there absolutely were.


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“While some of the switch to online is happening organically, it is not happening with the indecent haste RBS would like it to. These targets are less of a nudge to customers and more of a shove. It’s time people pushed back.

“If RBS will not behave in a responsible way towards its customers, who as taxpayers are also ultimately its owners, then it must be compelled to do so.”

Hugh Gaffney, another Labour member of the committee, said: “Ross McEwan told the committee that ‘change is difficult’. Well, if it looks difficult to him he should try seeing it from my constituents’ perspective. 

“RBS keep telling us that they can close branches because more people are banking online, but what about those who don’t, particularly older people who can’t be convinced that it is secure?

“I accept that many people do bank differently these days but I take issue with the speed that change is being forced through at and the damage it is doing to communities along the way.

 “Until RBS accepts that their closure programme will disproportionately affect the worst off and the most vulnerable, they will never understand the frustration felt by customers across Scotland.”


MPs committee urges RBS to reverse branch closure plan was originally published on Daily Business


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Firms face Irish-UK VAT burden after Brexit

Charlotte BarbourAccountants are calling for a change in the law in the UK and Ireland to alleviate the VAT burden on importers after Brexit.

Scottish accountancy body ICAS and Chartered Accountants Ireland say that an overlooked side-effect of Brexit is that VAT will become an upfront cost for imports between the two nations for the first time after the UK leaves the EU if the current law is not changed.

UK and Irish businesses that regularly trade with one another will face a heavy cash flow burden as they will be forced to pay VAT, along with customs duties, at the time goods are imported and then recover the costs later.

Given that more than €30 billion of goods are exchanged between the two jurisdictions every year, this major change will cause significant upheaval to every business involved in imports.

At the moment, VAT on imports between EU countries is paid when VAT returns are filed; which in many cases can be several weeks later. Once the UK leaves the EU, the practice of paying VAT will differ drastically.


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Charlotte Barbour, director of taxation at ICAS (pictured), said: “UK businesses currently benefit from postponed accounting for VAT when importing goods from the EU, but this could change after Brexit.

“While the UK Government has recognised the benefits of postponed accounting it hasn’t yet committed to replacing it.

“Leaving the EU without a solution in place in either the UK or in Ireland would create cash flow costs and administrative burdens – all generated by Brexit – and none of which exist at present.”

Chartered Accountants Ireland President Feargal McCormack stated: “Any mechanism to minimise cash flow issues and time delays after Brexit is welcome. An easy-to-implement solution would be allowing traders some extra time to pay the import VAT due on goods coming from the UK into Ireland.


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“Under the so called ‘postponed method of accounting for VAT’, importers would not have to pay VAT at the point of entry but instead declare the VAT in the next VAT return filed with Revenue.”

For many traders, an upfront VAT liability could be quite substantial and in reality could obliterate the cash reserves of a business. Affected businesses are normally afforded the opportunity to offset certain VAT costs against the VAT liability, therefore reducing the amount due but an upfront VAT charge does not enable this reclaim until a later date.

Mr McCormack said: “There are several existing precedents for this legislation and the postponed method of accounting for VAT would be relatively straightforward to introduce. 17 EU Member States have already adopted this method and many of these countries have land borders with non-EU countries.

“Postponing the payment of VAT makes practical sense for businesses that will already be challenged by the upheaval of Brexit. An added advantage would be that this proposed system would largely reflect the existing VAT collection mechanisms for trade within the EU and companies are already very familiar with this method.”



Firms face Irish-UK VAT burden after Brexit was originally published on Daily Business