Access to Cash — [Mrs Maria Miller in the Chair]

– in Westminster Hall at 11:29 am on 20th October 2021.

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[Mrs Maria Miller in the Chair]

Photo of Maria Miller Maria Miller Conservative, Basingstoke 2:30 pm, 20th October 2021

I encourage Members to wear masks when they are not speaking, and to give each other space when moving around, or entering or leaving the room.

Photo of Alex Davies-Jones Alex Davies-Jones Shadow Minister (Northern Ireland)

I beg to move,

That this House
has considered access to cash.

It is a pleasure to serve under your chairship, Mrs Miller. Given recent events, I feel it is important to take a moment to pay tribute to our wonderful colleague, Sir David Amess, who was a regular contributor to Westminster Hall debates. His presence here will forever be missed.

I am pleased to have secured this debate, particularly as our ability to physically access cash has been restricted as we continue to tackle coronavirus, and given the recent increase to the contactless card spending limit from £45 to £100.

I come to this debate with a specific constituency interest in mind. One of the jewels in the Pontypridd crown is the Royal Mint, based in Llantrisant. It is a major local employer, and I must give its tourist attraction, the Royal Mint Experience, a quick plug. The Royal Mint is the manufacturer of UK coins, and is not directly involved in policy on the use of cash, but it is a key contributor to ensuring that certain skills, and the capability to circulate coins, still exist in this country. I was joined there by the Under-Secretary of State for Wales, David T. C. Davies, only a few months ago; we struck coins, and met young people on the kickstart scheme. I will, however, try to refrain from reminding the Minister that despite all the country’s coins being made in my constituency, we sadly see precious little money in return from the Government. Perhaps that is a matter to be discussed another time.

Instead, I will focus on the sad, widespread repercussions of reduced cash flow, which is having a major impact on high streets up and down the country. Many have been hit by multiple bank closures, including in my constituency of Pontypridd and across Caerphilly. Banks not only provide vital services for a huge range of community groups, but are often the epicentre of our high streets, and are vital in encouraging local trade and footfall for surrounding businesses.

Photo of Martin Docherty Martin Docherty Shadow SNP Spokesperson (Industries of the Future and Blockchain Technologies), Shadow SNP Spokesperson (Foreign Affairs Team Member), Shadow SNP Spokesperson (Defence Team Member), Shadow SNP Spokesperson (PPS to the Westminster Leader)

In West Dunbartonshire, we have seen a huge decrease in the number of banks, and I congratulate the hon. Member on making that point. Do they agree that if we are moving to a cashless society, that cannot happen in a vacuum, and that the Government must step up to ensure that people have access to cash in local communities?

Photo of Alex Davies-Jones Alex Davies-Jones Shadow Minister (Northern Ireland)

I completely agree. It is vital that the Government step up to ensure that this transition to a cashless society—if that is where we are heading, which seems to be the case—is made quickly. I will return to this point later, but I must begin by placing on the record my gratitude to all the organisations that have supported me and my team in preparing for this debate, notably the team at the LINK group, who have assisted with many of the stats I will refer to; I am particularly grateful to them for their expertise. In addition, Cardtronics found time to advise us on the potential repercussions of losing more and more free-to-use ATMs, for which I am thankful.

Put simply, when it comes to how we access and spend cash, it is clear that our habits as a nation are changing. In my household, physical cash is essentially non-existent, and I often actively avoid carrying cash. In a world where tools such as Apple Pay mean that I can pay with my phone, my watch, or even just my face, carrying a large amount of cash seems to add an element of risk, and it ultimately feels largely unnecessary.

This stands in stark contrast to my attitude towards cash when I was growing up. I still remember the genuine thrill I felt as a youngster when I received what I suppose would be considered a wage for completing my household chores. That £3 per week felt like my ticket to freedom, and I loved to collect my pounds and pennies in my piggy bank, all to be spent, no doubt, in one go on something like Bliss magazine, the latest Tamagotchi or Steps’ latest single. This fondness and nostalgia for the Great British pound is widespread. According to the access to cash review interim report, “Is Britain ready to go cashless?”, despite the increasing use of cards and electronic payments, approximately 8 million people, which is 17% of the country, said that cash feels like an economic necessity.

For me, years down the line, I have changed not only my spending habits, but my attitude to cash. What was once seen as an exciting physical representation of my earnings is now something I tend to actively avoid. However, I recognise that plenty of people feel completely differently, with many preferring to use cash for security or cash management reasons. It is important to acknowledge that when we talk about access to cash, acceptance of cash is part of that debate as well. That is where the marked difference between the needs of those living in my semi-rural constituency of Pontypridd and those in inner-city dwellings becomes even more obvious.

In London, it is not uncommon for businesses to be entirely cashless. That is in stark contrast with the many small businesses in my community that rely on cash payments, due to the cost or impracticalities of accepting card transactions. I am pleased that there appears to be widespread support for the preservation of free-to-use ATMs, which are vital for protecting access to cash.

Photo of Greg Knight Greg Knight Conservative, East Yorkshire

I congratulate the hon. Lady on securing this debate. Does she agree that people should only need to travel short distances to pay in or take out cash, and that cashback should be readily available without purchase?

Photo of Alex Davies-Jones Alex Davies-Jones Shadow Minister (Northern Ireland)

I completely agree, but “a short distance” in my constituency of Pontypridd would be vastly different from “a short distance” in other constituencies.

Photo of Chris Elmore Chris Elmore Opposition Whip (Commons), Shadow Minister (Scotland)

I congratulate my hon. Friend, neighbour and fellow Taff-Ely MP on securing this debate. She will know that I have spent many years working on this issue.

Our constituencies are similar in geography. The UK Government’s response is to say that people will have a cashpoint within a kilometre. I know my hon. Friend’s constituency well, and she knows mine well. Mine has ranges of mountains and hills, and there is often only one road coming into and out of a valley. The reality is that although “a kilometre” is a measure of distance, it can feel vastly different to constituents depending on how they travel, and whether they are relying on bus or train services to access cash. The Government need to understand that this is not just an issue in cities, where transport is free-flowing and connectivity is often very good. In seats like ours, there can be huge differences in how people can access cash.

Photo of Alex Davies-Jones Alex Davies-Jones Shadow Minister (Northern Ireland)

I completely agree. My hon. Friend is absolutely right to make that point. In constituencies such as ours, we are not exactly talking about a kilometre as the crow flies. People would need to travel on several buses or walk a much greater distance to reach a free-to-use ATM.

Many Members before me, including Patricia Gibson and Paul Maynard to name but two, have been particularly vocal in their support for free-to-use ATMs. Thanks to LINK and UK Finance, we know that ATMs remain the most popular way of withdrawing cash—about 93% of cash withdrawals take place at a cash machine. There are 53,500 ATMs in the UK, 12,500 of which are pay-to-use. Only 41,000 are free to use. Some 94% of cash withdrawals are free of charge, but it will come as no surprise that cash withdrawals have dropped significantly. Coronavirus has undoubtedly expedited the move towards a cashless society.

As of August 2021, ATM usage is down a whopping 45% on pre-pandemic levels. This worrying trend impacts us all, but we can all agree that it is the elderly and the most vulnerable who are likely to be most impacted. Some groups of people may be nervous about using technology and may fear the potential cyber-security repercussions of using contactless payment systems. Others may struggle to remember their personal identification number, or may simply not have the form of identification available to set up a complex banking service.

I was also shocked to learn from the Treasury Committee report on increasing financial inclusion that there are still around 1 million people in the UK without a bank account. Some older, lower-income households rely on cash to budget because of a lack of access to online banking. In the conversations about the importance of cash and access to cash, we must acknowledge the clear regional divides that still persist. For example, here in London, 75% of card usage is now contactless, yet parts of my constituency simply do not have the broadband infrastructure to support contactless payments. The lack of investment in basic infrastructure means that many businesses in my area, through no fault of their own, are restricted in their ability to expand or develop. Our country is likely to follow the path taken by our friends in the European Union, notably Sweden, and become increasingly cashless to keep up with modernising in a global economy, but that modernisation cannot come at the expense of some of our most vulnerable groups, with communities and regions being left behind once more.

Photo of Gareth Thomas Gareth Thomas Shadow Minister (International Trade)

Perhaps I can encourage my hon. Friend to pay tribute to the community credit unions that have branches, and that actively encourage people to bring cash in and that help them to take cash out. Does she agree that community credit unions need more support from the Government to expand their networks and offer more services, so that they are even more attractive?

Photo of Alex Davies-Jones Alex Davies-Jones Shadow Minister (Northern Ireland)

I completely agree. In my constituency we have Dragonsavers, a vital service for local community groups, and the Welsh Labour Government are looking to set up Banc Cambria, so that we have banks on our high streets. They are looking at where it would be feasible to open branches.

While it is rare for me to have reason to doubly praise the Government, I am pleased to see that the plans outlined by the Treasury earlier this year suggest that people should not have to travel beyond a reasonable distance of around 1 km to withdraw or deposit cash. Such commitments are vital to the survival of cash circulation in this country, but as has been mentioned, only if the local geography of our towns and cities across the UK are taken into account when considering that 1 km radius.

For hon. Members not familiar with the south Wales valleys, my hon. Friend Chris Elmore and I can assure them that our hills and beautiful valleys are not for the faint-hearted. These geographical barriers cannot be ignored when factoring in access to cash for community members, both now and in future. I therefore hope to hear from the Minister exactly how the Treasury plans to safeguard those vital services, particularly for those living in rural and semi-rural constituencies such as mine.

There is some hope, though. As hon. Members will be aware, LINK is a not-for-profit with a strong public interest remit that runs the UK’s largest free-to-use cash machine network. Instead of owning and operating those machines, LINK’s job is to ensure that every community has free access to cash by paying commercial incentives to ATM operators to put free machines where they are needed.

Indeed, after representations from a number of residents, I was thrilled to see LINK secure a new ATM at the village store in Efail Isaf in my constituency. The ATM is now secured for a minimum of five years, and it will go a long way to helping those in our area. For two years, LINK has invited communities to request free-to-use ATMs such as this one, and in that time it has installed more than 70 of them in response to local demand, alongside a year-long trial that saw LINK working with partners to develop a new way of accessing cash, by allowing consumers to withdraw cash over the counter from participating retailers.

I am pleased to see innovative steps being taken to secure access to cash for all those who need it. What will be essential, however, is maintaining those fantastic services. I truly believe the Government must act on the recommendations recently produced by Cardtronics and the Federation of Small Businesses, which ask Her Majesty’s Treasury to mandate bank membership of LINK in order to protect its fantastic withdrawing and free-to-use ATM delivery schemes.

In addition to my very real concerns about the impact of a potentially cashless society on certain populations, this conversation must also address the many logistical challenges and concerns around the largely inevitable shift to a cashless world. We need a long-term solution, whereas I fear the Treasury is currently in denial about the fact that we seem to be heading at a record pace for an almost wholly cashless society.

Photo of Sara Britcliffe Sara Britcliffe Conservative, Hyndburn

Speaking of the work of Cardtronics, one of the recommendations to the Government on protecting cash is that we should protect cash acceptance in our businesses. Does the hon. Lady agree that that is something the Government needs to consider?

Photo of Alex Davies-Jones Alex Davies-Jones Shadow Minister (Northern Ireland)

I completely agree. For many businesses in my seat in Pontypridd—in the market, for example, we have some brilliant stores—it is not feasible to take cards. We are talking about an average transaction of £1 for Welsh cakes from our great Welsh cake shops, for example; it just is not feasible for a business to take card payments when they are charged for those. It would massively reduce their profits and make their business completely unviable.

Steps can now be put in place to ease the shift to a cashless society. We have seen neighbouring countries switch their entire currency; while I am very reluctant to turn this into a debate on the euro, in fear of somehow reigniting the Brexit debate, if other nations have managed such a transition, we should be able to follow suit. With that in mind, I hope the Government’s promised access to cash Bill will include some form of commitment to setting up a regulatory body to ensure a smooth transition. That regulator could work with different interest groups, infrastructure providers and charities such as Age UK to support those most impacted through this transition period.

Of course, this recommendation has been well researched, notably by Natalie Ceeney, who chaired the initial access to cash review. I hope to hear more from the Minister on the issue, along with a timeline on when we can expect the legislation to come forward to the House.

My final point concerns the worrying trend of bank closures that we are seeing up and down the country. While I fully recognise that the Treasury is unable to interfere in decisions made by private corporations to remove their presence from the high street, we must acknowledge the devastating impact that those closures have on the availability of, and people’s access to, cash.

In preparation for this debate, I spoke to a number of people living in my area who have sadly been impacted by decisions made by both Lloyds TSB and HSBC to withdraw three branches from my constituency. While not all banking services relate to the process of depositing or withdrawing cash, it is undeniably those basic services that are the most missed when a bank chooses to leave the high street. With the role of the post office ever changing, it has been quite a confusing time for many residents in my area, who have felt forced to shift their ordinary banking practices as a consequence of these closures. With this in mind, I am particularly interested to know what plans the Government have to improve the availability of deposit-taking facilities across the county; I hope the Minister will refer to this in his remarks.

Ultimately, we need to see this promised access to cash Bill sooner rather than later; the big changes are happening in our communities right now. People across the country are already being negatively impacted, and I fear many more will be excluded unless action is rapidly taken. The Government have made a start, and I commend them on their commitment to preserving access to cash, but they need to follow through with specific action to protect those constituents of ours who fall into potentially vulnerable categories. I look forward to hearing from the Minster, and hearing what hon. Members have to say on this important issue. Diolch.

Several hon. Members:

rose—

Photo of Maria Miller Maria Miller Conservative, Basingstoke

There are a large number of people wishing to speak in this debate, so I suggest an informal three-and-a-half minute time limit, so that as many people as possible can take part.

Photo of Sara Britcliffe Sara Britcliffe Conservative, Hyndburn 2:46 pm, 20th October 2021

It is a pleasure to serve under your chairmanship again, Mrs Miller, and I congratulate Alex Davies-Jones—I hope I have said that correctly—who is also a friend.

Access to cash is a massive challenge for the next few years. Although our use of electronic payments via card or mobile phone has increased, and although almost all shops now accept non-cash payments—a move accelerated by the pandemic—there is still a large minority of people, particularly older people, who cannot access electronic payments. According to the Library, in the constituency of Hyndburn, we have gone from having 15 local units in 2015 to just five in 2021. To get more information about the scale of this problem in Hyndburn and Haslingden, I put out a physical banking survey in the town of Haslingden, which recently lost a bank branch, and an online survey in the town of Hyndburn. We have also recently lost our Barclays branch in Accrington.

The results were informative. First, I had a 20% response rate, which many Members will know is a huge return on any survey. This confirmed that this was a real issue that people felt very strongly about. Secondly, and perhaps unsurprisingly, there was an age difference; 80% of respondents who did not have easy access to an ATM were of the older generation—aged 56 or above. In general, the older the respondent, the more they found access to cash was limited. Similarly, 46% of respondents to my survey did not use online banking, and more than three quarters of that group were aged 66 and over. Most interestingly given the context of the debate, an overwhelmingly large proportion of respondents said the biggest improvement to banking services that they would like to see in the area was not only access to cash, but access to ATMs that did not charge. This is an important point to remember.

Photo of Paul Maynard Paul Maynard Conservative, Blackpool North and Cleveleys

Is my hon. Friend aware of the research by NatWest showing that many people who use paid-for ATMs are go further to use them than they would if they used free-to-use ATMs? Does she agree that more research is needed as to why people are heading for paid-for ATMs when they do not need to?

Photo of Sara Britcliffe Sara Britcliffe Conservative, Hyndburn

I agree with my hon. Friend, who knows about this issue across Lancashire and in constituencies such as mine; I was not aware of the research conducted but agree that more is needed. It is not enough to simply map where the nearest ATM is; we need to ensure that everyone has access to free-to-use ATMs that do not disadvantage those who cannot afford to pay a fee.

If I may ask for the patience of my colleagues, I would like to drill down into the numbers and look at how people responded to the survey. I asked, “Do you have easy access to an ATM near your home?” About 60% of people said no, or “only somewhat.” When asked to explain, the majority of those who said “only somewhat” had access only to fee-charging ATMs. If I were to take this survey further and drill down into much tighter geographic areas, I would bet that the more rural an area, the less able to access cash people are. In some ways the conclusion is obvious: the fewer the people, the fewer the cash machines. If, over the ATM map, we layer a map of fee-charging cash machines, it becomes obvious that the more rural an area, the more likely that people will not only struggle to access cash, but will have to pay for it as well.

I also met with Cardtronics, and will briefly mention what it suggests. It states that the Government must protect ATMs:

“ATMs are the only sustainable national infrastructure that can maintain free access to cash 24/7 and must be protected through independent calculation of the interchange fee paid to ATM providers.”

It also says that the Government must protect key schemes:

“Membership of LINK and the Post Office banking framework should be made mandatory for banks to ensure these schemes are protected to ensure access to cash”.

It says that the Government must protect cash acceptance. There is a huge opportunity to work with local post offices, which would go a long way towards solving this problem and ensuring that all our constituents have easy access to cash.

Photo of Yvonne Fovargue Yvonne Fovargue Labour, Makerfield 2:50 pm, 20th October 2021

It is pleasure to serve under your chairmanship, Mrs Miller. I congratulate my hon. Friend Alex Davies-Jones on securing the debate.

Cash may no longer be king, but it is still pretty royally used. Its use did drop during the pandemic, but NatWest says that cash use is now at 75% of pre-covid levels. There were 35 million separate cards used to withdraw cash in August. The average adult withdrew £1,500 in 2020.

After the last debate, I received two letters. I received one from an older lady, who said that the online she had ever used was a washing line, and she certainly did not want to know any more about it. I also had a letter from a young mum who relied on cash. She said that she used cash so that she did not overspend: she could not spend any more than she had in her purse.

People worry about safety and security. What happens if connectivity drops? What about the security of the physical card, particularly with the £100 limit? What about internet scams, fraud or card details being stolen? Some 15% of people still prefer cash to budget when shopping, and 28% worry about fraud risks. Post offices can help, but, with post office closures and the difficulty of getting people to take on post offices, they are not the answer any more.

As we have heard, it is also about where you can spend your money. The pandemic has led to more refusals. There was an attitude that cash is a bit dirty, and that was used as an excuse. In June, almost one in five people had cash refused by a business, and the majority of businesses said refusals were due to covid. We have to get away from that attitude. People still want to pay with cash: 81% want a range of payment options, including cash, and 24% would not shop at a business that did not take cash. It is vital to keep that choice. I commend the Which? cash pledge campaign to encourage businesses to sign up to accepting cash.

We cannot move to a two-tier society in which some people have the choice of any shop and others have their choice restricted. It is no good having cash available if the only local shop one can reach does not accept it. If cash acceptance is not going to be voluntary, we need legislation. I would like to know when the result of the White Paper consultation will be published. Is there a role for the Financial Conduct Authority in ensuring access? Although 90% of people will have access within 1 km, what about the 10% who will not? Who ensures that access? We need the legislation as well.

It is more and more urgent. Every day it becomes more difficult to row back. While cashlessness might suit many people, we cannot leave people behind. We cannot railroad them into accepting something that does not suit their needs. We cannot sleepwalk into a cashless society. As the song goes,

“you don’t know what you got til it’s gone”.

Photo of Paul Maynard Paul Maynard Conservative, Blackpool North and Cleveleys 2:53 pm, 20th October 2021

It is a pleasure to serve under your chairmanship, Mrs Miller. I congratulate Alex Davies-Jones on securing a debate on what has probably been my favourite subject in my time in Parliament. As a member of the LINK Consumer Council, it is a subject that I am interested in. One hon. Member described at great length what LINK is, so I do not need to repeat that, thank goodness.

Hon. Members have described at some length how the use of cash is important to the most vulnerable in our society. I will quote one survey, which is from the organisation Which?, which found that two in five people reported being unable to pay with cash at a shop and did not have another payment method. Two in 10 people in that situation could not buy the medicine that they needed. That should surely show us why it is important to protect access to cash as a source of spending power and to insist on the acceptance of cash by shops, as Yvonne Fovargue said.

Back in December 2020, my right hon. Friend David Mundell and I were at a slightly less well-attended debate to talk about this issue. We urged Ministers and the industry to move rapidly towards addressing it. Rarely, I am going to praise a Minister—shock, horror—and say they have moved at some pace, both the industry and Government, by conducting the consultation we have heard about.

Industry bodies such as UK Finance, as well as Natalie Ceeney, who has been mentioned by the hon. Member for Pontypridd, and the banks themselves have worked hard, looking at what will best address the challenges that we face. The main project they have identified is called a shared banking hub. There is one in Cambuslang in Scotland and one not far from Southend, if it is worth observing, in Rochford. Both of those have worked extremely well. Banks have come together, shared premises and the consumers have loved it. It has moved the debate on from closing bank branches to how to provide more access to financial services.

We are now reaching the crunch moment. You may not be aware of it, Mrs Miller, but right now in the darkened corridors of the City of London, banks are discussing how to make access to cash happen, and they are going to resolve all these issues by early December. I say to the banks, they have to put up or shut up. They have to roll up their sleeves, dot the i’s and cross the t’s, overcome the commercial nerves and stop jockeying for commercial positions. They should not get lost in an alphabet soup of ACAG, JACSG and WDSG, and should stop the arbitrary waffling, focus on shared branches—what level, how many and how they are going to pay for it.

The investment that shared branches would require would be a tiny fraction of their turnover. They have no excuse. They have been discussing this for more than two years. If they do not resolve these issues, the likes of me will be baying for their blood. I will demand financial penalties commensurate with the investment that is forgone. We need to change now. I have seen in my constituency that they know the legislation is coming. They are shutting branches as we speak. There should be a compulsory moratorium on all bank branch closures from 1 January 2022 until the point at which that legislation takes effect. The banks have no further excuses. We have been on this issue for long enough. The time has come. We have solutions out there; we know what will work; we know the legislation is coming; we know that the FCA is the best vehicle to oversee it. Get on with it.

Photo of Jamie Stone Jamie Stone Liberal Democrat Spokesperson (Armed Forces), Liberal Democrat Spokesperson (Defence), Liberal Democrat Spokesperson (Digital, Culture, Media and Sport) 2:57 pm, 20th October 2021

It is a pleasure to serve under your chairmanship, Mrs Miller. I congratulate Alex Davies-Jones on a highly informed and amusing contribution.

I am going to make two points. It is very simple: all of us need cash. As some right hon. and hon. Members know, my wife is disabled. When I go away on a Sunday or Monday—or possibly on a Tuesday, in a good week—to come here, she gets on okay by herself during the week. One thing she always asks me to do is get cash. On the days before I leave to come south, I have to go to the cash machine and get out £70 or £80. That is how life is; she needs that money.

In recent weeks, we heard the sickening announcement that Virgin Money is going to close its branch in Wick. That leaves one bank in the big royal burgh of Wick, Caithness. It is a sickening litany of closures in what I think is the furthest constituency from London on the British mainland. I listened with amusement to the idea of 1 km. Hon. members from Wales are correct that the mountains do get in the way. In the entire county of Sutherland, a geographical area of 5,250 sq km, we have only one branch in Golspie. That is the nature of the problem. My constituents are sick and tired of it. Each time they hear the news again, there is a sadness about the whole issue.

However, in fairness to the Government, good experimental work has been done. Trials have been carried out with idea of banking at post office hubs, which have been well received. I say to the Minister and the Government, push on, forge ahead with those hubs. Some of the remoter constituencies in England, Wales, the and the highlands and other parts of Scotland, such as the constituency of Mr Jack, would be the perfect places to experiment with those hubs, because rurality militates against access to cash.

I have one final point, and I will be brief, Mrs Miller, to help you. I am going to repeat slightly a speech I made yesterday about post office closures. I talked about a fishing village called Balintore in Easter Ross. The local shop said, “We can’t work with the post office any longer. It’ll have to go.” The community, particularly the hall committee of the Seaboard Memorial Hall, got together and talked to the post office. Hey presto, we have a post office back in the village, although it will be temporary.

My final message to the Minister and the Government is that they should work as closely as they can with the communities that are involved, because very often they will come up with an innovative suggestion, even down to basic routes for mobile banks, the best times to visit communities, and the best ways to get such hubs up and running. I speak with passion because, on behalf of my constituents, I am so heartily sick of seeing my vast constituency drained of access to cash.

Photo of David Mundell David Mundell Conservative, Dumfriesshire, Clydesdale and Tweeddale 3:00 pm, 20th October 2021

It is a great pleasure to serve under your chairmanship, Mrs Miller, and to take part in another debate on access to cash. I commend Alex Davies-Jones not just for securing the debate, but for setting out the issues. I also commend my hon. Friend Paul Maynard for his passion on this issue, which he has pursued relentlessly in Parliament and with the Minister. The Minister has always offered good grace and helpful engagement, but as my hon. Friend intimated, we are at the crunch point and need action.

In her contribution, Yvonne Fovargue touched on something that the Minister and I have not always agreed on. I feel that the Government have not done enough to convey the message that cash is safe. During the covid crisis, cash was no less safe than using a PIN pad and terminal. The Bank of England and many other international authorities confirmed that, and I do not think a clear enough message was given out that cash was safe. We also know that many retailers and other service providers have just used covid as an excuse to move to cashless payments, rather than there being some safety or security issue.

As we have discussed, the issues of acceptance and access are interlinked. Of course, the third key issue is the ability to deposit cash, which remains incredibly important for many voluntary and smaller organisations. To give an example from my local community, people do not go to coffee mornings, when they are allowed again, with their iPhones.

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

I thank the right hon. Gentleman for giving way—he is an old friend indeed. Does he agree that there is an additional safety aspect to somebody having to travel a long distance with a lot of cash on them?

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

Indeed I do, and I think the hon. Member for Pontypridd made those comments in her opening remarks. We have to have the three elements: access, acceptance and the ability to deposit. Like Jamie Stone, I have a very large constituency—in fact, it is the largest constituency in the United Kingdom outside the highlands—where many of these issues of rurality are to the fore, so the issue of the 1 km within a rural context has to be properly addressed. We also have to have a better understanding of how engagement with post offices will work.

I remain very concerned about the post office network. I recently had four post office closures in significant communities, because a well-known retailer decided that it would no longer have post offices within its premises. Just glibly saying that the post office has a role might be right, but it is not as simple as that. We need to understand the basis on which it will underpin the availability of cash. I welcome the progress since the last debate, and I hope that we can achieve the same level of progress in the coming weeks, with a response to the White Paper and an understanding of the timescale. As my hon. Friend the Member for Blackpool North and Cleveleys said about the crunch, the banks have to put up or shut up. If they do not put up, we have to take the necessary action here in Parliament.

Photo of Tan Dhesi Tan Dhesi Shadow Minister (Transport) 3:04 pm, 20th October 2021

It is a pleasure to serve under your chairship, Mrs Miller. On behalf of many of my Slough constituents, I am extremely grateful to my hon. Friend Alex Davies-Jones for ensuring that this issue has been given time for debate in Parliament.

Like many hon. Members in Westminster Hall today, I am here simply to ask that people still have a choice; there is simply no reason why cash and card payments cannot co-exist. We cannot have a two-tier society, excluding those who through personal choice or necessity use cash, particularly because that can impact the most vulnerable.

Indeed, in 2019 the independent access to cash review found that those more likely to use cash than cards tended to be on a lower income and less likely to have digital access. They tended to be older adults; people with certain physical or mental health problems; those who are financially excluded, for example those who are homeless, so could not gain access to a debit card; people living in addresses with poor digital connectivity; or people living in areas where local shops do not take card payments. Eliminating cash from our society is akin to abandoning these groups of people and with that action it is already becoming more difficult to use cash, because facilities to withdraw cash are depleting in number.

In Slough alone, much to the consternation of many of my constituents, we have lost over 20 ATM or cashpoint machines since 2018, and in the last nine years in the south-east of England we have lost nearly 600 bank and building society branches. Research has shown that about a quarter of customers have a preference for cash, primarily for budgeting and control purposes, but also to avoid the discomfort and security risks that they associate with card and contactless payments. That shows that although there are certainly people who need to use cash, there are plenty of people who simply prefer to use it.

Who can blame them? The Financial Conduct Authority has shown that between April 2018 and the end of that year there were 302 major IT failings that caused a multitude of problems for card customers. Security breaches and cyber-attacks on banks have become increasingly common, and many people have legitimate concerns about privacy and data sharing linked to their card usage. An immense amount of data is held on every transaction that we make: the amount; when we make a payment; what websites we visit; and what type of purchases we make. All of that reveals a great deal about our whereabouts, lifestyle, financial means and much more, and it is used to fine-tune marketing for customers by holding a vast array of data on their financial behaviour. That is why many people detest and fear living in a Big Brother society, where their every move virtually is being tracked.

Today, I ask the Minister for his plan and the active steps he will take to halt this trend. Will he say whether he will act on the recommendations of the access to cash review to guarantee access to cash wherever someone lives or works; to ensure that cash is accepted; to take steps to make cash sustainable for longer; and to treat cash as its own system, with a joined-up regulatory approach?

Photo of John Lamont John Lamont Conservative, Berwickshire, Roxburgh and Selkirk 3:08 pm, 20th October 2021

It is a pleasure to serve with you in the Chair, Mrs Miller.

It is also a pleasure to participate in this debate this afternoon and, as others have done, I congratulate Alex Davies-Jones on securing it. The debate is on a topic that comes up very frequently in conversations I have with local residents in surgeries in my constituency. In a rural area such as the Scottish Borders, the recent closures of the TSB banks in Hawick and Kelso and the planned closure of Virgin Money in Galashiels mean that for some residents their nearest physical bank branch is miles away in Edinburgh—and when I say “miles away” I mean 50 miles away, which is totally unacceptable. I can very much relate to the earlier comments by Jamie Stone regarding the impact of bank closures on rural communities, such as those in many parts of Scotland.

That local picture mirrors a national trend. It is estimated that there were over 13,000 bank and building society branches in 2012, but by March 2020 that figure had dropped dramatically to only 8,000.

Photo of James Davies James Davies Conservative, Vale of Clwyd

I congratulate Alex Davies-Jones on securing this important debate. My hon. Friend John Lamont is quite right to refer to bank branches. In my own high street in Prestatyn, over the last five years the number of ATMs has dropped from six to zero, due to the closure of bank branches. Does he agree that incentivising local businesses to host ATMs is one possible way forward?

Photo of John Lamont John Lamont Conservative, Berwickshire, Roxburgh and Selkirk

I am grateful for that important point, with which I absolutely agree. It is important for local business that hosting cashpoints is cost effective. I am aware of a number of businesses that have tried to host cash machines, but it has turned out not to be a financially viable option for them.

Although cash use understandably decreased during the pandemic, that should not be a reason to move away from cash completely, and banks should certainly not use it as a reason to close local branches. I have seen at first hand that many local residents and businesses in my constituency use and rely on the vital services that their bank branches offer. Too often, large banking firms present evidence of reduced footfall as a justification for closure, but those figures do not reflect the fact that those vital bank branches provide services to customers week in, week out.

People often to prefer to deal with other people, face to face, and that is compounded by a lack of confidence in using online services as an alternative. Other constituents face difficulties in accessing online banking. For some local businesses, poor connectivity makes card payment machines unreliable, and residents who face connectivity problems cannot rely on the broadband service to access secure banking services. The SNP Scottish Government’s botched roll-out of the R100 scheme has simply compounded matters for many residents in local communities, but that is a longer debate for another day.

Amid the closure of local branches, I welcome that the UK Government have ensured that customers can use banking services across the network of more than 11,000 post office branches. Nevertheless, post offices do not provide the full range of services that bank branches can, including financial advice and planning, as well as privacy, which is clearly important for many residents. I totally share the concerns of my right hon. Friend David Mundell about the suitability of the post office to provide alternative services.

To conclude, I again congratulate the hon. Member for Pontypridd on bringing this important debate. I welcome the UK Government’s commitment to protecting access to cash, complemented by initiatives to tackle digital exclusion. There will always be a place for using cash, so maintaining access to the financial services that support my constituents in the Scottish Borders must be an absolute priority for the Government.

Photo of Gareth Thomas Gareth Thomas Shadow Minister (International Trade) 3:12 pm, 20th October 2021

I pay tribute to my hon. Friend Alex Davies-Jones for securing the debate and for the way she introduced it. I, too, think that banks should be mandated to stay as members of LINK, and that the pressure on banks relating to costs and to their desire to maximise profits, which has led to so many bank branches closing, is unlikely to dissipate any time soon unless Ministers take action.

Paul Maynard referred to a big meeting that is taking place in the City, but I fear that it will not lead to a whole slew of new bank branches opening. In fact, the pressure on banks to continue the programme of closures means that we will continue to live with it unless Ministers take action. David Mundell mentioned post office closures. I fear that those are the beginning of a pattern of closures that Royal Mail is also likely to engage in unless there is ministerial pressure to bring about a change of heart. The ability to withdraw and deposit cash is absolutely what makes the bank closures important. If Ministers will not mandate banks and post offices to maintain existing numbers of bank branches, it will undoubtedly become much harder for people to use cash.

I will use my remaining time to drill down into and encourage the Minister to look at one potential solution: community credit unions. Although they recognise the cost of community branches having a physical presence in their community, they have made a deliberate policy decision to go ahead and set up branches. Unless those credit unions can be helped to expand and offer a wider range of products, they too will face difficult cost pressures.

I know that the Minister is committed to bringing forward legislation to allow some expansion of credit union services, and I welcome that. It would be good to hear that the timescale for that to happen was being sped up. From what I gather, it is a set of changes that, welcome as they are, are not yet ambitious enough. I therefore gently encourage him to consider a more specific programme to encourage a whole range of commercial and public sector organisations to encourage people to join their local community credit union. Why not establish with employers, for the first time, a right to save: the right of the employee to go to the employer and say, “I want to save a small sum of money”—however small—“through a payroll deduction service”—perhaps with a credit union that the employer has sat down with and chosen—“and in that both help myself to be more financially resilient, and help my credit union and my community to grow and offer the services that are necessary”?

Photo of Ronnie Cowan Ronnie Cowan Shadow SNP Spokesperson (Infrastructure) 3:16 pm, 20th October 2021

I congratulate Alex Davies-Jones on bringing forward this debate.

Of course, most of us still want access to cash. For some, it is still their preferred method to manage their incomes and their outgoings; for many, it is still something they use—less frequently, but it is still required. I read with interest this morning on the BBC that:

“People are taking out more money when they visit ATMs, with the average amount climbing more than £10 to just under £80 in the last two years.”

My immediate thought was, “Cash is making a comeback,” but the next line said:

“But they’re using cash machines 40% less than before and withdrawing £44 a month less.”

I thought, “Is this because there are fewer ATMs? When people find one, are they taking out more money, so that they do not run out before they find another one that is working and is free to use?” However, Nick Quin, head of financial inclusion at LINK, has said:

“Covid has turbocharged the switch to digital”.

While cash usage is down in every constituency in the country, some have seen a 20% drop, while others have seen a drop of as much of 60% over the same time. Different parts of the UK are moving at different rates. It comes as no surprise that the most deprived areas of the country are likely to be using more cash than the wealthiest. Some 5 million people still rely on cash, and as we have heard, and 1 million people do not have a bank account. The average adult withdrew £1,500 in 2020. Cash will remain an important part of life for many people for a long time to come. That is reflected in the UK Government statement that they are

“preserving the long established, traditional services like cash that are integral to people’s lives.”

However, the reality is somewhat different. Access to cash is getting harder.

In my constituency of Inverclyde, the number of free-to-use ATMs has dropped from 87 to 68 in three years. Across Scotland, there has been a 16% reduction, which is compounded by the loss of 400 bank and building society branches, a 34% reduction—which in truth leaves me none the wiser, because I do not know what we are doing as a society. Are we working towards a cashless society? Is it the UK Government’s belief that we are moving towards a cashless society? If so, what is their timescale?

I have a number of issues with a cashless society that have to be addressed. For it to work, we require technology that is robust, secure and available 24/7. Currently, it is not. Only last Saturday, mid-way through preparing a meal for friends, I realised that I was missing a key ingredient. I went to my local convenience store, and there on the front door it said, “Cash only”, with a sign on the ATM saying, “Out of order”. By good luck rather design, I had a fiver in my wallet, and my Nigella Lawson fish curry was a huge success. Cash saved my curry, but what if we had relied on entirely on cashless transactions? What if there was a serious situation, where somebody had to pay a bill to stop the electricity being cut off or needed to pay for a taxi, bus or train to get to a loved one in distress, and cash was a thing of the past and the technology had been compromised?

What I am looking for from the UK Government is a destination and a plan. I remember when we transitioned from old money to decimal. It was a perfectly natural thing for me—as a very young child—but I had to try to explain to my gran, who was used to 12 pence to shilling and 20 shillings to the pound, that, from 240 pennies in a pound, there was now going to be 100. “Where’s my other 140 pennies?” She was baffled by this. To handle these concerns, there was a UK-wide advertising campaign to explain where we were going, what it would mean and how we would get there. If people’s fears are to be allayed and those that require cash are not left behind in a two-tier system, we need to look at a hybrid system that accommodates cash and electronic transfers. To make it work we need a strategy that encompasses a network of ATMs on the high street and in convenience stores with post office services and bank counter services. We need cash without purchase and banking hubs that serve our communities.

Photo of Ronnie Cowan Ronnie Cowan Shadow SNP Spokesperson (Infrastructure)

I am sorry, but I do not have time. Most importantly, the roles of each part of the system need to be clearly defined so that they complement each other, and when technology fails there must be a safety net to ensure that people can still top up their meters, purchase food and access public transport.

Photo of Maria Miller Maria Miller Conservative, Basingstoke

We have three speakers left and seven minutes, so perhaps Members will be kind to each other. I call Rachel Hopkins.

Photo of Rachel Hopkins Rachel Hopkins Labour, Luton South 3:20 pm, 20th October 2021

It is a pleasure to serve under your chairship, Mrs Miller. I congratulate my hon. Friend Alex Davies-Jones on securing this important debate.

We have heard much about how the pandemic has accelerated the trend in consumers moving away from using cash and towards digital payments, but cash is still critical for many people and local small businesses. If someone is on a low income, has a physical or mental health problem, is financially excluded, has poor digital connectivity, struggles with budgeting or lives in areas where local shops do not take cards, they will be disadvantaged by the continued reduction in access to cash.

Cash appears to have declined less in constituencies with higher deprivation, such as mine, during the pandemic. Protecting cash is an important sticking plaster. While total reliance on cash is due to wider structural issues such as a lack of digital access—whether that is due to a lack of physical devices or data or due to language—if that access continues to decline, vulnerable people will be at risk of being left further behind.

Between 2018 and 2019, the number of free-to-use ATMs fell by 13%, and the number of pay-to-use machines rose by 38%. According to LINK, in Luton South the number of free-to-use ATMs has reduced by 30% in three years from 140 to 98, with the total number of ATMs reducing by 16%. We cannot allow the creation of cash deserts where consumers cannot access cash. The Treasury’s 2019 access to cash review found that 47% of the population would find it problematic if there was no cash in society.

Finally, there is the issue of managing personal finances and the huge increase in personal debt. I have heard much about that from the Luton citizens advice bureau and from the debt advisers who work in the Salvation Army in Luton South. People who are pushed into using cards, digital or contactless find it less easy to manage their money, particularly if they are on low incomes or are vulnerable, as I have already said. They trip into increasing their personal debt. Perhaps the Minister will tell us what analysis has been done on the decrease in cash use and the increase in the preference for digital, and on the impact of the increase to £100 in contactless payments? What impact has there been on rising personal debt? I thank my hon. Friend for securing this debate.

Photo of Navendu Mishra Navendu Mishra Labour, Stockport 3:23 pm, 20th October 2021

It is a pleasure to serve under your chairship, Mrs Miller. I congratulate my hon. Friend Alex Davies-Jones on securing this important debate at a time when access to cash is becoming increasingly limited. I thank many organisations who have campaigned on the issue, including Disability Stockport, the GMB union and Cardtronics for their informative briefings. Marion Fellows tabled an early-day motion in July this year on this matter and I was pleased to add my name to it.

We are experiencing a long-term decline in cash usage in our country. While those with the right technology see many benefits, vulnerable consumers such as older adults, those on low incomes and the digitally excluded often depend on cash to help with budgeting, and they are experiencing an access-to-cash crisis. In the past three years my constituency of Stockport has seen a 24% drop in free-to-use ATMs as a result of a reduction in the fees that banks pay to ATM providers, making an increasing number of machines unviable. That has led to many of my constituents facing an acute cash problem, including those with physical impairments.

That is why the chief executive of Disability Stockport, Mr McMahon, wrote to me recently to set out how the issue has an impact on so many people. He informed me that, although disabled people readily recognise the need to introduce new ideas and embrace the benefits that modern technology may bring, they are also understandably wary as previous changes have resulted in greater exclusion from services, with many describing them as

“inaccessible or just plain impossible”.

For example, Disability Stockport cites an example from earlier this month of a couple in their 80s who asked the charity for help with downloading ID and other information just to apply to the council for their path to be altered. The charity also notes the challenge caused by the speed of change, which often happens at a pace faster than elderly or disabled people’s ability to adjust. That inevitably results in a situation whereby, when alternative options are unavailable, a large number of people end up being disenfranchised. I urge the Minister to consider all those with physical impairments or limited access before introducing any changes. In addition, considerations must be made of vulnerable individuals whose specific disability may make them more susceptible to fraud or financial abuse.

Simply put, the systems that dispense cash should be retained for as long as people require them—however small a minority they become. I urge the Government to protect access to cash and review forthcoming legislation, which is likely to focus on protecting a bare minimum level of access as opposed to maintaining standards at a level that all consumers want.

Photo of Maria Miller Maria Miller Conservative, Basingstoke

Order. I ask the final Back-Bench speaker to finish by 3.28 pm.

Photo of Gerald Jones Gerald Jones Shadow Minister (Wales) 3:25 pm, 20th October 2021

It is a pleasure to serve under your chairmanship, Mrs Miller. I congratulate my hon. Friend Alex Davies-Jones on securing today’s important debate. As we have heard, we could all be forgiven for thinking that we do not need cash any more, particularly with the onset of technology, such as online banking, contactless payments and Apple Pay. Technology is convenient in helping some people organise their budgets and pay their bills, but we must not assume that it is convenient for everyone. We should be mindful that a lack of access to cash can cause real issues—for some people, it can be detrimental to their quality of life. As we make advances in technology, it is essential that we do not leave people behind and I fear there is a real danger of doing so.

In the communities of Merthyr Tydfil and Rhymney, which I am proud to represent, access to cash is important. I am sure there are many similar geographically isolated communities and people who use services in these communities every day. These services include the corner shop, paying for doorstep milk deliveries, the window cleaner, the bakery that delivers bread door-to-door, or the local social club or pub. The list goes on, and many of these services rely solely on cash.

Over the last two years, I, along with many other Members here, have been working with LINK to identify isolated communities that did not have access to a free-to-use cash machine and as a result were unfairly paying a fee to withdraw their money. As a result of this work, at the latter end of 2019, LINK provided two additional cash machines in two isolated communities in my constituency: Bedlinog and New Tredegar. During the past two years, these two machines have distributed over £2 million to local people without charging withdrawal fees, saving local people thousands of pounds and with the majority of that money spent locally. Much of that time has been during the pandemic and that confined people to local areas, but even so this clearly demonstrates how communities rely on cash.

Access to cash is hugely important and we urgently need to focus on it given the number of banks and post offices that have closed in recent years. When the banks closed, residents were told not to worry as they would still have banking services and access to cash at post offices, but in some communities the post offices were the next to close. I had this very issue in the community of Treharris, where they have been without a post office for over two and a half years. We need a joined-up approach.

Finally, only a week ago I spoke to an elderly constituent who made the change—although she was not very happy about it—from having her state pension at the post office to having it paid into her bank account. Despite this, she still withdraws her pension amount from the bank every week as she relies heavily on the cash for her weekly budgeting, and she told me that she simply could not cope any other way. It is clear that we need action. I hope the Minister will give us reassurance and some indication of how the Government will address this issue in the forthcoming legislation.

Photo of Patricia Gibson Patricia Gibson Shadow SNP Spokesperson (Housing, Communities and Local Government) 3:28 pm, 20th October 2021

I begin by thanking Alex Davies-Jones for bringing this debate forward. I share her sincere and passionately held views on the issue; I and many other Members have participated in access to cash debates on umpteen occasions. Despite the huge consensus on what we need to do and what the problems are, I do not see much change, but we all agree that we need direct Government intervention to halt the decline of cash and to protect access to cash for our communities. I echo the words of Paul Maynard: we need to just “get on with it”.

The access to cash Bill will be an important piece of legislation, but we need to see it. Covid has placed our cash infrastructure in an even more precarious situation. We need clear protections for the future of cash payments which, as we have heard, are so important to so many people, including those who simply do not have the option to pay by card and those who simply want to pay by cash for budgeting or other reasons. As my hon. Friend Ronnie Cowan reminded us, more than 5 million people still rely on cash, and that must not be forgotten. Cash transactions are very important for many people, and will remain so for considerable time to come. We have heard as much from every single Member who has spoken today.

Alongside that is the loss of free-to-use ATM cash withdrawals. We know that withdrawals from cash machines dropped significantly at the height of the covid pandemic. My fear, which I know is shared by Members around the Chamber, is that that will feed further closures of free cash machines across our communities. Increasingly, ATMs are charging for access to cash, and I am afraid that the situation is becoming normalised.

Photo of Patricia Gibson Patricia Gibson Shadow SNP Spokesperson (Housing, Communities and Local Government)

I just want to make this point. To help address the situation, we need to make sure that banks pay their fair share so that their customers can get free access to cash. By cutting the interchange fee, banks have saved £120 million, but the financial brunt is being borne by those who live in less affluent communities. That is a disgrace. The more affluent the area in which someone lives, the less likely that they will be required to access their own cash through an ATM. That is unjustifiable by whatever measure we care to use. It is another example of banks expecting others to pay for the so-called service that they want to provide. They do not properly renumerate post offices for taking over basic banking, which they have abandoned in so many of our communities, nor do they properly renumerate the ATM providers.

A pattern is emerging and the banks need to explain themselves. It seems to me that they are simply not fulfilling any social obligation or any duty of care either to those to whom they expect to provide a service or to those that provide that service on their behalf. If the access to cash Bill is to make any real difference, it must hold them to account for their responsibilities.

Of course, it is welcome that the Financial Conduct Authority is to oversee access to cash and provide analysis of what needs to be done where in order to support it. The issue has become more critical because banks have left gaps in our provision. As a result, our sub-postmasters need more financial support. Banks need to stop taking them for granted, given the essential role that they play in our communities, doing the job that banks are no longer interested in doing. It is worth remembering that throughout the pandemic, post offices continued to serve our communities and we relied on them then, as we do now. Many banks closed their doors during the pandemic. So much is expected of our post offices, but sub-postmasters are leaving the service because they are under so much financial pressure. Many are simply shutting up shop, as it is much more challenging to make a living now.

Sadly, post offices have been systematically run down over the years by successive Governments. I remember the 2000s, when the previous Labour Government stripped post offices of many of their functions. Then, in 2008 it was announced that 2,500 small and rural post offices would have to close, with Scotland disproportionately hit with 600 closures, six of which were in my constituency of North Ayrshire and Arran. Since then there have been so many bank closures that seven towns in my constituency—Kilbirnie, Kilwinning, West Kilbride, Stevenston, Ardrossan, Dalry and Beith—have no bank at all.

Now we have an access to cash crisis, with sub-postmasters expected to do so much of the heavy lifting without being properly paid to do so. The threats to our cash infrastructure, with the banks abandoning our towns, with sub-postmasters under intolerable financial pressure, with free access to cash being increasingly difficult to find and with many being increasingly locked out of paying by cash, mean that urgent action is needed if we are to protect our financial infrastructure and ensure that we have a society where financial inclusion matters.

The situation is critical, and the contents of the access to cash Bill will be the crossroads where the Government have a real opportunity to step in to do something to stop the decline. I think we can all agree on what needs to be done, but we need to start with the banks and their responsibility to communities and consumers. I look forward to the Minister’s telling us more today about the meaningful actions he expects the access to cash Bill to provide and when we can get sight of it. The future of our financial infrastructure depends on that Bill, so its content will determine the future of cash.

Photo of Abena Oppong-Asare Abena Oppong-Asare Shadow Exchequer Secretary (Treasury) 3:35 pm, 20th October 2021

It is a pleasure to serve under your chairship, Mrs Miller. I congratulate my hon. Friend Alex Davies-Jones on securing the debate and thank all Members who have contributed. It is clear how keenly the issue is felt by so many of our constituents up and down the country.

My hon. Friends the Members for Pontypridd, for Ogmore (Chris Elmore), for Harrow West (Gareth Thomas), for Makerfield (Yvonne Fovargue), for Stockport (Navendu Mishra), for Slough (Mr Dhesi), for Merthyr Tydfil and Rhymney (Gerald Jones) and for Luton South (Rachel Hopkins) and Sara Britcliffe all spoke about how important access to cash is for the most vulnerable in their communities. They also talked about how many small businesses still rely on cash, especially in areas with poor broadband. We heard from colleagues across the Chamber who represent both urban and rural constituencies, so we know that the issue affects a wide range of areas, although clearly, as we have heard, there are specific issues in rural areas.

The pandemic has brought many changes to our lives. In some cases it has sped up trends that were already occurring. It has accelerated the move away from cash to online purchasing and contactless payments. That has put pressure on the cash system and contributed to a decline in the use of cash to make payments. Withdrawals from cash machines are more than 40% lower than pre-pandemic levels. For many people, this is a shift that they are embracing as digital payments bring greater control and convenience. We in the Labour party support innovation in payments and a thriving FinTech industry. We want UK businesses to create jobs and wealth in the sector, but we do not want a drift towards a cashless society with no thought of the consequences for social inclusion or national resilience.

For the low-paid, older people and those in remote communities, the shift away from cash brings challenges. As has been mentioned, a significant range of evidence shows that many people remain reliant on cash and vulnerable to the rapid changes in this area. That has been evidenced in the debate, particularly by Jamie Stone, who talked about his constituency. FCA research shows that 5 million adults use cash for most of their purchases. The Bank of England found that 1.2 million adults in the UK did not have bank accounts, and an analysis in Which? showed that one in six people have struggled with the shift towards cashless payment as a result of the pandemic. Lower-income households and those that do not have or cannot use the internet are much more likely to depend on cash.

There is evidence that during the pandemic, cash use declined less in constituencies with higher deprivation. The access to cash survey carried out a few years ago estimated that 70% of the population would still need cash in the future. Even as technology changes and advances, there is an important duty to maintain an easy-access and free-to-use cash network. We believe that is essential because we do not want to see a proportion of society cut off from full participation in society, unable to access goods and services. We also believe that it is important not to force small businesses to go cashless simply because it becomes too inconvenient and troublesome to work with cash.

There are also important resilience arguments for maintaining a cash network. The covid pandemic exposed weaknesses in our national resilience regarding personal protective equipment and ventilator capacity. We do not know what the next crisis will be. It could be a cyber-attack or some sort of technological breakdown—in those circumstances, cash would be essential. That is why it is important not to drift towards a cashless society without thinking through the consequences. Too often, we have seen banks rush to close branches without recognising the impact on the local community. At the same time, the number of free-to-use ATMs fell by 13% between 2018 and 2019, while the number of pay-to-use machines went up. Many of those pay-to-use machines are in deprived communities.

The Government promised legislation on the issue as far back as March 2020, but the consultation was not published until July 2021. We have also seen changes to allow cashback without purchase and access to cash pilots to show how banking hubs could work. The Government say they are analysing the responses to the consultation, and I look forward to their response in due course. However, I have a number of questions for the Minister on the issues raised today.

First, what do the Government actually mean by access to cash? Does the Minister accept that it must be about more than limited-hours access through local shops, and that it must include both ATMs and either branches or bank hubs, where people can transact business and deposit cash? Do the Government believe that access to cash includes face-to-face services? Labour believes that we need a comprehensive ATM and branch network, because access to cash is about not only withdrawing cash, but being able to deposit cash, for small businesses, as raised by some of my colleagues.

Secondly, do the Government believe that competition law should change to allow banks to co-operate in banking hubs, rather than leaving towns and villages with no banks at all? Thirdly, what are the Government doing to ensure that the agreement between the Post Office and banks continues, so that people can access banking services through the Post Office? Finally, on the Government consultation, when does the clock stop on what comprehensive coverage looks like? Legislation was first promised in March 2020; thousands of ATMs and hundreds of bank branches have closed since then. The Association of Convenience Stores says the clock should stop at that time. The consultation was launched in July 2021, but there have been more closures since then. Legislation will most likely be introduced next year, and there will be even more closures by then. When will the Government declare a moment to say what comprehensive coverage looks like, and that we are not going backwards from there?

I hope the Minister will be able to answer those questions shortly. However, most importantly, I hope that the Government will recognise that now is the time for action. If they delay for much longer, the most vulnerable in our society will be left behind. I think we all agree that that should not be allowed to happen.

Photo of John Glen John Glen Minister of State (Treasury) (City), The Economic Secretary to the Treasury 3:42 pm, 20th October 2021

What a pleasure it is to serve under your chairmanship, Mrs Miller. I commend Alex Davies-Jones for her speech and for securing the debate. She set out many of the core issues and gave a very fair assessment of them, which was echoed by the 13 speeches from Back-Bench Members and three interventions that we have heard this afternoon.

I have been the Minister for this issue for quite a long time, and I very much feel the urgency in resolving it while I am still around. I appreciate having the opportunity to update hon. Members on the Government’s efforts to protect cash and, in particular, the recent consultation on legislation to do exactly that.

As a number of colleagues said, many people still rely on cash and the infrastructure that delivers it. It is changing rapidly, but we need to recognise that it is an imperative for everyone’s daily life. That is especially the case for more vulnerable groups, be it in Pontypridd or in my constituency of Salisbury. Just today, we have seen more bank branches close, including one in Amesbury in my constituency. My hon. Friend Paul Maynard once again showed his encyclopedic understanding and depth of knowledge and powerfully expressed the urgency with which we must address the matter.

During the pandemic, there was evidence of access to cash being stretched. However, I am pleased that the Treasury was able to work closely with financial regulators, such as the FCA, and industry to maintain that access while protecting the safety of staff and customers. The vast majority of people were able to get hold of the cash they needed throughout the pandemic. Indeed, the share of the UK population who lost access to a source of cash within three miles during spring 2020 never exceeded 0.1%. In this conversation, I have always been very aware of the fact that—as Jamie Stone, with whom I have met separately, said—we have to deal with a very wide range of constituency interests, with very urban constituencies and very sparsely populated constituencies. That guides me as I contemplate what next to bring forward from the Government’s perspective.

Photo of Margaret Ferrier Margaret Ferrier Independent, Rutherglen and Hamilton West

With the closure of many high-street bank branches, many communities are finding it hard to get essential access to physical money. A pilot post office bank hub in Cambuslang, in my constituency, provides face-to-face services for customers. Would the Minister agree that the scheme could be rolled out UK-wide?

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

I am very grateful to the hon. Lady for raising that point. I visited her constituency last Thursday and saw that facility first hand, and I will say a little bit about it in a moment. It was a great example of banks coming together and working with the Post Office to find a practical solution—one that many colleagues in the Chamber have raised in previous debates.

We are in a strong position to build on our success in meeting the needs of local communities across the country over the long term. Access to cash across the UK remains extensive. Over the last year, the Financial Conduct Authority and the Payment Systems Regulator have undertaken important work to map cash access points across the UK. That has shown that access remains comprehensive, even though it is evolving. As of the first quarter of this year, more than 95% of the population were within two kilometres of a free cash withdrawal point. I would say to the hon. Member for Pontypridd that, as of August 2021, Pontypridd itself had 76 ATMs, 50 of which were free to use.

However, we are in no way complacent about access to cash. I recognise that we need a range of solutions. We understand that cash remains important for millions of people across the UK. That means that we have a responsibility to protect the cash system and ensure that it is sustainable. That means two things: being innovative in the provision of cash while ensuring that we maintain sufficient coverage.

The Government have already taken decisive action in a number of ways to support the widespread availability of cashback without a purchase from shops and other businesses, including legislative changes as part of the Financial Services Act 2021. That is a significant step change, and the industry is really on board with it. We have already seen the success of cashback without a purchase as part of the community access to cash pilots, which are trialling bespoke cash access solutions across a number of areas.

Gareth Thomas raised the issue of the role of credit unions. On my visit to Glasgow last week, I was pleased to meet with Glasgow Credit Union and discuss some of the legislative changes required to allow them to expand the provision of services. The notion of a bespoke solution in individual communities is very much uppermost in my mind as we move forward. It was great to hear how well received those pilots have been by the local community in Cambuslang, where I visited the post office bank hub pilot and saw at first hand the impact that innovative industry solutions can have. The hub is a post office counter service, and different bank representatives come there on different days. When a customer’s bank representative is not there, other representatives can also help them.

I am delighted by the industry’s announcement that, following the Government’s changes to the law, cashback without a purchase will be rolled out to thousands of shops over the coming months. When it comes to ATMs, LINK, which, as a number of hon. Members have mentioned, runs the UK’s largest ATM network, remains committed to protecting the broad geographic spread of free-to-use ATMs, and it is held to account against that commitment by the Payment Systems Regulator. The Government also continue to fully support the post office banking framework agreement, which allows 95% of business and 99% of personal banking customers to deposit cheques, check their balance and withdraw and deposit cash at the nation’s 11,500 post office branches. The Access to Banking standard and FCA guidance force the banks to look at their mitigation responsibilities to maintain face-to-face banking services in situations where branches close.

On top of that, the Government are doing more. As several hon. Members have mentioned this afternoon, we have been developing new legislation that will enable us to protect cash over the long term. The most recent step in that process was the consultation on proposed legislation, which closed less than a month ago, on 23 September. That consultation was designed with a simple principle in mind: finding that crucial balance between supporting the use of cash and embedding flexibility as the cash landscape continues to evolve.

At the most fundamental level, that has meant setting out proposals for new laws to ensure that people need to travel only reasonable distances to pay in or take out cash. Through our actions to date and these proposals, we seek to support the continued use of cash in people’s daily lives, including supporting local businesses in continuing to accept cash. The consultation also set out proposals on what sort of organisation should be within scope of legislation to ensure that industry, especially banks, continues to play a key role in supplying cash, be it through their own branches or through funding customer transactions at ATMs or post office counters.

It is crucial, of course, that any legislation is coupled with appropriate regulatory oversight, and that has been another important aspect of the consultation. We want regulators to have appropriate powers and responsibilities, but without imposing unnecessary burdens on businesses. We believe that the FCA is best placed to play the leading role in holding firms to account on access to cash, so that the needs of consumers and businesses are met.

The Government also intend the Payment Systems Regulator and the Bank of England to maintain their existing functions regarding retail cash. As I mentioned earlier, the co-ordinated actions by the FCA, PSR and the Bank of England on cash as part of the covid-19 response have shown that co-operation between the regulators at both strategic and operational levels works well.

For all that the Government are doing to preserve access to cash, it is also worth acknowledging that the trend away from the use of cash towards cards and other digital payments has been both significant and accelerating over the past 18 months. That brings with it many opportunities, such as the potential for cheaper and more tailored payments, as set out in the Government’s recent response to the payments landscape review call for evidence, which was running in parallel.

It is important that digital connectivity is in place to help individuals and businesses to seize those opportunities, as has been mentioned by many hon. Members this afternoon. That is just one of the reasons why the Government are striving to ensure that no one is left behind in the transition to digital. To improve digital connectivity, the Government’s £5 billion Project Gigabit is helping to deliver lightning-fast, reliable broadband, including in Wales and therefore in towns such as Pontypridd.

We are working with industry to target a minimum of 85% gigabit-capable coverage by 2025, and will seek to accelerate roll-out further to get as close to 100% as possible. Action is also being taken to improve mobile connectivity in rural areas, recognising the challenges of getting to that complete coverage. The Government are providing £510 million for the shared rural network, and by 2025 that will expand 4G mobile coverage to 95% of the UK.

Out of respect for the hon. Member for Pontypridd, I looked into what is happening in Wales. The shared rural network programme is helping to reduce partial mobile phone notspots in Wales, and in the South Wales Central area, where her constituency is located, 4G coverage from all four operators will increase from 82% to 90% by the end of the programme.

Our consultation on proposed legislation closed on 23 September and the Government will set out the next steps in due course. I hope hon. Members will understand that it was only three and a half to four weeks ago, but I acknowledge the urgency that has been expressed this afternoon. I take it to heart, and I recognise the determination to get this done as quickly as possible.

I also acknowledge the recognition by my right hon. Friend David Mundell of the imperative for banks to come forward with proposals. The Government are always open to constructive suggestions from the banks as to what they wish to do in the meantime, but I cannot say much more at this stage. What I will say is that the Government remain absolutely determined and committed to legislate to ensure that people have access to cash over the long term. In doing so, we need to strike a balance between, on the one hand, being open to innovation and, on the other, ensuring that people are not financially excluded by losing access to cash. That is what we will do.

I sincerely thank Members for their thoughtful and constructive advice and contributions, and I can assure them that I will continue to work with Members from across the House. I do not see this as a partisan matter at all. I will continue to hear from them and to work with them to come up with an enduring solution next year and beyond.

Photo of Alex Davies-Jones Alex Davies-Jones Shadow Minister (Northern Ireland) 3:56 pm, 20th October 2021

It has been a complete pleasure to take part in today’s debate. We have had a broad range of speakers from across the House, all showing a consensual approach to the importance of preserving access to cash. As the Minister alluded to, it is indeed a rarity for debates held in this place to be so consensual, and this is not a party political issue. I hope that we can continue to capitalise on that consensus going forward.

I said at the beginning of the debate that I recognise the impact that coronavirus has had on people’s desire to carry, accept and access cash, and I really believe that we are living in changing times, where modernisation is key. Many of my comments focused on the impact of reduced cash circulation in the context of the individual, but a number of Members have rightly raised issues around the difficulties of businesses that carry cash. With bank closures on the rise, as mentioned by my hon. Friend Abena Oppong-Asare, cashing up at the end of the day may no longer be the simple task it once was for a small business. Small, independent businesses have been hit the hardest throughout the pandemic, and we must now ensure that we prioritise them going forward.

With that in mind, I very much welcome the comments from the Minister on the urgency to resolve the problems that we have raised today. I also welcome his commitment that no one will be left behind in the digital connectivity roll-out—a promise on which I will ensure he is held to account. I hope he recognises that although good progress has been made on the access to cash Bill, it needs to be accompanied by a real-life approach to supporting people through what is inevitably a transition to a cashless society. That will need very close attention if we are to support our must vulnerable populations.

The Minister’s comments will help us to move in the right direction, and I am grateful for that. I look forward to seeing his promises enacted in future legislation put forward by the Government.

Question put and agreed to.

Resolved,

That this House
has considered access to cash.