ATM Closures — [Mr Philip Hollobone in the Chair]

– in Westminster Hall at 9:30 am on 4 December 2018.

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Photo of Ged Killen Ged Killen Labour/Co-operative, Rutherglen and Hamilton West 9:30, 4 December 2018

I beg to move,

That this House
has considered the effect of ATM closures on towns, high streets and rural communities.

It is a pleasure to see you in the Chair, Mr Hollobone. I and other hon. Members on both sides of the House have been raising the closure of ATMs and its impact on our towns, high streets and rural communities for some time. The issue is more pressing than ever. In November 2017, LINK, the ATM membership body that sets the funding for free-to-use ATMs, began consulting on proposed cuts to the funding mechanism known as the interchange rate fee—a fee paid to the ATM operator, by the bank or company that issues a consumer’s bank card, when cash is withdrawn. Prior to LINK’s reductions, that fee was 25p. In its consultation, LINK proposed reducing the fee to 20p through four rounds of cuts beginning on 1 July this year and ending in January 2021, although the third cut was cancelled and the fourth has been put under review.

From the beginning, LINK accepted that those changes would lead to ATM closures. In its analysis and consultation documents, it stated that it expected a decline of between 1% and 11% in free-to-use ATMs, but that it was confident that there would be a reduction only in areas with a high concentration of free-to-use ATMs, such as cities. However, the number of closures has been far higher —approximately 250 per month—since LINK announced its consultation. Operators such as NoteMachine and Cardtronics say they expect to lose thousands of machines each, and new installations have been put on hold.

Photo of Yvonne Fovargue Yvonne Fovargue Shadow Minister (Housing, Communities and Local Government)

Does my hon. Friend agree that one of the major problems is that the machine operators—Cardtronics and so on—do not have to inform the LINK network before closing a machine, and that the cost of replacing a machine is prohibitive?

Photo of Ged Killen Ged Killen Labour/Co-operative, Rutherglen and Hamilton West

My hon. Friend anticipates my next point. If an ATM is removed, it costs between £7,000 and £10,000 to reinstall. That high capital investment means that, once closed, an ATM is difficult to replace, due to concerns that the investment may not pay off.

LINK sought to reassure the Payment Systems Regulator that the spread of free-to-use ATMs would not be damaged, because it would use its financial inclusion programme to protect ATMs in areas where there was not another free-to-use machine within 1 km. However, although it is well-intentioned and well funded, that programme relies on communities or operators reporting vulnerable ATMs to LINK and nominating them for extra funding, which, as my hon. Friend alluded to, they do not have to do.

The problem is that the existence of the financial inclusion programme is not well communicated, and there is concern that take-up has been poor. Anecdotal evidence suggests that the process for accessing the programme is not well known or straightforward, meaning that communities, operators and councils are often delayed in applying for funding.

I spoke recently to Tesco about its network of more than 4,000 ATMs. As I am sure Members know, many of those ATMs are in groups of two or three outside stores. Tesco told me that in some cases, those two ATMs are the last two in the town, but neither falls under LINK’s financial inclusion programme because both are right beside another free-to-use ATM.

As a consequence of the poor deployment of the financial inclusion programme, more than 100 ATMs with “protected” status have closed. We see examples of the programme failing in Scotland. Just outside Edinburgh, in the EH18 postcode, the nearest free-to-use machine is now 1.3 km away. In the PH24 postcode in the Cairngorms, the nearest machine is 6.6 km away. In TD10 in the Scottish Borders, some consumers must travel 10.9 km to withdraw their cash without charge.

Photo of Jamie Stone Jamie Stone Liberal Democrat Spokesperson (Armed Forces), Liberal Democrat Spokesperson (Defence)

I am extremely glad that the hon. Gentleman is making an issue of the distance between ATMs. My constituency is vast and remote, and we have a thin scattering of ATMs. There is a threat of closure. I have a map here. I assure the hon. Gentleman that the distance between some of those ATMs is more than 10 km. If any one of them closed, that would be severely detrimental to my constituency.

Photo of Ged Killen Ged Killen Labour/Co-operative, Rutherglen and Hamilton West

I thank the hon. Gentleman for making that point. He came along to an event I held in conjunction with Which? where that information was available to Members from across the House. Many Members were surprised to learn just how far apart ATMs are in their constituencies, and how vulnerable each of those areas would be if something happened to one of those machines.

The 1 km rule just is not working. Even if it were, things can go wrong quickly when one of the last remaining machines develops a fault or runs out of cash. I stopped off in Ballantrae in South Ayrshire over the summer recess, which seems a long time ago now. When I went to use the ATM, I discovered it was out of service. There is a post office counter in the local shop—we would need an entirely separate debate to talk about the pressure post offices are under to try to meet the gap in services created by the banks—but when I went into the shop to inquire, I discovered that the next-nearest ATM is more than 20 km away, or almost 13 miles in old money.

The other issue is that it is difficult to take account of local circumstances in applying the 1 km rule. In Cambuslang in my constituency, both free-to-use ATMs at either end of the main street are—excluding the other—within 1 km of another ATM, but those alternative ATMs would be not just inconvenient but very difficult to get to for anyone who experiences mobility issues. The closure of either ATM on the main street would have a massive impact on the small businesses in that area, which are already really feeling the pressure.

Photo of Gregory Campbell Gregory Campbell Shadow DUP Spokesperson (International Development), Shadow DUP Spokesperson (Cabinet Office)

I congratulate the hon. Gentleman on securing this timely debate. Does he agree that in coastal towns—particularly in my constituency but in others, too—we sometimes see the dilution of ATMs? A filling station might open with an accompanying shop and ATM, but the ATMs in the town centre might close, thereby exacerbating the problems we have with reinvigorating our town centres.

Photo of Ged Killen Ged Killen Labour/Co-operative, Rutherglen and Hamilton West

The hon. Gentleman is absolutely right. He makes an excellent point about the existing pressure on our high streets. Removing ATMs and other services does not help that pressure one bit.

LINK has now been given a specific direction by the PSR to review its financial inclusion programme, due to its failure to protect the spread of free-to-use ATMs. However, I have little confidence in the regulation of the sector. LINK’s changes to ATM funding were the PSR’s first major regulatory hurdle. In my view and that of many stakeholders, it fell at that hurdle. Common themes related to the reporting of issues and access to the financial inclusion programme have been reported by those involved in the industry pretty much since day one. I sat across from the PSR and explained the concerns I had heard about the closure of free-to-use ATMs and about their operators, and from the many people who are against the cut to LINK’s interchange fee, and I was met with silence. On every occasion when concerns were raised, the PSR failed to act. Only latterly has it taken action.

Photo of Ruth George Ruth George Labour, High Peak

I thank my hon. Friend for bringing forward this important debate. My very rural constituency is similarly affected. When I met the PSR, I found its attitude was, “Wait and see whether there are any problems, and then we might think about acting.” Does he agree that that is not the correct attitude for a regulator to take when it has such a weight of evidence before it that there will be problems?

Photo of Ged Killen Ged Killen Labour/Co-operative, Rutherglen and Hamilton West

My hon. Friend is absolutely right. When I met the PSR, it seemed wholly satisfied with listening to what LINK, rather than everyone else involved in the industry, had to say about the issue. That was surprising and disappointing.

The closure of free-to-use ATMs highlights the significant problem we have with the way access to cash is managed in the UK. There seems to be no effective oversight of the issue, and responsibility sits across numerous Departments, regulators and private companies. We need a regulator to have the powers to take a rounded view and implement effective measures that will ensure access to cash is protected. It seems likely that the PSR either does not have the power it needs or has not utilised fully and effectively the abilities it has. I should be grateful if the Minister would comment on that.

We are in a transition towards a cashless society, but we are not there yet. We need to be careful about how the transition is managed. Most importantly, we have to think about the impact on people who still rely on cash. Access to cash remains an important part of many of our constituents’ lives. Research from Which? has highlighted the fact that four in five people said that access to the free-to-use network was important in their daily lives and in paying for goods and services. Removing free access to cash would leave one in 10 people struggling to make payments, and would shut many consumers out of local shops and services.

We also need to think about what happens when the technology fails or in the case of hacking. This year the Visa payment system crashed and there were major online banking issues for TSB customers, many of whom of course did not have a local branch to visit as an alternative. The experience of other countries further along the journey towards a cash-free society, such as Sweden, where there has been a huge rise in the number of places that simply will not accept cash, is that there are now serious concerns about the lack of cash in the economy, so that the Government are looking at ways of addressing that retrospectively.

Photo of Ruth Smeeth Ruth Smeeth Labour, Stoke-on-Trent North

Does my hon. Friend agree that another challenge is the fact that in many communities there simply is not access to digital platforms—so that 25% of my constituents have not accessed the internet in the past six months? Moving to contactless payments or online banking is not an option available to them.

Photo of Ged Killen Ged Killen Labour/Co-operative, Rutherglen and Hamilton West

My hon. Friend is right. My constituency is neither rural nor a city; there are new-build towns that are in between, with surprisingly poor access to broadband in some places. We are asking people to use those services instead of visiting a local branch. That is not always practical—not least for those who are perhaps not as tech-savvy as others.

It is not just a matter of ATMs. The whole infrastructure that supports access to cash will be at risk if we move towards a cashless society too quickly. Without intervention from the Government it will be the elderly, the least well-off, rural communities, struggling high streets and small businesses that will pay the price. We see that happening in other countries that have made the transition too quickly. That is the driving force behind my private Member’s Bill to ban ATM charges and protect access to cash, the Banking (Cash Machine Charges and Financial Inclusion) Bill. In principle I do not believe people should have to pay for access to their own money. Long gone are the days when people’s employers handed them a pay packet at the end of the week, and the banks would not much like it if we all decided to keep our cash under the mattress. We have little choice but to keep our money in banks, and that money generates profit for banks, so we should not be paying to get access to it.

As LINK chips away at the funding formula for ATMs and more and more people use contactless and digital payment methods, there will be far fewer ATMs and more of the ones that are left will charge us for the privilege of withdrawing our cash. I do not want to stand in the way of progress towards a cash-free society, but I do want to shift the burden of that transition away from consumers and on to banks, who after all are the long-term beneficiaries of a cash-free society. We will never reap the rewards of those savings when they come, so let us have them now by requiring the banks to continue providing free access to cash where there is still a demand for it.

I was glad that the Labour party adopted the aims of my private Member’s Bill. For me, and for the Labour Front Bench, the rejuvenation of the high street is not just about helping small businesses; it is a social issue as well. I have noted that there is a growing cross-party consensus on the issue. Huw Merriman—he is not here for the debate, but I have notified him that I shall be mentioning him—has a private Member’s Bill on ATMs, the Minimum Service Obligation (High Street Cashpoints) Bill. I agree with Luke Graham, who is here today and who, with his private Member’s Bill, the Banking and Post Office Services (Rural Areas and Small Communities) Bill, has highlighted the responsibilities that banks have to the consumers who bailed them out during the financial crisis. In addition to what is being done by Members of this House, a range of organisations have raised the same concerns. They include Which?, the Federation of Small Businesses and the Association of Convenience Stores.

I recently met the chair of the independent access to cash review, and I know that the review is considering in detail some of the issues I have touched on in the debate, so I look forward to seeing what comes out of that. However, in the context of bank branch closures up and down the country, and with high streets and rural communities facing ever greater challenges, the Government must take a serious look at the issue now. I hope that the Minister will reflect on what I have said.

Photo of Philip Hollobone Philip Hollobone Conservative, Kettering

The debate can last until 11 o’clock, and five Members want to catch my eye. We have about 40 minutes of Back-Bench time, so if Members speak for more than eight minutes they will deprive someone else; please be courteous to each other.

Photo of Kirstene Hair Kirstene Hair Conservative, Angus 9:46, 4 December 2018

It is a pleasure to serve under your chairmanship, Mr Hollobone. I thank Ged Killen for bringing this important debate to the Chamber. I was delighted to support his recent ten-minute rule Bill on protecting access to cash and reducing charges, the Banking (Cash Machine Charges and Financial Inclusion) Bill.

According to analysis by Payments UK and the Bank of England, those who rely almost entirely on cash are much more likely to be in rural areas such as my constituency. Yet they are experiencing the greatest reduction in the number of machines since the funding reduction by LINK in 2018. The closure of ATMs on the high street is of particular concern to older residents, who are more likely to rely on such services. The ATM network in rural areas is therefore incredibly important in supporting rural economies. My constituency will soon lose the Bank of Scotland branch in Kirriemuir, and earlier this year we lost our Royal Bank of Scotland branch in Montrose. When we lose banks, we also lose the ATMs.

Such closures have a huge impact on rural high streets. High streets in Angus are struggling anyway, and the closures put further pressure on them, continuing to challenge their trading environment. The removal of ATMs only creates a further barrier and a disincentive to shoppers. That is why the UK Government and LINK should work together to make shopping on high streets as simple and straightforward as possible. Everything should be done to prevent rural communities from feeling the brunt of the fee reductions and the potential closures that might ensue.

Like many hon. Members, last week I visited many small businesses in my constituency. Among the matters that came up was the ATM issue, and the negative impact that card transactions can have on small independent businesses. Many ask that people spend a certain amount before they can make a card transaction, but if one in 10 people have to walk more than 30 minutes to find the closest ATM, they may just walk away from the transaction. There are differences between contactless payments and card payments, and those things all put more pressure on small independent retailers. That is why ATMs must be in place to support them.

The financial inclusion programme, which aims to identify vulnerable ATMs and increase the interchange payment by 30p, in order to keep rural ATMs financially viable and protect rural communities, is welcome, but there is a question as to how effective it has been. Despite the programme, research by Which? has shown that closure rates of free-to-use ATMs have still been at their highest in rural constituencies such as mine. The provision that people should not have to travel more than 1 km does not go far enough. In fact, it is not in place in every area in Angus, and today we have heard other Members say the same. Residents in Inverkeilor, a village in my constituency with a population of 1,000, must travel six miles to Friockheim to use a free ATM. That is well outwith the 1 km provision that should be in place.

Photo of Kirstene Hair Kirstene Hair Conservative, Angus

The hon. Gentleman is right. With declining public transport provision in rural communities, if someone does not have the provision of a car they are left completely stranded, with no access to cash.

Photo of Ruth Smeeth Ruth Smeeth Labour, Stoke-on-Trent North

Does the hon. Lady agree that one of the challenges is that LINK, when it makes these decisions, looks at a map and has no understanding of local territory? It has no idea how steep some of the hills are. Access can be almost impossible for someone trying to walk 1 km, never mind 10 km.

Photo of Kirstene Hair Kirstene Hair Conservative, Angus

I agree. That is why I want to talk about how important it is to do impact assessments before we lose the ATMs, so that those issues are closely considered.

The Association of Convenience Stores has criticised LINK’S FIP, saying that, “it is not clear whether LINK has the resources to implement these commitments across the network.” For example, LINK previously identified 2,651 deprived areas in the UK that are eligible for free-to-use ATM subsidy, but 10 years after the introduction of the FIP, 824 of those did not have free access to cash within a 1 km radius.

We need to watch what commitments LINK makes to ensure that ATM networks in rural areas are properly protected as rates are reduced further in the years ahead. The question is whether the LINK process of identifying vulnerable ATMs is working or whether we need to have further impact assessments. As Ruth George said, we need to ensure that this is not a “wait and see” game. We must work ahead of time to ensure that people are not negatively affected when they lose their ATMs. That is a huge issue across my Angus constituency, and for hon. Members across the Chamber.

Photo of Luke Graham Luke Graham Conservative, Ochil and South Perthshire

I know that my hon. Friend is drawing her speech to a close, but she is talking about impact statements, which are especially important. It is something I raised in my ten-minute rule Bill. Does she agree that we need to have different impact analysis for rural and urban areas? Some of the evidence she cited about constituents being disadvantaged is the same for Ochil and South Perthshire. I have a constituent in her 80s, who lives in St Fillans, who was told to “nip to Perth” to do her banking. That is a journey of 50-plus miles that would take more than two hours on the bus, especially in bad weather. Members who know the geography and weather in my part of the world will appreciate that that is no easy feat for a woman in her 80s who walks with two sticks.

Photo of Kirstene Hair Kirstene Hair Conservative, Angus

I thank my hon. Friend for his intervention. I know his constituency very well, both the geography and the weather, so I know it is important, as I said at the beginning of my speech, that the most vulnerable in our society have that provision and that it is easy to access. I look forward to hearing the Minister’s response.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health) 9:53, 4 December 2018

It is a pleasure to speak in this debate. I congratulate Ged Killen on bringing forward an issue that is important for every one of us here. It is a particularly important issue for me, as I have fought for ATM retention in many places across my constituency, sometimes successfully and sometimes not, mostly due to bank closures. I will use the time available today to do that.

For those who hail from a rural constituency, the availability of free-to-use ATMs is essential. The hon. Gentleman and Kirstene Hair have both outlined the importance of that. In recent times, bank closures have severely affected rural communities, particularly those in my constituency, where I think we have had seven bank closures. I live on the Ards peninsula, and the effect of the closures on the rural community is intense. When the banks close, often no ATMs are retained because the building is sold and there is nowhere to put it, which is very frustrating. My hon. Friend Mr Campbell made a salient point: whenever the banks move out of the villages and toward the town centres, the business moves with them, meaning that villages and small places come under intense pressure.

Photo of Yvonne Fovargue Yvonne Fovargue Shadow Minister (Housing, Communities and Local Government)

Does the hon. Gentleman agree that it is not just bank closures but post office closures that have that effect? Although the closure programme for small post offices has been completed, two post offices in my constituency have closed because the sub-postmasters have resigned and they cannot get anyone else to do it. The Payment Systems Regulator, which told me that cash is available at post offices, has not taken that into account.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

The hon. Lady is absolutely right. We have not had so many post office closures in my constituency—we have been able to defray those by moving post offices into shops and so on—but I know that the effect on rural communities is immense. On the Ards peninsula we recently lost the Ulster Bank branch in Kircubbin, with a mobile bank in place at present.

The British Bankers Association investigated lending data and found that bank closures dampen lending growth to small and medium-sized enterprises by a massive 63%. I am sure that other hon. Members can reflect that. The figure rose to 104% in areas that had lost their last bank. We must consider the impact on SMEs, because it is a significant and damaging drop in funding for areas already under commercial and economic pressure.

Photo of David Simpson David Simpson Shadow DUP Spokesperson (Environment, Food and Rural Affairs), Shadow DUP Spokesperson (Business, Energy and Industrial Strategy)

Does my hon. Friend agree that the fact that between 150 and 250 ATMs are closing per month in Northern Ireland, as the Belfast Telegraph recently reported, is causing major difficulties, especially for pensioners and those not able to get out?

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

My hon. Friend makes a salient evidential point, which contributes greatly to the debate. The removal of any ATM services will have a further, extreme impact on rural communities and convenience shops. It must be remembered that currently there remain more cash transactions than any other method. We need to ensure that cash is available to people as they need it and that we do not return to people hiding money in the house because they cannot easily access their cash.

I live in a community where it is not unusual for people to keep their money at home. Those of an elderly disposition more often than not even keep their savings there. A few years ago my wife’s aunt was burgled and lost her life savings as a result of two people taking advantage of a vulnerable lady with poor eyesight. More than one constituent has told me that since the latest banking crash they lift their money after pay day and keep it at home. That is not safe and it is not what we advocate. It must also be remembered that many ATMs provide other services such as pin number changes and balance inquiries. For those who do not have reliable broadband at home, these machines are essential for the correct control of finances. These problems make the ATM debate so important.

Polling research by Which? found that cash remains popular and important. The research showed that almost three quarters of people, or 73%, use cash at least two or three times a week, including 60% of 18 to 24-year-olds, which is quite interesting. Only 5% of people use cash once every three months or less, and the majority of consumers still rely on cash in some circumstances. Which? magazine research further found that 57% of consumers say that they have experienced a situation in the last three months in which they could only pay by cash. Two thirds, or 67%, of people say that cash is important for making small purchases, and six in 10 say that it is important for paying for occasional professional services, such as babysitting and cleaning.

Photo of Gregory Campbell Gregory Campbell Shadow DUP Spokesperson (International Development), Shadow DUP Spokesperson (Cabinet Office)

Does my hon. Friend agree that the other statistic we should bear in mind is that the number of contactless payments is going up exponentially every single month? The greater likelihood is that there will be many millions more of that type of payment, leading to greater numbers of breakdowns of contactless payments, which will leave people without cash or the ability to pay otherwise?

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

My hon. Friend illustrates clearly where the focus is moving as more people use contactless payment methods. Cash is still a widely used payment method. It is relied upon not just by consumers, but by those receiving payments, with 52% saying it is an important way of being paid. It is imperative that rural communities have access to these services, which I believe we must secure. That is why I support Which? magazine’s suggestion to deal with the ATM concern, which has been taken up by the magazine and other consumer bodies. It responded to the LINK review by pointing out that ATMs are only one part of the cash nexus that needs to be protected. It believes that without a wider strategy for cash, the closure of bank branches, post offices—Yvonne Fovargue referred to that—and ATMs could mean that the UK reaches a point where maintaining the current system of free-to-access cash is no longer viable. We have to look at the end result of what we are heading towards.

There are also potential risks to all UK consumers and businesses if we no longer have a sustainable cash network. Recent IT failures have underlined for many people who do all their transactions by card and are almost in a cash-free environment that, whenever their card or bank fails, they are in big trouble. For example, IT failures at RBS highlighted that the distribution of cash can be critical to national infrastructure and is often the only viable alternative if a consumer or business cannot make an electronic payment.

That is why Which? has called on the Government to take urgent action to protect cash by placing a duty on the Payment Systems Regulator to protect access to cash and to ensure the sustainability of the UK’s cash infrastructure. Will the Minister address that and assure the House, Members here and people watching from elsewhere that that will be the case? It would support consumer choice, prevent financial exclusion, ensure that there remains access to a secure, non-digital form of payment and promote effective competition across all payments.

With all that in mind, I put that suggestion to the Minister for his consideration. I look forward to hearing from him and the Government on how we can ensure that services are available UK-wide, particularly in rural areas. I again thank the hon. Member for Rutherglen and Hamilton West for securing the debate.

Photo of Douglas Ross Douglas Ross Conservative, Moray 10:01, 4 December 2018

It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate Ged Killen on securing the debate and on introducing it so well. I was delighted to agree to be a co-sponsor when the hon. Gentleman applied for the debate to the Backbench Business Committee, and I am grateful to that Committee for granting it.

I will divide my comments into two parts. First, it is abhorrent that we should be charged to take our own money out of ATMs. There are still a few in Moray that charge for use. If I come upon one, I will actually go away to another. It might end up costing me more in money, time, fuel and inconvenience, but out of principle I would rather go to another destination than pay a company to access my own money. It is simply unacceptable that, in 2018, we still have to pay some companies to take out our hard-earned money. My constituents in Moray are particularly aggrieved about that.

However, I will focus my remarks on the availability of ATMs in high streets and rural communities, as the motion mentions. ATMs have been critical to many communities in Moray for several years, particularly in Lossiemouth and Keith. A couple of weeks ago, Bank of Scotland announced the closure of eight branches across Scotland. Some are in the constituency of my hon. Friend Kirstene Hair, but 25% of those eight are in Moray—one in Keith and one in Lossiemouth. As well as potentially closing the branches next year, the bank will also remove the ATMs.

In the 2011 census, the population of Lossiemouth was just over 6,000. That has now boomed to more than 7,000. The P-8s are coming to RAF Lossiemouth in one of the biggest UK Government investments in our defence estate, which will boost personnel numbers at the base alone by 400, and those personnel will bring their families with them as well.

The town is expanding at an excellent rate, which is encouraged by the local community, yet Bank of Scotland has decided to close its very last branch in the town. With that it will take away the ATM, so a town with a population of more than 7,000 that is expanding will go from three ATMs to two ATMs. One of those is in the local post office at Buckley’s, which is up for sale. If it is sold and that ATM is lost, we could have a population of more than 7,000 and only one cash machine. That is simply unacceptable and cannot be allowed to happen.

Photo of Luke Graham Luke Graham Conservative, Ochil and South Perthshire

My hon. Friend makes a powerful point. Does he agree that banks are speaking with a little bit of a forked tongue? They are closing branches in the areas that really need them, such as his constituency and mine, but are happy to open them in places such as Canary Wharf and Chelsea, which are very well served by the financial system and by broadband, and where more people bank online than in our constituencies.

Photo of Douglas Ross Douglas Ross Conservative, Moray

I absolutely agree. That issue came up at the two public meetings I have held in Lossiemouth and Keith since the potential closures were announced. The questions at Keith centred on the fact that this would not happen in the central belt of Scotland or in the capital down here in London, where there is a large footfall. Closing one branch would have less impact on communities in Glasgow or Edinburgh than closing the last branch in a town such as Lossiemouth.

My hon. Friend the Member for Angus made the excellent point that some people may decide not to shop locally if they cannot access an ATM so that they can pay by cash. We heard at my Lossiemouth public meeting that a lot of takeaway shops only accept cash payments. It is not that people go there and decide not to buy; they have already purchased on the phone. They place an order, the food is then made, and they turn up to find out that payment is by cash only. With the cash machines potentially going in Lossiemouth and Keith, they may have no opportunity to get money out, and therefore the takeaway business loses income, because it has already produced the order.

Another important point is that, yes, this has a huge impact on local residents, and particularly the elderly, but Lossiemouth and Moray are beacons for tourists coming to Scotland. We want to welcome as many tourists as possible. What will they think when they want to buy something from the local shop, when they want a memento of their visit to Lossiemouth and Moray, but there is no cash machine for them to get their money out to purchase the goods in the town? We have to consider that going forward.

The local Conservative councillor for Heldon and Laich, James Allan led a great campaign in Moray. I pass on my best regards for Councillor Allan, who unfortunately ended up at Dr Gray’s hospital yesterday. He is recovering well. James has been a real champion of this issue in his hometown of Lossiemouth. When the Royal Bank of Scotland left the town and took away its ATM, he led the campaign to reintroduce it. The RBS building has been taken over by a commercial businessman who would be absolutely delighted to retain the RBS ATM in the town, because he knows the needs of local people. He would facilitate and work that machine, but RBS has so far refused to allow the machine to reopen. It really has to consider its obligations to the community. It may leave and close branches, but it should not take lock, stock and barrel away with the ATMs as well.

James has done an excellent study of the number of cash machines in the local area. Lossiemouth, with a population of more than 7,000 and expanding, currently has three cash machines, which will potentially be down to one. Forres, with a population of 12,500, has eight cash machines. Fochabers, which I used to represent as the councillor for Fochabers and Lhanbryde, has a population of 1,700 and three cash machines, compared with a community the size of Lossiemouth, which is expanding and will potentially go down to one cash machine.

I have to say that the mobile banking provision, which the banks always say will support the communities, does not serve our communities particularly well. It is potentially available for one hour every week or every fortnight, and many of the functions of an ATM are not available at a mobile banking service. The Moray Rambler introduced by RBS now covers a far wider area than only Moray, because RBS has closed so many other branches in Aberdeenshire and the highlands and so on, and our service in Moray is diminished even further.

I will finish on a recent court judgment about ATMs in England and Wales. I was involved in an issue with Buckley’s newsagents in Lossiemouth, again with Councillor Allan. It has an ATM that faces out on to the high street, to ensure that people can use it 24 hours a day. The owner, Tony Rook, could put it inside, but it would then be available only when the shop is open. As a servant to the community, he decided to have it outward-facing. He is being punished by the Scottish Government, who have implemented far higher business rates for outward-facing ATMs than those inside a shop.

I hope that the Minister will clarify this. The issue was passed on to me by Councillor John Cowe, who attended the public meetings in Lossiemouth and who is encouraged by the judgment that came down, I think, last month. Since 2010, supermarkets and convenience stores have been liable to pay rates on the machines, but the courts have now decided that that is not correct and have ruled in favour of the supermarkets who took this forward, particularly Sainsbury’s and Tesco, meaning that the £300 million already charged will now be refunded. I agree with the Tesco spokesperson who said:

“We welcome today’s result and the confirmation of our belief that ATMs should not be separately rateable.”

I will be interested in the Minister’s response and particularly whether he has had any discussions with his Scottish Government counterpart about how they will look at the issue in Scotland, because the ruling was for England and Wales only. It will be very important and useful for us to learn what the Scottish Government will do as a result of the judgment, because it will make a big difference to people such as Tony Rook at Buckley’s newsagents.

I am grateful for your indulgence, Mr Hollobone. This is an important debate for our communities, and I am grateful to the hon. Member for Rutherglen and Hamilton West for initiating it. Banks and ATM providers have a moral obligation to the communities that we all represent and serve. The message is coming through loud and clear. Do not take away ATMs, which are an integral part of our communities; they are important for everyone who lives in and visits them. We need them, we need them to be free and we need them to be accessible and available. By shutting them down, banks and ATM providers are shutting down many of the communities that rely on them.

Photo of Hugh Gaffney Hugh Gaffney Labour, Coatbridge, Chryston and Bellshill 10:10, 4 December 2018

I am grateful to you, Mr Hollobone, for allowing me to speak in this important debate. It was a pleasure to be here this morning to listen to the important speech made by my constituency neighbour and hon. Friend Ged Killen. I support his continuing efforts to stand up for the most vulnerable people in our communities through his campaigning on this important issue.

My hon. Friend has already outlined many of the concerns. I will not repeat all the arguments, but will focus on a few key areas: charges, closures and the reliance of many people on ATMs as essentially “the last bank in town” on main and high streets in towns and villages in all four nations of the United Kingdom.

Since my election to this place in 2017, a number of issues have been raised with me in my role as the local MP. One is the impact of Tory austerity on the people I represent in Coatbridge, Chryston and Bellshill. That impact has been made worse by the fact that many of the ATMs available in our community charge residents to access their own money and by the closure of three RBS branches. Forcing people to pay to withdraw their own money is crazy and, in these tough times, so unfair and unjust. I call on ATM providers to think again about the impact on those who have to survive on low incomes and low wages. Those people have to turn the pennies inside out and the pounds upside down to survive, to keep a roof over their head and to keep their families warm and fed. We all have a duty to speak up for them in the House.

The figures speak for themselves. From January to July 2018, 1,300 free-to-use ATMs disappeared, at the disgraceful rate of about 250 a month. According to analysis by Payments UK and the Bank of England, the number of people who rely almost entirely on cash has risen by more than half a million in the past two years to 3 million. Like me, my hon. Friend the Member for Rutherglen and Hamilton West has raised this issue in Parliament, through his private Member’s Bill introduced under the ten-minute rule, which has my full support. I will continue to work with him and others on the Opposition Benches on these issues.

The issue of ATM closures goes to the heart of the debate this morning. My hon. Friend was very clear in his speech that we cannot sit back and watch the programme of closures. I thank Which? for its research on this issue, which has shown that the number of closures of free-to-use ATMs is highest in rural areas. That stands to reason: ATM providers think that fewer people will complain and make a big deal of it. Well, they cannot get away with that, not on my watch, not on my hon. Friend’s watch and not on the Opposition’s watch. I know that most hon. Members here today will not allow it, either.

All colleagues will know that Coatbridge, Chryston and Bellshill is made up of towns and villages across North Lanarkshire in central Scotland. We have main towns and small villages, and I am proud to represent every one of them and all those who live in them. I am determined to stand up for their right to access their own money, in their own community, free of charge.

This debate speaks to the crisis facing our high streets and main streets. All Members of the House will recognise, as they go about their business in their constituencies, that an increasing number of pubs, businesses, post offices and banks are closing. That is why I am hugely supportive of Labour’s five-point plan to support and save Britain’s high streets, outlined by the shadow Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend Rebecca Long Bailey, at Labour’s recent conference in Liverpool. The five points are, first, to ban ATM charges and stop bank closures and, importantly for me, stop post office closures; secondly, to improve local bus services and provide free bus travel for under-25s; thirdly, to deliver free public wi-fi in town centres; fourthly, to establish a register of landlords of empty shops in each local authority area; and, fifthly, to introduce annual revaluations of business rates, ensure a fair appeals system and review the business rates system to bring it into the 21st century.

For many people in my area, the ATM is indeed the last bank in town. If someone does not have a car to travel to the closest branch of their bank, or if they cannot afford the cost of bus travel, they rely on access to an ATM to be able to pay bills and survive. Members of the House will know that Crown post offices are branches directly managed by Post Office Ltd, which is wholly owned by the Government—or should I say by the people who elected every Member of this House. Let me take this opportunity to pay tribute to the postal workers who campaigned in Scotland, England, Wales and Northern Ireland on Saturday for the national day of action to save our post offices. I was proud to campaign with postal workers in Scotland; I am proud of my brothers and sisters in the Communication Workers Union.

As part of the “modernisation” programme, Post Office Ltd has been involved in the privatisation of Crown post offices. The Post Office closes down the Crown post office and looks for a retailer to take over the counter. We are paying £31 million—it is Government money—to subsidise our post offices. That is not good enough. I am delighted that the next Labour Government will stop the franchising of Crown post offices by introducing a new condition into the Post Office’s funding agreement—that no further Crown post office branches will be closed. That will be an important step forward and is so necessary.

I thank my hon. Friend the Member for Rutherglen and Hamilton West for his leadership on this issue and for introducing the debate today. I will fully support him as he continues his endeavours.

Photo of Ruth Smeeth Ruth Smeeth Labour, Stoke-on-Trent North 10:17, 4 December 2018

It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my hon. Friend Ged Killen on securing such an important debate on an issue that is of genuine concern to many of my local residents across Stoke-on-Trent North and Kidsgrove. The issue affects both rural and urban communities. Up and down our country, towns and smaller communities are losing access to community-based financial services on an almost monthly basis. These are not “nice to have” facilities; they are a lifeline for people and communities that still depend heavily on cash. I am of course referring to the community banking services—whether that means the local bank branch or the local ATM machines—on which so many people depend.

Earlier this year, I raised the issue of the impact of the closure of local bank branches, which we are also losing at an unprecedented rate. However, basic access to cash is now disappearing from our high streets. LINK’s own figures show that we are losing free-to-use ATMs at the rate of 250 a month. When we explore the reasons for this extraordinary cut to provision, we find that there are multiple excuses, but as my hon. Friend the Member for Rutherglen and Hamilton West made clear, it is in large part because of LINK’s cut in the interchange fee—a decision that had serious repercussions for our ATM network even before it was fully implemented.

The loss of these services is a serious problem in its own right, but there is a larger concern, too. The closure of well-used local bank branches in my constituency and the associated impact on residents and businesses have unfortunately been all too obvious in the last year. Burslem, Kidsgrove and Tunstall have all lost popular local branches. In the case of Burslem, we have found ourselves without a single bank branch left in the town and with no replacement of the ATMs that the NatWest and Lloyds banks operated until their closure. The sector’s lack of local understanding is evident all too often in its decision making. In Tunstall, the Co-operative bank justified its branch closure by stating that customers would be able to access the NatWest across the road. Unfortunately, that bank had already closed and its ATM machine went with it.

For communities that have already lost all-important branches and access to personal banking, ATMs represent a financial service of last resort—a fall-back for the millions of people who still make cash purchases every single day, and for those who do not make contactless payments and prefer to manage their household budgets by allocating cash towards their bills. To do that requires free access to money. A charge of £3.50 to access cash—as in parts of my constituency—is an extraordinarily large proportion for someone taking out only £10 or £20. As ever, those most struggling financially are being punished by the decisions of a faceless corporation.

In Burslem, the mother-town of the potteries, the closure of our last bank means that the only remaining free-to-use ATMs are inside retail facilities and there is nowhere for residents to withdraw cash in the evening. For a town with a thriving night-time economy, that is not just a hindrance to trade but a threat to public safety. Mr Hollobone, if you should leave the pub in Burslem late at night—I am sure you never would—and need money for a taxi, your only option is a long, dimly-lit walk to an out-of-town petrol station. That trip, understandably, could be threatening for many people, especially women, who would not want to make that journey alone. Alternatively, they would have to take a taxi and ask the driver to take them to an ATM and wait, which is far from ideal and costs more money.

In too many parts of my constituency and our country, free-to-use cash points are getting harder to find and further to reach, especially in areas of financial vulnerability. This is exactly the scenario that LINK’s financial inclusion programme was designed to prevent; it was supposed to identify the needs of rural and deprived areas and provide additional funding to ensure that communities did not have to travel more than 1 km, as we have already said, but it is not working. Huge swathes of my constituency do not have access to their money. Neither Goldenhill nor Chell Heath can access a free-to-use ATM within 1 km. In parts of my constituency, this is leading to a spike in the use of illegal loan sharks. There are human consequences to the decisions that LINK is making.

Often, the machines that LINK considers easily accessible to a community are not. The geography or terrain should also be considered. Given that an ATM costs between £7,000 and £10,000 to reinstall, it is almost impossible to get new ATMs in place where there is no provision. I know how important these services are to my constituents, which is why I secured a debate on community bank closures earlier this year. In every debate we discuss the immediate challenge, but we need a policy solution that tackles these issues in the round, which is why my constituency Labour party submitted a motion to this year’s Labour party conference calling for the protection of community banking services to be made official party policy. I am delighted that that policy has now been adopted.

We cannot allow banks to default on their responsibilities to our community, which is why I welcome this debate and congratulate my hon. Friend the Member for Rutherglen and Hamilton West on securing it. I fully support calls to protect our free-to-use ATM network and ensure every community has access to the services it needs.

Photo of Philip Hollobone Philip Hollobone Conservative, Kettering

We now come to the Front Bench speeches, beginning with Patricia Gibson for the Scottish National party. The guideline limits are 10 minutes for the SNP, 10 minutes for Her Majesty’s Opposition and 10 minutes for the Minister. Then we will allow Ged Killen three minutes at the end to sum up the debate.

Photo of Patricia Gibson Patricia Gibson Shadow SNP Spokesperson (Consumer Affairs) 10:23, 4 December 2018

I thank Ged Killen for bringing this important debate, and for the work he has done on this issue. I am pleased to participate in this debate on the important issue of our constituents’ access to their own cash free of charge and, ultimately, the issue of social and financial inclusion.

We have heard that 2.2 million people across the United Kingdom are entirely reliant on cash, as opposed to credit or debit cards. It must be correct that we should all be able to access our own cash without incurring any charges. The fact is, those who are reliant on cash transactions tend to be less well-off and are the least able to pay any additional cost to access what little cash they have.

As the hon. Gentleman pointed out, earlier this year LINK, the UK’s largest cash-machine network, announced that it would go ahead with plans to cut its interchange fee by 20% over the next five years. As a result, we have seen hundreds of ATMs closing. Scotland has been hit hard, with 221 free cash machines lost between January and July 2018—around one every day. There are now fewer than 6,000 free cash machines left in Scotland. That sits uncomfortably alongside bank branch closures, as Jim Shannon pointed out, with banks closing at a rate of 60 each month, leaving significant towns in my constituency—such as West Kilbride, Dalry, Brethe, Stevenston, Ardrossan, Kilwinning—with no bank at all thanks to RBS closures. The communities affected will never forgive RBS for this abandonment and betrayal. I believe that RBS will never again be trusted, nor will it have its reputation repaired. It is still disappointing that the UK Government did not intervene and use what influence they had in that matter.

We have also heard that post office closures, stretching back to 2007 and 2008, have compounded the issue, as Yvonne Fovargue pointed out. As the hon. Member for Strangford said, we have the additional problem of postmasters not being replaced; so the issue is snowballing.

I fairly enjoyed Douglas Ross doing his impersonation of a trapeze artist when he tried to blame—if I heard him correctly—the shortage of ATMs and the impact on small businesses on the Scottish Government. He will be well aware, I am sure, that thousands of businesses in Scotland have benefited from the small business bonus. I think anybody in Westminster Hall would agree, looking at the evidence, that the major issue facing small businesses is the concern and uncertainty caused by Brexit. We will just leave that there.

Photo of Patricia Gibson Patricia Gibson Shadow SNP Spokesperson (Consumer Affairs)

I will not give way. I will proceed.

So far, 2018 has seen 670 local bank branches closing across Scotland, following close on the heels of the 879 that closed in 2017. In response to this debate, the banks will no doubt tell us that fewer and fewer of us use cash in our transactions; but research shows that at least three-quarters of us use cash at least two or three times a week and it is still the most popular method of payment. Ruth Smeeth pointed out—as did almost every contributor to the debate—that those on lower incomes and older people are likely to be hardest-hit by any reductions in access to cash. The less well-off you are and the older you are, the more likely you are to rely on cash transactions, with just over a quarter of people not using card payments at all.

This perfect storm of a reduction in free ATMs and bank closures means that now there are real concerns about the effect that the closures will have on consumers and small businesses without adequate access to cash. This financial and social exclusion is utterly unacceptable. Consumers are gradually being forced into online banking, and the evidence suggests that now they are being gradually forced into cashless transactions—so much for consumer choice.

We heard from the hon. Member for Rutherglen and Hamilton West that in January 2018, LINK announced a series of four reductions in the interchange fee—the amount paid every time a customer uses a free ATM, and which funds the entire free-to-use network—from around 25p per transaction to 20p. However, concerns have been raised and, as we heard from the hon. Gentleman, the third and fourth reductions have been cancelled and put on hold respectively. Cutting the interchange fee was supposed to reduce machines in areas where there were considered to be too many, but maintain geographical coverage of ATMs across the UK. LINK commissioned a review to consider consumer requirements for cash machines over the next five to 15 years. That review was cognisant of the fact that financial inclusion is extremely important for all consumers and will remain so. Their needs and requirements must be met. Like all hon. Members in Westminster Hall today, I look forward to the findings of that review in March.

Meanwhile, research carried out by Which? is truly shocking. It shows that free-to-use ATMs are closing at a rate of 250 a month, while over 100 ATMs with so-called protected status have stopped transacting in the same period. The hon. Member for Rutherglen and Hamilton West set out the challenges associated with ATMs with protected status. Analysis shows that from November 2017 to April 2018, following LINK’s announcement about cutting the fees paid for each ATM transaction, the rate of cashpoint closures increased from around 50 per month to 300 each month. LINK’s own figures show that between January and June this year, 500 cashpoints closed each month. The implications of all this are extremely significant, with more machines being lost in rural communities despite LINK’s pledge that changes would only target urban machines, not rural ones.

Just under half of us use a cashpoint at least once a week, with 80% of us saying that access to free-to-use cash machines is important in our daily lives for paying for goods and services. Forcing people to pay to access their own cash would leave around 10% of us struggling and would constitute nothing less than financial exclusion. It would hit small and local businesses hard, as was set out in some detail by the hon. Member for Strangford. As the hon. Member for Rutherglen and Hamilton West said, already many people struggle to access free cashpoints, with around 11% of us having to walk for more than 30 minutes to access the nearest cash machine and around 9% saying that the nearest machine is simply too far away to reach on foot. That, coupled with the fact that many people do not have access to a car, makes life extremely difficult, as Jamie Stone reminded us.

One in five of us currently do not have access to free-to-use cash, but it seems this might get worse. That is why the calls from Which? for the Payment Systems Regulator to bring more regulatory scrutiny and intervention to bear on this issue are so important. I agree that it is time for the financial inclusion programme to be amended to ensure that the entire ATM network is fit for purpose. LINK has tried to address concerns that all ATMs 1 km or more from the next free ATM will be exempt from any reductions and cuts to fees for transactions made and is increasing the subsidy for these machines, but there is some concern that these measures, although well-meaning, simply do not go far enough. Exempting individual cashpoints from cuts to fees might not be enough to save them. Cashpoint closures are not decided by LINK. We know that recent closures and the inability of LINK to quickly and effectively replace protected machines shows the shortcomings of the current approach.

We have heard from many Members today that it really is time for the Payment Systems Regulator to show its teeth. It seems eminently sensible for the PSR to conduct its own review of LINK’s financial inclusion programme, including the ATM replacement process, because that must be fit for purpose. The Government must also beef up the powers of the PSR to allow it to protect cash, and impose a duty of care on it to ensure the sustainability of the UK’s cash infrastructure. I believe that would do much to protect consumers, the choices they want to make and their financial inclusion.

If it had the power from Government, the PSR could introduce robust measures to ensure that all our communities have free and easy access to their own cash. I urge the Minister to set out how he can empower, and what he is prepared to do to empower, the PSR, to ensure that there is a robust future for free-to-use cash machines. In correspondence with me on 12 September, the PSR has admitted that it is “concerned about these closures”.

Photo of Patricia Gibson Patricia Gibson Shadow SNP Spokesperson (Consumer Affairs)

I am hoping the Minister will heed the calls he has heard from all parts of Westminster Hall today to work across party lines to ensure a sustainable, inclusive approach on this issue that works for all consumers.

Photo of Gill Furniss Gill Furniss Shadow Minister (Business, Energy and Industrial Strategy) (Steel, Postal Affairs and Consumer Protection) 10:33, 4 December 2018

It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my hon. Friend Ged Killen on securing this important and timely debate. I know that he is an avid campaigner in this area and that this debate follows the introduction of his Banking (Cash Machine Charges and Financial Inclusion) Bill, which is intended primarily to end cash machine charges.

Small businesses form the backbone of our economy. Over the past weekend parliamentarians and citizens across the UK had an opportunity to support our small businesses during Small Business Saturday. They are vital to our local communities, from large towns to small rural communities, but in order to survive and thrive they need the infrastructure conducive to their running, which includes a vibrant network of free-to-use ATMs.

As has been outlined, ATMs are under threat. Earlier this year LINK decided to begin a phased reduction of the interchange fee by 5% from 1 July 2018. This reduction in the funding formula has led to concerns that ATMs will become financially unviable, resulting in closure or an increase in the number of fee-charging ATMs. Despite all the discussion to the effect that we are all transforming into a cashless society, recent research by Which? highlighted that demand for cash and physical financial infrastructure remains, and that these services are important to everyday life. In a survey of over 1,200 members in Scotland, Which? found that 44% of people use a cashpoint at least once a week, that nine in 10 people said that free-to-use cash machines are important to their everyday lives, and of those, more than half described them as essential for day-to-day living, with this figure remaining similar across every age group. My hon. Friend Hugh Gaffney eloquently reminded of that.

A reduction would also lead to one in seven people being deterred from using outlets that accept cash only, placing a strain on consumers and retailers alike. Similarly, a poll of Federation of Small Businesses members found that 59% of retail businesses felt that a cash machine was useful to their business. In addition, 50% of businesses said that their nearest free-to-use cashpoint was already over 1 km away. Many hon. Friends have referred to this scandal today. Although LINK has said that it will provide funding to ensure that there is always a free ATM at least 1 km from another one, in practice this has proved difficult to implement and there are concerns that this standard does not provide free-to-use ATMs in the areas where they are needed most.

The ATM Industry Association has calculated that at least 10,000 free-to-use cash machines could be at risk—almost one in five of the 54,000 ATMs at which customers can withdraw cash without incurring fees. The organisation has found that the worst-hit regions for independent, free-to-use cash machines are set to be rural south-west England, Scotland and urban south-east England, outside London. The Which? and FSB research has shown that there remains a demand for free-to-use cash machines, that reductions could damage consumers and businesses, and that the public could be forced to use fee-paying machines if free-to-use options are reduced. Any reduction will be most harshly felt in rural and deprived areas.

There has been no significant review of the ATM market for a number of years. I know that the Bill introduced by my hon. Friend the Member for Rutherglen and Hamilton West would introduce a legal requirement for access to free cash through ATMs or other means, following a market review of the ATM network by the Payment Systems Regulator to establish demand. The legal requirement would create a function for ATMs to be provided where there is demand, based on the PSR’s review. Reviews could be conducted at regular intervals to monitor demand. LINK has said that it will provide funding so that there is always a free-to-use ATM at least 1 km from another one. In practice, this has been difficult to implement and there are concerns that this standard does not provide free-to-use ATMs in the areas where they are needed most, hence the need for a full market review by the PSR. Both Which? and the FSB have called for a full market review. On principle, Labour does not believe that anyone should have to pay to access their own cash.

Fee charging is the option often taken most in deprived or rural communities, meaning that the most vulnerable are often asked to pay more. We should try to prevent a poverty premium and ensure that access to cash is inclusive. By banning fee-charging machines we can focus on a funding formula that ensures that all ATMs are fully funded without there being recourse to charges. My hon. Friend Ruth Smeeth explained clearly what this means for people in many areas of her constituency.

As the shadow Minister for postal affairs, I find it particularly concerning that under this Government vital local community assets, such as ATMs, are being stripped away. The same is true of our post office network, which has seen a managed decline under the Tory Government. We must protect our local communities’ ability to do business and ensure financial inclusion for all. ATM closures have a detrimental impact on our communities and the Government must ensure that any further closures are immediately halted.

Photo of John Glen John Glen Minister of State (Treasury) (City), The Economic Secretary to the Treasury 10:39, 4 December 2018

It is a pleasure to serve under your chairmanship, Mr Hollobone. I thank Ged Killen for raising the matter and for the thoughtful way he set out several issues that I will respond to. I also thank the other five Back-Bench Members who made contributions.

First, I assure hon. Members present, and across the House, that the Government recognise that widespread free access to cash remains extremely important for the day-to-day lives of many consumers and businesses in the UK, particularly the most vulnerable members of our society. Ultimately, the Government’s approach to payments is one of facilitating maximum choice; consumers should be free to choose the method of payment that best suits them. I acknowledge that several scenarios have been set out, particularly for rural and less affluent areas, and I will come on to address some actions that can be taken at different levels to deal with those challenges.

The fundamental context for the problem is the rise of digital payments and the decline in cash use. The UK has one of the most extensive free ATM networks in the world; some 82% of the ATM network is free. I listened carefully to the remarks of my hon. Friend Douglas Ross, who resists the option to pay a fee. I share his antipathy to that situation, but 98% of all ATM transactions are conducted on free ATMs. Moreover, the free ATM network has increased by 40% in the past 10 years and the number of pay-to-use ATMs has fallen by a similar percentage.

However, we must all acknowledge that people are increasingly moving away from cash and towards digital payments. To be specific, in the UK, cash use has fallen from 61% of all payments in 2007 to a remarkable 34% last year. That fall is expected to continue at pace. Correspondingly, the declining number of withdrawals at ATMs is forecast to continue as cash usage by consumers for payments declines. We can all, therefore, recognise the challenge of maintaining efficient, free access to cash.

In response to that challenge, LINK—the UK’s ATM network—announced a series of reforms at the beginning of the year, which have provided the main focus of the debate. Its work to maintain widespread free access to cash involves acknowledging that 80% of free ATMs are within 300 metres of one another. There is evidence that too many ATMs are clustered in busy, urban areas, which unnecessarily duplicates the supply of that service. Therefore, LINK’s measures aim to reduce the amount of ATM duplication in urban areas and avoid unnecessary growth in ATM numbers, despite the observed decline in consumer demand for cash.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

The Minister says that there has certainly been a downturn in the use of cash, but I remind him that we have to acknowledge that almost three quarters of people use cash two to three times per week. An interesting trend, which we cannot ignore, is that 60% of 18 to 24-year-olds also use cash at that level, so it is still vital.

Photo of John Glen John Glen Minister of State (Treasury) (City), The Economic Secretary to the Treasury

I acknowledge that we are not seeing the end of cash. The challenge is how we adapt to the different mode and frequency of its use. There is no simple single solution. Clearly, creating a complete network in sparsely populated areas will not always be the right answer.

Although Yvonne Fovargue is not in her place, for general edification I will respond to her point about the lack of notice when ATM operators move. They have a duty to inform LINK that a protected ATM will close. LINK can offer premiums to all its members to incentivise the replacement of the machine. It has set up a publicly available monitoring tool on its website that shows ATM availability. It has the power to mandate and directly commission an ATM deployer where one is necessary.

LINK’s measures aim to reduce the duplication that I mentioned earlier and to intervene where necessary. It aims to incentivise broad, national coverage of free ATMs and to protect every community across the UK from losing free ATM access. Specifically, LINK has ensured that free ATMs that are 1 km or more from the nearest free ATM are exempt from any reductions in the interchange fees that fund free ATMs. It has put in place specific arrangements to protect free ATMs more than 1 km away from the nearest free ATM, including boosting the interchange fee available in those areas. It has also enhanced its financial inclusion programme by tripling the interchange fee available to the lowest-income areas of the UK, to ensure that they all have at least one free ATM. Some 93%—an all-time high—of the most deprived areas in the UK have a free ATM.

That fact has to be seen in the context of the £2 billion of investment in the Post Office since 2010. The £370 million that is earmarked for 2018-21 is designed to maintain the last post office in the village and ensure that consumers can use the over-the-counter option to secure cash.

Photo of Douglas Ross Douglas Ross Conservative, Moray

I am grateful to the Minister for his courtesy in giving way—a courtesy that was sadly lacking in Patricia Gibson. As he is speaking about post offices, does he think that the hon. Lady did not take my intervention because she is fully aware that business rates are overseen by the SNP Scottish Government in Scotland? The problem for the Lossiemouth post office is that it is being punished by the SNP Scottish Government for having its ATM facing outwards and accessible 24/7 rather than inside the post office, which has therefore reduced the hours when the ATM is accessible.

Photo of John Glen John Glen Minister of State (Treasury) (City), The Economic Secretary to the Treasury

In response to his earlier request, the Government are aware of the Valuation Office Agency’s ruling and are considering their response, which will come in due course. He points out that there is a clear distinction in that behaviour.

Photo of Carol Monaghan Carol Monaghan Shadow SNP Spokesperson (Armed Forces and Veterans), Shadow SNP Spokesperson (Education)

The Minister talks about the importance of keeping an ATM in rural and deprived areas. The difficulty is that when there is only one ATM in such areas, it often experiences high levels of usage and regularly runs out of cash, which is worse than not having it at all in some ways. I encourage him to do what he can to ensure that we keep a network, even in such areas.

Photo of John Glen John Glen Minister of State (Treasury) (City), The Economic Secretary to the Treasury

It is obviously difficult for me to comment on each of our 64,400 ATMs, but the hon. Lady makes a reasonable point, which I will certainly take back to my next meeting with the Payment Systems Regulator.

Photo of Patricia Gibson Patricia Gibson Shadow SNP Spokesperson (Consumer Affairs)

The Minister mentioned the Payment Systems Regulator, so before he moves on I want to ask whether he is considering giving it greater powers to protect cash, and imposing a duty of care on it, to ensure that the UK’s cash infrastructure is sustainable. That would address a lot of the concerns that hon. Members have expressed.

Photo of John Glen John Glen Minister of State (Treasury) (City), The Economic Secretary to the Treasury

I will come on to talk about the powers of the Payment Systems Regulator, which I have met. My judgment is that it has considerable power over the LINK network. It can mandate LINK to do certain things and it can impose fines. I would need to look carefully at what that proposal would involve and where it would be different from the powers that LINK has at the moment.

I acknowledge LINK’s independent review, which is chaired by Natalie Ceeney. As was mentioned earlier, the report will be published in March. It is looking at long-term access to cash and exploring further the impact on consumers and small businesses of the shift from cash to digital payments. I have met Natalie Ceeney and encouraged her to look as broadly as possible at this issue. I imagine that the nature of her powers, as well as what she needs to do her job, will be part of her report.

This House should also note that the payment systems regulator, which the Government established in 2015 to ensure that payment systems work well for those who use them and which regulates LINK, has taken a lead in examining this issue. Following the first publication of LINK’s ATM footprint report, the regulator used its powers to place a specific direction on LINK. This is designed to make sure that LINK does all it can to fulfil its public commitment to preserve the broad geographic spread of free ATMs and to report to the regulator on a regular basis.

I think I have addressed a number of the concerns raised in the debate. The Government have invested heavily in maintaining a stable network of post office branches. Anyone can use their LINK-enabled bank card to take money out for free at the counter of every one of the 11,500 post offices in the UK. I acknowledge that a post office needs to be open for that to happen, so I am not presenting it as a perfect solution, but it is a significant alternative source of cash for many people.

Additionally, in the autumn Budget at the end of October the Chancellor announced the Government’s plan to help local high streets to evolve and adapt to changing consumer demands. It included £675 million for the future high streets fund to support local areas’ plans to make their high streets and town centres fit for the future.

The hon. Member for Rutherglen and Hamilton West raised a couple of specific points about digital payments failure. The Treasury and the UK financial authorities take this issue very seriously and are investing in improving the operational resilience of the system, including cyber, across the financial sector. Over the next five years, £1.9 billion will be spent on cyber-security initiatives.

The hon. Gentleman also asked about helping the vulnerable. The Department for Digital, Culture, Media and Sport has a digital skills partnership that is looking at partnerships across the private, public and charity sectors, which also involves training in digital skills for adults.

On the point about the powers of the PSR, it has the power to direct LINK and impose financial penalties; it is committed to using those powers. It also made a direct intervention on the interchange fees to LINK to deal with this issue.

To conclude, I thank the hon. Member for Rutherglen and Hamilton West for raising this issue. It is surely right that we consider the impact of an increasingly digital world and ensure that we protect those who need to be able to pay by cash. In the here and now, cash use remains important; it is still the second most frequently used payment method, just behind debit cards. We also know that around 2.2 million consumers predominantly use cash, many of whom are the more vulnerable members of our society.

I take this matter very seriously. I chair the Government’s financial inclusion forum, and for me there is a combination of interventions. There will be interventions from the regulator to deal with those who are making it very difficult for people to access affordable credit. However, this issue is also about increasing capacity.

I do not rule anything out in terms of efforts to improve the situation. With my officials, I have spoken to the PSR about this issue, and it has engaged with the regulator and LINK on this topic. I assure the Chamber this morning that I will continue to emphasise the importance that this Government place on widespread free access to cash.

Photo of Ged Killen Ged Killen Labour/Co-operative, Rutherglen and Hamilton West 10:53, 4 December 2018

I thank hon. Members for taking part in this debate; I was encouraged to see so many people first thing on what promises to be a very long day indeed.

I also thank the Minister for his response. Unfortunately, for some of it I felt like I was hearing the LINK briefing that I have heard a thousand times being repeated back at me, but there were some interesting things in there that I agreed with. I was encouraged to hear him say that the authorities were investing in cyber security, but I suggest to him that the people who are seeking to undermine our security are also invested in that endeavour.

As we witness the rise of digital technology, which the Minister mentioned, we have to consider the experience of other countries, such as Sweden, that are now retrospectively looking at Government intervention. We have a chance in this country to get ahead of that by considering intervention now.

I agree with the Minister when he says that this issue is about consumer choice; he is right about that. However, having listened to the concerns of Members here today, he will understand that that choice is being taken away from some people, due to the lack of availability of free cash. He can quote some favourable statistics showing that the situation is better than we might have suggested, but on the ground the picture is very different for the communities that we represent.

We all recognised what Douglas Ross said about going to other ATM machines if he finds one that is charging a fee. I am exactly the same. Unfortunately, as he said, not everyone has the ability to go to another ATM.

The hon. Gentleman made an interesting point about business rates, which must be looked at. I have heard these concerns expressed many times by shop owners in particular. They are concerned not just because ATM machines attract business rates; as I understand it, an ATM machine in a store actually increases the rateable value of that store overall, which brings additional costs for that business. We need ATMs to be there if there are no bank branches offering ATM provision.

Jim Shannon said that cash transactions were still in high use. From memory, when I spoke to Tesco it told me that over 60% of its transactions in store are still cash, and that there is a withdrawal from one of its ATM machines every 10 seconds. So, it is simply not right to say that cash is on the way out yet. As I have said, we are in a transition towards a cashless society, but we are not there yet and we have to get that transition right.

My hon. Friend Ruth Smeeth said that services such as ATM provision were a lifeline for our communities, and spoke about the percentage of someone’s income that they could pay out in charges if they withdrew £10 from an ATM machine and were charged. Of course, if that person has only £10 in the bank, they will be unable to withdraw that from one of these ATM machines that charge.

I conclude by giving my private Member’s Bill one final plug. I am pleased to report that the inventor of the ATM machine and the PIN code, James Goodfellow, is alive and well in Scotland. Mr Goodfellow supports my private Member’s Bill. So, if the Minister is unwilling to take my word for how important this issue is, perhaps he will consider taking the word of the inventor of the ATM machine.

Question put and agreed to.


That this House
has considered the effect of ATM closures on towns, high streets and rural communities.