Covid-19: Access to and Acceptance of Cash — [David Mundell in the Chair]

– in Westminster Hall at 1:34 pm on 3rd December 2020.

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Photo of David Mundell David Mundell Conservative, Dumfriesshire, Clydesdale and Tweeddale 1:34 pm, 3rd December 2020

I remind hon. Members that there have been some changes to normal practice to support the new call list system and ensure that social distancing can be respected. Before they use their microphones, Members should sanitise them using the cleaning materials provided, which they should dispose of as they leave the room. Members are asked to respect the one-way system around the room. They should speak only from the horseshoe, and they can speak only if they are on the call list. That applies even if debates are undersubscribed. Members cannot join the debate if they are not on the call list. I remind Members that they must arrive for the start of debates in Westminster Hall, but they are not expected to remain for the wind-ups.

Photo of Paul Maynard Paul Maynard Conservative, Blackpool North and Cleveleys 1:35 pm, 3rd December 2020

I beg to move,

That this House
has considered access to and acceptance of cash during the covid-19 outbreak.

It is a pleasure to serve under your chairmanship, Mr Mundell, however unexpectedly. I am a great believer in innovation in the Standing Orders, so it is good to see it happening in real time. I thank all hon. Members for attending this debate. I draw the House’s attention to my entry in the Register of Members’ Financial Interest. I have been a member of the LINK Consumer Council for all of three days, but I should make everyone aware of it none the less.

It is strange. A year ago, we were all debating who should appear on banknotes—which famous historical figure deserved the right to appear on our currency. Now, 12 months on, we are debating whether banknotes even have a future. I open my wallet and the moths fly out, not because I am stingy in any way but because I now use banknotes only to pay my window cleaner or my drycleaner.

Members will know that this topic is twofold, being about acceptance of cash and access to cash. The two are closely interlinked. Members have been arguing for some time about the preservation of ATMs to preserve access to cash, and I pay tribute to Patricia Gibson, who has done a lot on that in the past. We are now seeing a growing trend towards as cashless society that affects all ATMs by reducing the consumer’s need for hard cash and making that infrastructure unviable. The key question becomes: what is the point of preserving access to cash if there is nowhere to spend it in the first place?

The trend has affected us all, but particularly the most elderly and vulnerable. Some may be nervous about using technology, or they may to struggle to remember a personal identification number or manage their personal finances. They may be among the 1.8 million people who are still unbanked and rely on a jam-jar approach to monitoring pots of money for bills, which cannot be done with a card. Recently published research from the consumer organisation Which? showed that two in five people reported being unable to pay with cash at a shop and did not have another payment method at the point of purchase. Indeed, two in 10 could not then buy medicine that they needed.

We see regional differences. London clearly leads the way: 75% of card usage there is now cashless, compared with 50% in my region of the north-west. I am also conscious that, as Members representing the highland fastnesses of the far north of Scotland can attest, there are many remote rural areas with very poor broadband, so it is not possible simply to install an iZettle—a little handheld device that permits cashless transactions.

Even in the three years up to lockdown, there was a drop of 20% to 30% in ATM withdrawals. Of course, when lockdown hit, that usage fell off a cliff. It has now recovered to some three quarters of what it was, but I very much suspect that the remaining quarter is unlikely to come back. We are turning cashless almost without noticing it, and certainly without discussing it. The trend is accelerating. LINK predicts that as few as one in 30 transactions will involve cash within the next five years or so.

There are many regulators in this field. One of them, the Payment Systems Regulator, has delayed its consumer tracker due to covid, even though it is more needed than ever. The PSR is rightly now focusing on access based on deprivation, rather than just on geographical area. We have indeed seen, just as in my constituency, a much sharper reduction in free-to-use ATMs in the more deprived areas.

A key noticeable feature of the initial lockdown was the sudden drop-off in the number of shops accepting cash. I saw that in my constituency. A fruit and veg shop suddenly went cashless—something that never would have occurred to me as likely to happen. Part of the trend of shops stopping taking cash was the fear of the virus remaining on banknote and coin surfaces. In the past week, I have noticed that the Bank of England has sought to clear up that myth, and I hope that shop workers and customers will start to feel more confident that using banknotes and cash does not put them at greater risk of contracting the virus.

Which? said that the reduction is also due to the underlying challenge of handling cash. Perhaps it means driving further to deposit a day’s takings at the bank, given the number of bank closures, or queuing for up to half an hour to make a deposit in a post office, which means that the working day is extended. Each time they have to go, the unit cost goes up, as fewer use cash. That drives more businesses cashless for simple economic reasons.

We have seen innovation from ATM providers and FinTech. LINK continues to have the role of ensuring that protected ATMs are replaced when needed and subsidising low-volume ATMs. It pioneered other approaches such as a community right to request an ATM as well as a range of schemes focused on promoting local cash recycling and more use of cashback without purchase in shops. However, even if the cashback without purchase pilots prove successful, it still requires the Government to renew the regulations concerning what is called PSR 2 for them to continue. That is critical because the pilots end soon. Will the Minister confirm that the regulations will be tabled in due time so that the industry can make sure it continues that good work? Will he also extend them to include deposits, so that local businesses have more options for where to take their cash at the end of the working day? In case he thinks this is a rather obscure point, he might wish to be aware that there is one pilot at a SPAR in Castle Street, Hereford, which is one of the trialled pilots. Perhaps he is more likely to be found in the Waitrose by the football ground rather than in SPAR on Castle Street, but he might wish to visit to see how it is working in practice.

I know the Government have promised an access to cash Bill. The Treasury is starting a review of access to cash as well, but can the Minister comment on the timing of the Bill? I am very concerned because we need a Bill sooner rather than later. The changes are happening now. Cash is disappearing now. Even if we do not get the Bill soon, I hope that some of the structural changes needed in the sector that do not require legislation can be accelerated by the Treasury.

The Government have set up so many institutional bodies. The Joint Authorities Cash Strategy is a key one, which is trying to reduce the cost of the hidden cash infrastructure that distributes notes and coins by consolidation and removes duplication. We do no talk about this often enough; we just look at what the consumer does, not at what happens behind the cash machine or cash register, which is just as important. In addition, the Payment Services Regulator now has a steering group for consumer working groups, each meeting weekly and coming up with solutions to immediate and medium-term problems. One might argue that there is far too much going on. The National Audit Office report, “The production and distribution of cash”, published in September, made that point and highlighted five separate bodies with an oversight role in cash infrastructure. This surely needs rationalising to make it more effective. Many bodies recommend that the Financial Conduct Authority takes on responsibility for protecting access to cash.

Serious thought is being given to the public utility model for cash infrastructure by another group that the Government set up, the Wholesale Distribution Steering Group. I would support that model, as the minutes from the steering group’s meeting on 18 November stated,

“without some action being taken the current wholesale cash distribution system would not remain efficient or effective against the backdrop of declining cash volumes.”

That puts it in a nutshell. We must not allow vested commercial interests to veto much-needed reform, particularly if all we end up discussing is interbank rates, so will the Government accelerate the proposal for a public utility model so that we can reduce the £5 billion cost of the hidden wiring that makes up the infrastructure?

We also need a long-term solution. We cannot pretend that we are not heading for an almost wholly cashless society at some point in the future. The question surely is: how do we get there? I very much hope the Government’s access to cash Bill will include a commitment to set up a body a bit like Digital UK, which managed the transition from analogue to digital TV. It is perfectly possible to create a guiding hand that knits together all the different interest groups, working with both the infrastructure providers and the charities that work on debt advice or support the elderly. They could manage that transition and make sure that those at greatest risk of being marginalised are helped through the process. I confess that is not my idea. I cannot claim the credit. That goes to Natalie Ceeney, who chaired the initial access to cash review.

I would also like the Government to probe into whether we should enshrine a legal right to pay cash for bills up to £100, as Denmark has done. It could perhaps be time limited until such point as the transition is completed. A more radical idea still might be a short-term legal requirement for shops to continue to accept cash as a primary way to protect both the acceptance of cash and by extension the cash infrastructure, including ATMs. That might be controversial if unit costs continue to increase for businesses, but I want to know the Minister’s views before I start planning my amendments to the Bill when it finally appears.

The sector is innovating, even though it is hamstrung by competing commercial pressures and some arcane internal debates. The Government have at least identified the problem and have raised the sense of urgency, and not just because I have started pestering the Economic Secretary to the Treasury whenever I pass him on the street. He now crosses the road very quickly when he sees me coming, and I do not blame him! I still think we need to have a wider national conversation and a much greater sense of urgency about how we manage the process. The transition is happening as we speak and not many people are noticing it. There will rapidly come a time when people ask, “Why did we not think about this more clearly at the time it was happening?” As the deputy chairman of the Swedish Riksbank, Cecilia Skingsley, said:

“If we don’t do anything we are looking at a future where money is spontaneously privatised.”

I do not think any of us in this House want to see that. We all have constituents who fall into the potentially vulnerable categories. We want to make sure that their interests are cared for as technology forges ahead. The Government have made a good start, but they need to follow through and much more speedily than is currently the case.

I look forward to hearing what other hon. Members have to say.

Photo of David Mundell David Mundell Conservative, Dumfriesshire, Clydesdale and Tweeddale

Thank you for that excellent start to the debate, Mr Maynard. I call Yvonne Fovargue to contribute next.

Photo of Yvonne Fovargue Yvonne Fovargue Labour, Makerfield 1:46 pm, 3rd December 2020

Thank you, Mr Mundell. It is a pleasure to serve under your chairmanship. I congratulate Paul Maynard on securing this debate. We have worked together on this issue for a number of years.

There is no doubt that the covid-19 crisis has hastened the move to a cashless society. Before the restrictions, people were talking about a timescale of years; it is now months, even weeks away. Cash does not seem to be king anymore. As my honourable colleague mentioned, it is coming back and is now at 75% of pre-covid levels—more in some areas—but surveys are being done at the moment to measure the use of cash and I worry that that will skew the results.

For many people, not having cash is a good thing. For an increasing number of people shopping online, using contactless payments and digital transfers, internet shopping is a boon, but it can increase the opportunity to scammers and fraudsters, and there are people who worry about using digital methods of payment and would prefer to keep cash. Many people have no bank account or credit card. They find budgeting far easier with notes and coins—after all, with cash, you cannot spend more than you have in your purse or wallet.

Many of my constituents are going back to those days. I can remember my mother having a little pocket for each bill—that is the way not to get into an overdraft. It has always been thus for people on lower incomes. Even with covid-19, people in deprived areas continue to rely on cash more than those in wealthier areas. LINK research shows a clear connection between deprivation and cash usage. Cash usage has dropped 70% year on year in the wealthiest areas, but only 35% in more deprived areas. That is the case in my constituency. Many people either choose to or have no option but to use cash. It is becoming harder and harder to pay using cash—in fact, we may well be at a tipping point, where the cash services once gone will not come back. Tipping point is a good way of putting it; I have difficulty in paying tips now. I do not really trust putting a tip on to my card. I would rather give the person giving the service the cash, and that is getting more and more difficult.

ATMs are being shut down throughout the country. In some cases, it is a response to falling demand, but once they have gone, it is much more expensive to restore them. It will be harder to get shops to accept cash again after they have insisted on contactless payments and cards for the best part of a year. Cash has been portrayed as somehow dirty and able to pass on the virus. That has not helped.

Research conducted for Money Mail suggests that half of all retailers plan to go cashless or have already done so due to the virus. I do not want to be in a situation where we find that because people choose to or have to use cash, their choice of where to shop is extremely limited. They might be taken advantage of in that situation.

LINK suggests that a cashless society presents a serious problem for 2 million people who still rely solely on cash and Natalie Ceeney, who chaired the access to cash review, says that as many as 8 million people would struggle to cope in a cashless society. These people need cash and they need confidence that the shops they use will accept cash for the goods they want to buy.

We must look at innovative and flexible ways of ensuring people have access to cash—for example, cashback without purchase, where people can go into local shops without buying anything. I welcome the extension of cashback, but it has to be part of a strategy. Things are happening piecemeal at the moment. Bank branches are shutting, ATMs are closing, and increasing numbers of shops are going cashless. We may need to look at making it mandatory for shops to have to accept cash, particularly those providing essentials such as food, medicine and so on. Do we need to look at a universal service obligation, so that banks are required to ensure cash access across the whole country, as happens in Sweden?

We also need to look at deposits. Post offices are almost seen as the silver bullet, but the postmaster in my constituency, who was quite elderly, had to self-isolate, and the post office has now been shut for nine months. People have no access to their cash now in that area. Three post offices in my constituency have also closed, with nobody able to take them over. These are in small pockets of community where to get cash is a journey.

There has been a 23% increase in the number of pay-to-use ATMs in the most deprived areas and that statistic worries me more than any other. If people have to pay to take out their cash, the £1.50 they pay to access their cash can be the difference between topping up their meter and having heat, and not being able to. Perhaps we should be looking at reforming the interchange fees to provide a bigger subsidy for provision in certain areas. It would be good to hear the Minister’s views on that.

I agree that vested interests should not accelerate the decline of cash. There is a case for reducing the number of ATMs in the face of decreasing use, but not the distribution and geographical reach. We need to maintain the footprint as we move forward, and we have to move forward. We need a Bill that deals with the issues and we need it very soon. We also need co-ordination of all the interested parties so that we can have a joined-up approach. Covid-19 has pushed an already fragile cash system to the brink of collapse. Unless the Government act now, we will sleepwalk into a cashless society and millions will be left behind.

Photo of Jamie Stone Jamie Stone Liberal Democrat Spokesperson (Armed Forces), Liberal Democrat Spokesperson (Defence), Liberal Democrat Spokesperson (Digital, Culture, Media and Sport) 1:53 pm, 3rd December 2020

It is a pleasure to serve under your chairmanship, Mr Mundell, which I think is a first in the 21 years that we have known each other.

I will dwell briefly on cash machines, because excellent reference has already been made by the two previous speakers. I commend the hon. Members for Blackpool North and Cleveleys (Paul Maynard) and for Makerfield (Yvonne Fovargue) for two very fine speeches, which will mean a lot to my constituents in the far north of Scotland.

There is a village called Durness in north-west Sutherland, which is the northernmost and westernmost inhabited community on the British mainland. Every year, they have a tremendous Highland games and tourists come from far and wide. I remember my predecessor bar one, Robert Maclennan, the late Lord Maclennan of Rogart, being chieftain of the games some years ago, resplendent in kilt and everything else. He greeted me very warmly and said he had had six glasses of whisky. He was in extremely good form.

There was a cash machine in Durness, run by the Bank of Ireland, part of Robbie and Fiona Mackay’s shop. They used to tell me that the amount of money that came out of that machine the day before the games and during the games was absolutely staggering—tens of thousands of pounds. That was, of course, then spent on whisky or on whatever else at the highland games and it went straight back into the local economy. Then the machine was taken away. As Robbie Mackay said, “They can get cashback in the shop, but I can’t stay open until the wee small hours; I can’t be open at 6 in the morning.” That was the problem and it became a huge cause célèbre in that part of Sutherland.At the end of the day we did get a cash machine back in, but as the hon. Member for Makerfield said, getting them back again once they have been closed is a near-impossible task. I can tell Members that it is: I have the T-shirt. For every one we win, we lose a lot of others.

The second anecdote—just to colour in the cash machine issue—is that some years ago, maybe even 10 years ago, there were huge gales in the north of Scotland and the electricity went out—not for a few hours, not for a day, but for three, four or even five days in some communities in my present constituency. That meant, of course, that the cash machine did not work, and neither did contactless, so it is worth remembering that the present electronic regime is vulnerable to an electricity failure.

That is as much as I want to say about cash machines, except that they absolutely underpin my constituency. Of course we can withdraw cash from bank branches, but as I have said an awful lot of times during my three years in this place, we now only have one bank branch in the entire county of Sutherland. That is 2,028 square miles; it is a vast county, with one bank branch, in Golspie. That means that people have to make a 150-mile round trip to go to a bank branch, which is causing huge difficulties for my constituents.

As all colleagues here today know—I have mentioned this many times in this House—it seems as if there is a sickening liturgy of closures, one after the other, which we are unable to do anything about. Of course I am told, “You can use the post office.” That is not the silver bullet, because—as has already been alluded to—many is the post office that has already shut, or is shutting, in the relevant town, and the distances to get to the nearest post office are impossible. In no way do I denigrate what the Post Office does: it is a splendid institution, dating from the 19th century, and it is something that we can be very proud of as a British innovation.

I apologise for repeating myself, but one thing that I and others have been advocating is a joint banking hub approach, whereby the clearing banks work together to form a joint hub that would be owned in Scotland by the main clearing banks. That would mean a human face or faces behind the counter, who can advise. I bank electronically—I do it through my mobile—but I got a fright quite recently when I saw a debit coming off my account that I did not know anything about, and it was actually a banking fraud. Now, by dialling various numbers and taking a long time over it I got to the bottom of it, but had I been older than I am, or had I been a vulnerable person, that would have been very frightening. What better than to be able to go into a bank branch and ask, “What is happening here?” and be told, “Ah, this is a fraud we know about. We will kill it right now and get the money returned to you”?

I am not having a go at the Government, because the Government have actually been helpful. Before the pandemic, I had a constructive meeting with the Economic Secretary to the Treasury, and I was very grateful to him for that. He thought that there was possibly some mileage in the Government looking at the concept of a jointly owned banking hub, and indeed, on the business front, that concept has already been established—not for the north of Scotland, but nearer London, I think. Before the covid outbreak, I had hoped that I could have a look at it and see how it worked, and whether we could apply the same principle to the clearing bank idea, tweaking it suitably.

The other thing about having a human face behind a counter, or in a building that really exists and is reasonably accessible to people, is the issue of depositing money. We can take money out of a cash machine, but we cannot stick it back through the slot, and during the covid pandemic I have heard from businesses that, by the very nature of what they do, have had to travel a considerable distance to bank their weekly takings. That, I suggest, is not terribly safe, not only because of the security risk—a person travelling with that amount of money on them, in their car—but, sadly, because of the likelihood of transmitting the disease. We can learn lessons from the pandemic about this.

When it comes to the idea of a hub, where there is a will, there is a way. It could be done, and what I try to say to the banks of Scotland is that it would benefit them in so many ways. I am digressing from taking cash out of machines, so I will be very brief, but I have constituents who tell me that they have a brilliant idea to start a little business, but that whereas their father or grandfather would have talked through the sums with the bank manager and the bank would have supported them to the tune of, perhaps, £20,000, my constituents cannot do that because it is not so easy now. They may have to travel somewhere far away, which, because of covid, is not so good.

I started with a light-hearted point about the Durness highland games; I conclude on the splendid galas that we have in our highlands. Wick gala is famous, and it is excellent, with great entertainment. There are lots of different acts on the backs of lorries. I remember, on one lorry, an excellent take-off of my immediate predecessor Viscount Thurso, which was very humorous; indeed, his lordship enjoyed it enormously. The way to contribute to the Wick gala is to throw money at the floats, which is caught in little nets. A lot of things that are good for civic society involve cash being given. In my hometown of Tain, people go around with buckets which money is thrown into. That is how it is done; it cannot be done with a card or contactless.

With that light-hearted point, I congratulate the hon. Member for Blackpool North and Cleveleys on securing the debate. It is super to see a constructive debate such as this taking place. I look forward with great interest to the Minister’s reply.

Photo of David Mundell David Mundell Conservative, Dumfriesshire, Clydesdale and Tweeddale

Thank you, Mr Stone, for that—as ever—entertaining tour of your constituency. I will call Sarah Owen to speak next, and in the course of her contribution the Chair will transition to Yvonne Fovargue.

Photo of Sarah Owen Sarah Owen Labour, Luton North 2:01 pm, 3rd December 2020

It is a pleasure to serve under your chairship, Mr Mundell, and shortly under the chairship of my hon. Friend Yvonne Fovargue. I thank the Backbench Business Committee for finding the time to put this issue on the parliamentary agenda. This is a 90-minute debate, but for me and, I think, the public the issue is really straightforward: people should not be charged to access their own money. It really is as simple as that.

Data from the GMB union—I declare an interest as a member—found that access to free cash in my constituency had fallen by 46% since 2018, one of the top five biggest falls in free cash machines across the UK. Let us call that what it is—a stealth tax on the most vulnerable and those on the lowest incomes. Low income is the biggest indicator of cash dependence. Lower-income households are less likely to have access to digital infrastructure and more likely to use cash, for budgeting reasons. Older constituents contacted me during the pandemic, concerned that they could not pay with cash. We know that older people are less likely to be able to access banking digitally. Those people literally cannot afford to be left behind.

[Yvonne Fovargue in the Chair]

From an accessibility standpoint, a range of health problems may make it more difficult to use digital payments. Cognitive difficulties may make it challenging to remember a PIN—particularly if my child has kept me up all night and I really struggle to remember which PIN is which. Those with certain visual impairments may prefer the tactile nature of cash. Those with mental health problems may not trust digital payments, or may find it more difficult to control compulsive spending, affecting some people living with bipolar disorder or with gambling addiction, for example.

The pandemic has changed everyone’s way of life completely, and I entirely understand that, for now, we need to do everything we can to slow the spread of the virus. However, as businesses adjust to the new normal I will be pleading to allow the safe return of cash payments, because so many people would still like that option, and so many depend on it. Like many industries right now, the cash industry has been hit hard, as the number of cash withdrawals halved during the initial weeks of the covid crisis. However, this crisis was long in the making, with figures from Which? from February 2020 showing that 1,200 bank branches and 9,500 free-to-use ATMs were lost in 2018. That is having a real impact in Luton North. We are losing bank branches, with Barclays—around the corner from me, on Marsh Road—the latest to announce plans to go. When I went there last week, the queues were 15 people deep, 2 metres apart. That bank branch is well used and needs to be saved.

The industry is now on a knife edge. G4S, which operates some cash-handling services, is threatening more than 1,000 jobs with restructuring plans, and Loomis has announced 300 redundancies. When do the Government plan to bring forward the legislation promised in March to protect the cash industry? Will it include protections not only for accessing cash but for accessing free cash? My constituents are already some of the most overcharged in the country for getting at their own money. My constituents need the legislation to offer a legal right to pay for goods and services in cash, especially essential goods and services. Can the Government pledge that any legislation will ensure the availability of cashback from medium and large retailers? I ask the Minister to ensure the Government keep their promise and do more to back this vital industry and make progress towards ending this stealth tax on low incomes.

Photo of David Mundell David Mundell Conservative, Dumfriesshire, Clydesdale and Tweeddale 2:05 pm, 3rd December 2020

It is a real pleasure to serve under your unexpected chairmanship, Ms Fovargue. I am grateful to my hon. Friend Paul Maynard not only for securing time in Westminster Hall to debate access to cash and acceptance of cash during the covid-19 pandemic, but for his continuing work on this subject, as highlighted in his very thoughtful opening speech. I am also grateful to the other participants so far—including you, Ms Fovargue—for raising a series of important points, some of which I will repeat.

This debate is urgent, because I fear that, accelerated by covid-19, we are sleepwalking quickly to a cashless society in a totally unmanaged and unprepared way, with potentially disastrous consequences for many of our constituents. I know there will be people who advocate the benefits of a cashless society, but even if that is the case, we must not proceed in this unplanned and ad hoc way. We know from research that some 17% of adults in the UK—around 8 million—would struggle in a cashless society, and those struggling the most would be the elderly, the vulnerable, the economically excluded and those in rural communities such as my Dumfriesshire, Clydesdale and Tweeddale constituency.

Shockingly, the National Audit Office’s recent report on cash found a fragmented system of oversight, with the Financial Conduct Authority regulating banks and the Payment Systems Regulator regulating payment systems identified by the Treasury. Coherence and co-ordination is urgently needed in this regard, along with clear, robust messaging from the Government on the importance of being able to use cash, at least for the time being. In my view, the Government’s promised legislation should not just address access to cash, but make the Financial Conduct Authority responsible for regulating a well-functioning retail cash system.

When I have previously raised this issue, the ability to access cash and the cost of doing so was the primary concern, along with the need for small businesses, charities and local organisations of the type that Jamie Stone mentioned, to be able to deposit cash. Now, however, the immediate focus has to be on cash acceptance. It is pointless to access cash if people cannot use it, yet cash is increasingly refused as a means of exchange. The Bank of England noted in its quarterly bulletin that 42% of people had recently visited a store that did not accept cash. More worryingly, Which?, to which my hon. Friend the Member for Blackpool North and Cleveleys referred, conducted a survey that found that four in 10 of those who had experienced difficulties paying with cash had been left empty-handed when trying to buy groceries, and almost two in 10 had been unable to buy medicine. Indeed, I learned only yesterday of another pharmacy that has gone cashless.

Industry-collated data suggests a 71% decline in cash use between early March and mid-April of this year. Conversely, my experience is of the importance of cash to people who have relied on it during the pandemic. Cash has been the means by which local communities have supported themselves, with neighbours, friends and family buying essentials for one another. Short of handing over one’s PIN and bank card, cash was the only option for many of those who needed others to help them when faced with domestic emergencies, given that such people were mostly older or vulnerable and were certainly not users of apps, credit cards or digital banking services. Indeed, many are part of the so-called unbanked community.

As others have touched on, there is no doubt that part of the issue is the false perception that cash has not been safe to use during the pandemic. In my view, some have seized on that perception as an excuse to go cashless for their own purposes. In any event, it is just not true: as far back as April, the Bank for International Settlements advised that the risk of transmitting covid-19 via banknotes was low when compared with credit card terminals or pin pads. That view is shared by the Bank of England, which found that,

“the survival of virus on banknotes is no greater—indeed appears potentially less—than on reference surfaces representative of the many surfaces that people may come into contact with in their routine life.”

Cash is safer still if users follow the routine guidance on washing their hands regularly and on social distancing.

The Government now have a major role to play in making it absolutely clear that people should be able to use cash in routine transactions. If that is not possible on a voluntary basis among retailers and other service providers, legislation should be considered—at least for a fixed period—to support those who are least able to manage without cash in transitioning to a cashless economy. My hon. Friend the Member for Blackpool North and Cleveleys drew a useful comparison with the transition to digital television.

Amid the pushback on the use of cash, accessing and depositing cash has become increasingly difficult, with bank branch closures and the decline of free-to-use cash machines. Since 2015 there has been a 17% reduction in the number of free-to-use cash machines, and since 2010, 39% of the bank and building society branch network has closed. That has been acutely felt by local communities in my constituency, which have seen seven Royal Bank of Scotland branch closures in recent years, as well as the closure of the West Linton branch of the Bank of Scotland. Covid-19 has only added to the impetus of that trend: three other local cash machines have been lost, and the TSB in Peebles is scheduled to be shut. In your speech, Ms Fovargue, you made an important point about post offices, as did other hon. Members. Post offices in my constituency have been closed the next day because the postmaster was ill, meaning that people could not gain access to the post office.

Photo of Jamie Stone Jamie Stone Liberal Democrat Spokesperson (Armed Forces), Liberal Democrat Spokesperson (Defence), Liberal Democrat Spokesperson (Digital, Culture, Media and Sport)

The right hon. Gentleman is making an excellent contribution. Does he agree that the closure of local bank branches and post offices is all part of the downward spiral of Scottish high streets?

Photo of David Mundell David Mundell Conservative, Dumfriesshire, Clydesdale and Tweeddale

Indeed. The challenge of the high street is a considerable one.

Although our local post offices do a good and worthwhile job where they are still in the community, they are not a silver bullet. It is sometimes suggested that everything will be sorted out by the post office. The challenge is not only in having post offices in every community in the first place, but in the considerable issues that post offices face in providing those services and, very often, operating a retail outlet. That is why we need the joined-up approach to the whole cash system, as I have said.

As my hon. Friend the Member for Blackpool North and Cleveleys mentioned, there has been a rise in the number of cash machines that charge for use. Most cash withdrawals from machines are relatively small, so the charges mean that users effectively face a 10% to 30% tax on each transaction. Generic figures on the number of free-to-use cash machines mask the scarcity of such machines in rural and deprived areas.

When I last counted, there were fewer free-to-use cash machines in the almost 1,700 square miles of my Dumfriesshire, Clydesdale and Tweeddale constituency than can be found on or just off Victoria Street, a few moments from here. That imbalance is plain wrong and the industry must correct that. I welcome the fact that the banks, LINK and the card operators, which have come forward with innovative proposals about the interchange rate that applies to cash transactions, are all contributing to the thoughtful work that the Financial Conduct Authority and Payment Systems Regulator are undertaking, about which my hon. Friend the Member for Blackpool North and Cleveleys spoke in detail.

I was pleased to have the opportunity to discuss these issues recently with the Economic Secretary to the Treasury. I welcome his commitment to legislation and other initiatives on access to cash, but, as I have said, I hope they will go beyond access to cash and cover the entire cash system and responsibility for it. That legislation is needed now, along with the Government’s robust advocacy of our ability to use cash. Without action, our cash system is in danger of collapsing, leaving the elderly and most vulnerable to pay the price. I hope that the Minister can promise that action today as a matter of urgency.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health) 2:16 pm, 3rd December 2020

I congratulate Paul Maynard on securing this debate. This is not the first time we have debated this subject in Westminster Hall; I understand that Patricia Gibson and probably numerous other Scottish MPs have had previously had a similar debate. We are back to rehearse the issues, in a nice way. It was a pleasure to hear the opening speech from the hon. Member for Blackpool North and Cleveleys.

I do not feel particularly old—some days I do, but other days I do not—but I am one of those old-school people when it comes to cash and cheques. People can still get cheque books, by the way; I get one almost every month. By and large, the people from whom I buy stuff have been more than happy to receive a cheque. Unfortunately, that has changed, and I will give a few examples to illustrate the issues to which the hon. Gentleman and other hon. Members have referred. I understand the rationale behind shops asking people to use contactless payment if possible at this time, but that is not and cannot be sustainable. A number of businesses in Belfast and Northern Ireland have refused to take cash during the coronavirus pandemic and have lost business for life.

I digress slightly, but flights from Northern Ireland to here are quite restricted. I have to go over first thing in the morning and come back last thing at night, because there are not many options. British Airways has put a flight on in the last week. It informed us this week that we could not get a boarding pass online, but we had to present ourselves at the airport where a person would hand it over face to face. That is totally contrary to the coronavirus rules, and it is hard to understand how some have changed their methodology while others have not. Incidentally, there is not the same problem with Aer Lingus and other airlines.

I will give an example of the problems with contactless payment. My parliamentary aide, who was determined to shop in the local high street for her Christmas gifts, went to the local Menarys department store in the main town of Newtownards to buy Christmas gifts for her children’s teachers. When she came to pay, an issue with the card machine meant that she could not. That seems to be a recurring problem, although I do not know why. She has told me that she will make every effort to go back and select the merchandise and pay for it, because she knows that coronavirus and the lockdown could be the death knell for the high street. Next week, there will be a debate about the high street, not in Westminster Hall, but in the main Chamber. It will probably be oversubscribed, because every hon. Member present will want to make a contribution if possible. The fact that my aide does not bother to carry money and has her card on her phone meant the loss of that sale, as it would for many people.

I requested a breakdown of access to cash in Strangford and received some interesting results. In total, the constituency lost 13 free-to-use ATMs from January 2018 to September 2020, according to the latest data at that time, despite the fact that the number of pay-to-use ATMs increased by four. There was also a reduction of two ATMs from the start of lockdown in March to May 2020. By the end of 2021, my constituency will have lost seven bank branches since 2015. That figure includes the proposed closure of a TSB branch that was announced earlier this year.

Access to cash is declining and our reliance on contactless is growing, but the technology and security are not keeping pace with that. A chat with local merchants will tell of the unreliability of card machines, or of being caught out when a customer unintentionally leaves before it is realised that their card has been declined. I have seen that happen in the Members’ Dining Room. Let me be clear that that is nobody’s fault; nobody is doing that intentionally, and they have put their card on the reader. Of course, in the Members’ Dining Room, people do not go too far away—they only go to wherever they are going to sit to have a cup of tea, or whatever they are having—and the staff come up and say, “Look, that didn’t go through. Will you go back and do it again?” That can happen, and it underlines some of the issues.

I have been contacted by the Association of Convenience Stores, which represents some 33,500 local shops and petrol forecourts across the whole of the United Kingdom of Great Britain and Northern Ireland, many of which trade as independents under brands such as Spar, Nisa and Costcutter. I support their calls to restore the independent setting of LINK interchange fees for ATMs and to require bank participation in LINK; to enable cashback without a purchase, but without any obligation for retailers to offer that service and with guaranteed fair remuneration; and to develop an access to cash guarantee to ensure that access is maintained where exceptional circumstances lead to a lack of coverage. Sarah Owen referred to that as well. We do need some help from the Minister, who is here to respond to our requests.

As Which? put it,

“The pandemic has accelerated the decline in cash use and demand: ATM withdrawals fell significantly during the first national lockdown, and with an increasing number of shops encouraging non-cash payments, we anticipate this reduction in cash to persist long after restrictions have been lifted. This is putting immense pressure on the UK’s already fragile cash infrastructure, leaving it at a high risk of collapse.

However, while overall use has fallen, our research has found that cash remains a fundamental payment method for many, often vulnerable, people.”

David Mundell talked about that just before I rose to speak. We are here to speak for vulnerable people. Every one of us will mention them, we all know them and we know what the issues are for them. I am sure that the hon. Member for North Ayrshire and Arran, who will follow me, will underline that with real understanding and with lots of examples of where the system falls down for them.

In a survey in May, less than half of all consumers said that they were accessing or using cash in the same way as before the pandemic, while almost a third said that coronavirus would not affect their cash use in the next six months. Although the Government pledged to protect access to cash in March, just before coronavirus came online, legislation is needed urgently to prevent people from losing access to their only payment method. We have all said that, but I will say it again. I know that others, including the shadow Minister, will say the same thing.

I believe the Government must set out a clear timetable for introducing a Bill to Parliament, with detail on the scope and contents of the proposed legislation, highlighting how it will build on and complement current work being done to protect consumers’ ability to access cash. Can the Minister set that out?

My constituents have, by and large, supported the coronavirus rules and regulations, and they have understood the need not to use cash, but they also understand the predicament and the problems that come with having a cashless society. We need to make sure that the vulnerable are looked after. Quite clearly, at the moment, they are not.

Photo of Patricia Gibson Patricia Gibson Shadow SNP Spokesperson (Consumer Affairs) 2:24 pm, 3rd December 2020

I am delighted to speak in the debate, and I echo the congratulations that have been offered to Paul Maynard on securing it, and on his clear exposition of the scope of the challenges that we and our communities face in access to and use of cash.

I want to express my good cheer at the fact that there is such a level of common purpose in the Chamber today. That does not happen as often as we might like, but there is clear agreement here. I want to pick up on something that Jim Shannon said. He described himself as old school, because he still uses cheques. I cannot speak for anyone else in the Chamber, but I also use them. I can go one better, because recently, having forgotten my cheque book, I had cause to buy that quaint old relic called a postal order, which is very unfashionable. I was quite surprised; I had not bought one for about 35 years, and they look really quite sexy now—far different from how they used to look.

There was a debate similar to this one at the end of May last year, covering many of the same issues; again, that was referred to by the hon. Member for Strangford. All the issues we would expect were debated: how for some of us cash is convenient but for others it is a vital budgeting tool; the level of control that it offers, which digital transactions do not; and the fact that there is a sensible reason why debt charities always advise those living with damaging levels of debt to cut up their cards as a first step to regaining some financial control. Members around the Chamber have repeatedly referred to the way our cash machines are disappearing from our high streets—faster than snow off a dyke. Some businesses do not accept cash payments at all, and some 1.3 million people in the UK do not have a bank account and already suffer financial exclusion. Those problems were highlighted even before covid-19 and the need to factor in the effect of cash not being accepted in the current climate. The same arguments and concerns have rightly been repeated today.

How different the world looks now, only 19 short months after that debate in May last year. Now we are living with covid-19. We live in a world where the cash network has been placed under increasing strain, pushing it ever closer to collapse. Alongside that, as we have heard from many Members today, there is a continuing trend for considerable shrinkage in the availability of free-to-use cash links in communities; 9,500 have been lost since 2017, and it is feared that further losses are on the way. More than a third of bank branches have been lost in less than five years, and we can all guess that there will be further bank closures to come. That is extremely worrying, because for many of our constituents cash is not just the preferred way of payment—although for many that is the case; for many, cash is the only purchasing method at their disposal, as you said, Ms Fovargue.

The hon. Member for Strangford also reminded us that cash is something that we all sometimes need to rely on, whether we like it or not, because of technical glitches with card machines, and even some high-profile IT glitches in the banking world. I thank the hon. Gentleman for reminding us of that.

The Chancellor committed to introducing legislation to protect access to cash in March 2020; however, the pandemic has dramatically shortened the timeframe needed for intervention, and unless it is introduced urgently the ability to get access to cash and spend it could be permanently lost to many consumers, causing significant harm and financial exclusion.

The speed of the stampede away from cash and towards digital payments is fine for some people, and good luck to them. However, the price of that speed is that many are left behind. The consumer body Which?—many have referred to its excellent work on the matter—revealed that 85% of us would find it difficult to live our lives without the ability to withdraw cash. That makes the 23% rise in pay-to-use cash machines, particularly concentrated in socially deprived areas, all the more worrying. I share the concerns highlighted by Sarah Owen.

This speeding towards digital payments, which were taking hold before covid, has accelerated at an astonishing rate in the current climate, and that has quickened the decline of our high street cash machines and bank branches. The loss of bank branches has affected my constituency of North Ayrshire and Arran. I believe it is one of the worst hit in the UK when we consider the distance to the next bank, although I take on board the challenges that Jamie Stone talked about in his rural constituency. These matters have been repeatedly raised in the Commons by me and other Members. I echo the hon. Gentleman’s comments about the pressing need for banking hubs. It is really important that they are expedited in all our communities that have suffered.

[Rushanara Ali in the Chair]

Covid has made the situation of our cash infrastructure all the more perilous. As we have heard, many retailers are simply refusing to accept cash. During the global pandemic, when there is already no end of serious matters to contend with, too many of our constituents have to contend with their lives being made unnecessarily difficult because they cannot pay for the goods and services they need with cash, as David Mundell set out.

Research by Which? showed that in May, one in 10 people had been unable to pay for items with cash during lockdown because they were refused by the retailer. Of that number, 26% were unable to purchase the items that they needed as they had no alternative to cash. In October, Which? found that four out of 10 of those who responded to its survey left a shop empty handed when they tried to pay for groceries with cash. The right hon. Gentleman also highlighted that. As we have heard, action on access to cash is utterly meaningless if the widespread acceptance of cash is lost in our shops. We urgently need the Financial Conduct Authority to publish a UK-wide tracker of levels of cash acceptance.

I echo the calls for the Minister to set out what interventions his Government will take to ensure that people, especially those who rely on cash, can continue to use it to pay for essential goods and services. There is currently an absence of legislation to protect such access to cash. Alongside that, we need an impact assessment of the effect of cash refusal on consumers, to consider the relationship between the acceptance of cash and consumer access to it.

The genuine fear that we have heard today is that cash payment options have been fatally and profoundly—but, I hope, not irreversibly—affected to the point where the post-covid use of cash in our society is on its death bed. I suppose we are here today to see whether it can be resuscitated. The UK Government have a duty to ensure that access to cash does not disappear, for the sake of our rural and socioeconomically challenged communities, which particularly rely on that medium.

Following the UK Government’s legislative proposals to protect access to cash, the proposal to give the Financial Conduct Authority the responsibility for overseeing access to cash is to be welcomed. Alongside that, it is important that the Financial Conduct Authority is given proper teeth. It needs comprehensive powers to ensure strategic and comprehensive regulation.

It seems clear that expediting those proposals has become ever more urgent, given that the diminishing of the cash infrastructure has been accelerated in recent months. The Financial Conduct Authority should be given a statutory duty to protect our cash infrastructure. It should be responsible for monitoring and reporting on levels of cash access, as well as designing and implementing a framework funded by the industry by which a minimum level of access to cash can be maintained. Our cash infrastructure will not be sustainable without that level of intervention from the Government. We can already see it crumbling before our eyes at a shocking rate, as every single participant in the debate has mentioned.

In addition, the Government should set out a clear timetable—others have also called for this—for introducing a Bill to Parliament as soon as possible. That should include the detail, scope and contents of the proposed legislation, with a clear exposition of how it will build on and complement current work being done to protect consumers’ ability to access cash. I know that Conservative Governments are often reluctant to have such direct intervention on such matters, but when direct intervention is required, the Government must be brave enough to make that intervention.

Photo of Bridget Phillipson Bridget Phillipson Shadow Chief Secretary to the Treasury 2:35 pm, 3rd December 2020

It is a pleasure to serve under you in the Chair, Ms Ali, and to have had revolving Chairs this afternoon. My hon. Friend Yvonne Fovargue and David Mundell also did fine work in the Chair.

I am very grateful to Paul Maynard for securing this important debate and for his excellent contribution. I should just draw the House’s attention to the fact that my husband is employed by the Bank of England. I will refer to the Bank later.

As many hon. Members have set out, the use of cash in this country has been declining for some time and the decline has been accelerated by the pandemic. Many consumers today are turning towards digital payment methods. However, as we have heard, that change in behaviour does not fall evenly across society.

According to the Treasury Committee report on increasing financial inclusion, there are still about 1 million people in the UK without a bank account and some older, lower-income households that rely on cash to budget or because of a lack of access to online banking. Many communities and many people, especially older and more vulnerable ones, still rely on cash. As we have heard, the Access to Cash review carried out by Natalie Ceeney estimated that that was the case for some 17% of the population.

We have been seeing a shift away from using cash and towards digital for some time, but that has clearly been accelerated by the pandemic. Data from LINK suggests that ATM cash withdrawals were down by 60% between March and April this year, compared with the same period in the previous year. Although ATM withdrawals have increased since that period earlier this year, the change in behaviour is likely to be long-lasting.

Many people are able to adapt to the changes and welcome them, but an unmanaged drift towards a cashless society risks seriously disadvantaging many of the people we represent. We have heard in many contributions today what that might mean for communities and individuals in regions and nations of the UK.

My hon. Friend the Member for Makerfield, who brings to the House real experience in these matters, talked about the pressures faced by families on lower incomes and described how many people find it easier to budget using cash. Like my hon. Friend Sarah Owen, I am a GMB member. I was very pleased to hear her raise its concerns about job losses. She is a passionate advocate on behalf of her constituents, and I know she will keep pressing Government on this issue.

It is clear that we need to find ways to manage and protect access to cash. Otherwise, we risk exacerbating inequality and shutting people out from access to various services. We know that a failure to manage the transition and a sudden inability to access cash will cause problems for many of our constituents. I saw that in my own constituency last year, following the decision by Barclays to opt out of the Post Office cash withdrawal scheme. That followed a bank closure not long before in a community in my constituency. There was significant worry about what this would mean for my constituents in Hetton-le-Hole and how they would adjust. We should not underestimate the anxieties that such developments can cause and what they mean for the local high street.

I welcomed at the time Barclays’ decision to reverse the plans, but notwithstanding the wonderful news on the vaccine that we have seen, the reality is that the future of our society may well mean reduced reliance on face-to-face everyday services for some time to come, and the Government should be thinking about how we protect those services for those in our communities who would otherwise be left isolated.

In the light of that, I welcome the commitment from the Government in the March Budget to legislate on cash access, and I congratulate organisations such as Which? that have been tireless campaigners in this area. However, I am worried that if we do not get to grips with this task quickly, the cost of inaction or, indeed, slow action will only make the inequalities that we see even more severe.

Without clear legislation, we risk the creation of cash deserts. We must not allow the financial exclusion of those who rely on cash purchases. I recognise that Ministers have previously recommitted to bringing forward that legislation, and that the call for evidence ended only last week, but can the Minister set out today a rough timescale for legislating on this matter? Does he agree that the longer the current situation goes on, the more severe the consequences may be, and that uncertainty is damaging? We know that an unmanaged transition to a cashless society would not just affect families who rely on cash, but could have a significant impact on jobs and businesses. As the GMB has rightly pointed out, many small and medium-sized enterprises rely on cash transactions. Many thousands of people work within the cash transit and ATM service industry, too.

Has the Minister considered the implications that this trend will have on jobs and livelihoods? If so, what are the Government doing to ensure that businesses can adapt and plan for the future?

We know that the infrastructure around cash is a critical element in this debate, as we have heard from Members of different parties. Joint research by the FCA and the University of Bristol found that the number of free-to-use ATMs fell 19% between March 2018 and March 2020, and that number is likely to continue falling. It should worry all of us that the conversion from free-to-use to pay-to-use ATMs appears to be concentrated in deprived communities where there is much greater reliance on cash.

There is also an obvious need to protect ATMs in rural communities, as we have heard this afternoon. Across the country, the Post Office plays a vital role for those who need access to cash. In 60% of rural settings, post offices are the nearest cash access point, yet thousands of post offices remain worried about the future. Of course, that concern is not limited to rural communities. Can the Minister tell us what work his Department is doing with the banks and ATM providers to review these matters and to ensure that people who depend on cash have good geographical, and free, access to it?

The Minister will doubtless be aware of the recommendations made in the 2019 Access to Cash review about how we maintain the infrastructure. It called on the Bank of England to redesign the high cost of the infrastructure we have today so that it is tenable for banks to provide free access to cash. The review also highlighted the role that the FCA can play in ensuring that the cost of handling cash is kept on a par with digital.

The pace of technological change in the past 60 years has been extraordinary, and it is important in any area of our lives where technology has transformed the questions of who can exercise power over us and how, that as a society we keep under anxious review the question of whether we have struck the right balance between enabling commercial success and ensuring public benefit. The GMB submission to the Government’s call for evidence highlights the importance of getting the regulation right. As the GMB says, there is

“an urgent and compelling need for regulation to ensure the sustainability of the ATM network.”

We have the Payment Systems Regulator, of course, but there is a wider strategic question about the relationship between the work that it does and the availability of cash. The GMB’s view is that

“a single regulator with overall statutory responsibility” would be the preferred outcome, and it recommends the FCA for that role. The GMB also notes, however, that it would need proper support from Government to ensure it can perform its functions effectively, given the scale of the challenge. Will the Minister set out the Government’s current thinking on how the system will be regulated in future and how we might bring costs down?

There should be a focus on ensuring alternative access to cash. We have seen a number of pilots recently across the country—I particularly note the work of LINK and PayPoint—but can the Minister tell us whether any efforts are being made to promote pilots and to look at new, innovative solutions around the issue of access to cash?

At the heart of this issue is a transition to digital forms of payment, and no one must be left behind by this transition. Of course, one of the most significant factors is the level of deprivation in an area. We must ensure that deprived communities are not left behind, so can the Minister outline what more the Government intend to communicate throughout the transition? How will they support communities in all parts of our country through this process?

It is quite right that we focus on the impact on individuals, but we must not forget the security implications of an unmanaged transition to a cashless society. The Minister will doubtless be aware of the example of Sweden, a country that is much closer to becoming cashless, and where concerns have been raised about the risk of cyber-attacks or foreign interference in a totally digital system. Consumer privacy is clearly an issue too, given the traceability of digital transactions and how so much information is stored and used. What consideration has the Minister made of these matters, and will he address the potential vulnerabilities of a cashless society in legislation?

I want to close by saying that we all recognise that an unmanaged drift to a cashless society would do significant harm to millions of people right across our country. Once infrastructure has gone or communities have been harmed, rebuilding is very hard. I urge the Minister not to delay work on this important issue and to work with all of us across the House to get the response to this issue right.

Photo of Jesse Norman Jesse Norman The Financial Secretary to the Treasury 2:44 pm, 3rd December 2020

It is a delight to see you in the Chair, Ms Ali. I am sure all colleagues will join me in taking my hat off to the genius of improvisation and quick thinking that allowed our colleagues, my hon. Friend David Mundell and Yvonne Fovargue, to take the Chair—the vital element. Thank you, Ms Ali, for coming in at the end and allowing us all to take our positions in the Chamber.

This has been a very good debate—very thoughtful, very constructive, very well informed and on a very important topic—and I thank everyone who has made contributions to it. I am sure everyone present will join me in thanking in particular my hon. Friend Paul Maynard for securing the debate, and also for his excellent and very thoughtful speech. He picked up on themes that he and many other hon. Members have been pressing over the previous years and months. His knowledge of and engagement in the issue of cash access and the use of cash are well known, and I thank him and everyone else for their contributions.

As colleagues will be aware, I am not the Economic Secretary to the Treasury. He, tragically, is unavoidably detained with the trivial matter of the Financial Services Bill—he sends his apologies and thanks. It has been mentioned by several colleagues in this debate that he has been very accessible to them in discussing these issues; his style is a very open and friendly one. We try to do that in the Treasury and he has been an exemplar. I am sure that colleagues will continue to engage with him. I am afraid that, compared to his grandmastery and immense skill, I am very much a novice chess player in this area.

It is clear that digital payments are, as colleagues have mentioned, playing more and more of a role in the lives of people across the country and in the activities of business. In many ways, this is to be profoundly welcomed; it allows for faster, cheaper payments and for easier management of household and business finances—those are the forces that in large part have powered the change hitherto.

The statistics are clear: in 2009, some 58% of payments were made using cash; just a decade later in 2019, it was 23%. That astonishing rate of change has now been accelerated by covid-19, as colleagues have said.

It is important to say that cash has not, by any means, had its day; it is still the second most popular form of payment in this country. According to figures published last year, a reported 2.1 million people mainly use cash for everyday payments, many of whom may be vulnerable, elderly or on low incomes. However, the pandemic has clearly had a marked impact on cash usage. We recognise that and, as I think colleagues have noticed, the Government have not been slow to press forward on the issue. That, of course, creates the impetus and energy that they have shown in bringing attention to these issues in the debate.

I reassure colleagues that the Treasury has been working very closely with regulators and industry to try to ensure that people have access to essential banking services, and to cash in particular. As colleagues will be aware, the Joint Authorities Cash Strategy group only launched in May 2019, but it is very much engaged in facilitating co-ordination and seeking to ensure comprehensive oversight of the UK’s cash infrastructure. If I may, I will talk a little more about the wider picture, then I will come to specific comments and questions that have been raised by colleagues in the debate.

The JACS group is chaired by the Treasury, and brings together the Payment Systems Regulator, the Financial Conduct Authority and the Bank of England. The group has continued to try to coordinate efforts throughout the pandemic and, as Members will be aware, it published an update on the actions of its members in July 2020. Also in the summer, the FCA and the PSR published a statement setting out their approach to addressing issues in relation to access to cash, including local-level areas that have lost access to cash. In September, the FCA introduced new guidance for banks, building societies and credit unions when they are considering closing branches or ATMs.

I think it fair to say that throughout the pandemic, the regulators on the one side and the industry on the other have taken steps to support customers who are reliant on cash. Those have included more proactive communications, cash deliveries to people’s homes, and issuing carer cards to trusted third parties. As a result, the vast majority of people have continued to have access to cash during the pandemic. That, of course, does not address those who may have been struggling, whose position has been highlighted by many of the individual stories told in the debate.

There is the question not merely of cash access, but of cash acceptance, as my hon. Friend the Member for Blackpool North and Cleveleys highlighted. The one is as essential as the other. Of course, to help to control the virus, businesses and individuals have been encouraged to follow the latest Government advice, which involves a range of measures to protect personal health, but also to minimise contact in transactions. However, it does remain the choice of an individual retailor whether to accept a particular form of payment, be that cash or card. What is interesting is how different groups, including the FCA, the PSR and the Bank of England, as I have mentioned, are joining forces to improve data collection and, therefore, gain a better understanding.

My hon. Friend the Member for Blackpool North and Cleveleys raised the question of mandation. The Government do not believe that mandating cash acceptance is the answer, but exploring means to incentivise the acceptance of cash is high on the agenda and was a key issue raised in the call for evidence. If protecting access to cash is a complex issue, requiring a long-term and collaborative effort, it is no less important that that work continues across industry regulators and the Government.

The ATM network has been mentioned by colleagues. LINK, which is the largest network of ATMs, has taken action to ensure that remote and deprived areas continue to have access to free-to-use machines. The Government are working to bring legislation to protect access to cash to ensure that the nation’s cash infrastructure is sustainable over the longer-term, as the hon. Lady for Houghton and Sunderland South (Bridget Phillipson) highlighted, and as was prefigured in the March 2020 Budget.

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

As I said in my contribution, the Association of Convenience Stores has put forward ideas for helping the ATM system. I realise this is not the Minister’s responsibility to be honest, but has the Department had the opportunity to talk to those people to see how we could work together?

Photo of Jesse Norman Jesse Norman The Financial Secretary to the Treasury

I thank the hon. Member very much. I do not know whether the Department has had the opportunity to talk to the Association of Convenience Stores specifically, but I do know that the issue is very much on the agenda—it is certainly on the agenda of the Economic Secretary. It is important to realise, and to remind everyone, that the call for evidence on access to cash only closed last week. The timeliness of this debate rams home that point, and rightly so, but it is merely a week. It says more than I could for the high esteem in which colleagues across the House must hold the Government, if they think we can make a decision without having published a response and having only closed the call for evidence last week.

Nevertheless, the call for evidence is an important aspect. It set out the Government’s view that cash has the potential to continue to play an important role—and cashback within the cash infrastructure—and also asked for views on how that can be achieved. We will publish a summary of responses to the call for evidence and set out steps alongside that in due course. As colleagues will know, the call for evidence asked for views on key considerations associated with cash access, including deposit and withdrawal facilities, cash acceptance and regulatory oversight of the system.

The call for evidence also set out the Government’s views on the aims of legislation: that it should be proportionate, flexible, cost-effective, efficient and sustainable. The Government’s view, and we should be perfectly clear about this, is that legislation will need to ensure that business and people can have access to cash withdrawal and depositing facilities within a reasonable travel distance, as is needed in their day to day lives. I remind colleagues of that central point.

Photo of Yvonne Fovargue Yvonne Fovargue Labour, Makerfield

I accept that the purpose is to have reasonable access to cash within a travelling distance. Is that to free cash machines, because that is a key point?

Photo of Jesse Norman Jesse Norman The Financial Secretary to the Treasury

The Government absolutely recognise—I am not going to comment on the shape of what is to come, because I do not think that would be appropriate—the concern about free access to cash. As the hon. Lady will know, a lot of work has been done on trying to preserve inclusivity in the face of markets and pandemic-induced change that may be prejudicing that access.

Photo of Jesse Norman Jesse Norman The Financial Secretary to the Treasury

I really do not have much time, and I want to respond to the comments and to give my hon. Friend the Member for Blackpool North and Cleveleys the chance to wind up, so let me press on with a couple of key things.

It is worth mentioning that the industry is already taking action to support cashback. Mastercard and Visa have already announced incentives, and of course we have the community access to cash pilots.

The set of authorities that govern this area has been raised. It is important to say that the Government’s view is that the FCA may well be best positioned to take on the function of co-ordinating in an overall responsible way, while we also intend for the PSR and the Bank of England to continue their existing functions. As colleagues will know, the FCA already has a statutory objective to secure an appropriate degree of protection for consumers and existing regulatory relationships with industry.

My hon. Friend asked about wholesale cash distribution. As I think he knows, there was a previous consultation paper by the Bank of England on the future of the wholesale cash distribution model, which set out a high-level road map. A lot of work is being done between the Treasury and the Bank to address those issues.

The hon. Member for Makerfield will be aware that there are existing policies within the LINK ATM network, in particular, to protect the distribution of free cash through ATMs. The Treasury is supporting the Bank of England in trying to enable a sustainable model—sustainability is important—to permit effective wholesale cash distribution.

I ought to sit down now. I thank colleagues very much indeed for their interesting and constructive contributions to the debate.

Photo of Paul Maynard Paul Maynard Conservative, Blackpool North and Cleveleys 2:56 pm, 3rd December 2020

I thank the Backbench Business Committee for enabling what I thought was an excellent debate. We are at our best in this place when we find consensus and agreement in the search for common solutions to common problems, so I consider the debate quite a success, unlike many other debates that I have sat through.

I particularly thank the hon. Members for Makerfield (Yvonne Fovargue) and for Luton North (Sarah Owen) and the shadow Minister, Bridget Phillipson, for raising the interplay between free-to-use and pay-to-use ATMs in deprived areas. That is a particular problem in my constituency, where the poorest areas are nearest the town centre, so geographical proximity actually does not help constituents living there to access free-to-use ATMs.

My constituency is also just 8 miles by 2 miles, so hearing from Members for much larger rural areas in Scotland was particularly helpful in understanding the broader picture of access to cash. I say to Patricia Gibson that I am too young to even know what a postal order used to look like, let alone what it now looks like. I am grateful that Jim Shannon chose to grace us with his presence; it may be because Strangford has no track record of coal mining that he could draw on to speak on that issue in the main Chamber. His points on the high street were well made.

I am grateful to the Minister for his response. I may have to write to the Economic Secretary to the Treasury on the tabling of regulations to enable the cashback pilots to continue, which is an urgent matter that the Government need to address. They have weeks to do that. It cannot wait for a Bill, or even the consideration of a consultation. I love Government consultations. As a Minister, I would take them home over the Christmas holidays and read them over the turkey, and then come back and rewrite what was going on, so I hope the Minister will request that the Economic Secretary, in this time of lockdown Christmas, locks himself away with all the consultation responses, which I know will be of very high quality.

I once again thank all Members who participated in what has been an excellent debate. I am sure that it will not be the last time that we come back to this issue. Thank you, Ms Ali.

Question put and agreed to.

Resolved,

That this House
has considered access to and acceptance of cash during the covid-19 outbreak.

Sitting suspended.