ATM Closures — [Mr Philip Hollobone in the Chair]

Part of the debate – in Westminster Hall at 10:33 am on 4th December 2018.

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