Mr David Ward (Bradford East) (LD)
I beg to move,
That leave be given to bring in a Bill to make provision to ensure that cheque facilities continue to be available to customers of financial institutions; and for connected purposes.
Something brings together the Federation of Small Businesses, Age Concern, Help the Aged, the union Unite, Which?, the Royal National Institute of Blind People, the Institute of Fundraising and, of course, more than 120 Members of Parliament who have signed an early-day motion tabled by my hon. Friend the Member for Cheadle (Mark Hunter). What do they all have in common? They all have major reservations about the scrapping of cheques.
That preferred method of payment is used by hundreds of thousands of people every single day. In fact, the total number of cheques written out each day is close to 4 million, or more than 1.3 billion a year. Despite this very clear message that cheques are still valued by the customers of the major banks and other payment service providers, last December the Payments Council agreed on their behalf to scrap cheques in 2018. That decision will, I believe, have major ramifications.
Some may ask, “What is the rush? 2018 is a long way away. Why do we have to take action now to head off the threat of cheque abolition in the future?” After all, we are led to believe that the final decision will not be made until 2016. However, if the Payments Council can set its own criteria and targets for scrapping cheques, it also has the power to try to make the abolition of cheques a foregone conclusion. Some will argue that this is simply a business decision to reduce costs, the benefits of which can then be passed on to customers. Well, this is hardly a shining example of the free market at its best, as what is in effect a cartel has collectively agreed to remove from the market a service, knowing that no individual bank can do anything to stop it.
This Bill is borne not out of nostalgia, but out of an acceptance of the present. The Bill does not attack the independence of businesses, but would protect the rights of their customers. The Bill would not condemn customers to an outdated method of carrying out financial transactions, but would give all those carrying out such transactions greater choice in how they do so in the future.
The truth is that setting an end date for cheques will inevitably accelerate the process by which businesses stop accepting cheques and individual banks stop issuing them, making the demise of the cheque a self-fulfilling prophecy. The Payments Council does not have much confidence in its ability to wring this particular chicken’s neck. It has forecast that, whatever it does and whatever we do—including if we are not successful in stopping this action—then even on the cheque’s deathbed in 2018, there will still be 2 million cheque transactions being made every day. Some chicken, some neck.
I have referred to my concerns about what I believe to be the major ramifications of cheque abolition, but I am here to voice the concerns of some of the groups that I have mentioned. The Federation of Small Businesses has strongly argued that the abolition of cheques will have a detrimental effect on smaller firms—not my words, but those of the FSB, which also says that many small businesses rely on cheques, which to them represent the most convenient system. They provide an excellent audit trail, are easy to reconcile and require minimal administration. Far from achieving our stated aim of decreasing the burden on small and medium-sized enterprises, switching away from cheques could increase it for some businesses.
Many clubs, charities and societies receive an overwhelming proportion of their donations in the form of cheques. While larger organisations have the facilities to process other means of payment, it is the small, local organisations, reliant on volunteers, that will suffer. Blind and partially sighted people are particularly reliant on cheques, as was made clear to the Treasury Select Committee. Members of the Royal National Institute of Blind People feel that cheques give them a greater sense of control. They can sign them and check the figures with a magnifying glass, whereas with chip and pin, it is almost impossible for them to read and check the amounts that they are paying.
However, by far the largest group of people who are most reliant on cheques are the elderly. That is partly out of habit and partly out of necessity. The elderly are also the group who will find it hardest to adopt alternatives. The Payments Council’s projections assume that there will never be a time when cash will be substituted for cheques, but the evidence from abroad does not support that. The fewer cheque transactions there are in a country, the more people will use cash and the greater the number of cash transactions there will be. Overall, my concern is that people will move back to cash and start keeping large volumes of money in the house, making them vulnerable to theft. That is not scaremongering; it is simply what will happen. The ability of elderly people to continue to manage their finances independently by using cheques is crucial, and particularly for older people who are housebound, whether it is about paying the paper bill or including a little something in a card to the grandkids. It is about financial independence.
Behind the Payments Council’s proposal is no doubt a belief that—I guess there is no delicate way of saying this—many of the existing elderly cheque users will not be around in 2018. However, the latest edition of Age UK’s political bulletin reveals that 64% of people aged 65 or over have never used the internet—and, let us face it, never will. Despite the inconvenience to the Payments Council, I wish all those who took part in Age UK’s research a long and happy cheque-using life.
So far I have focused on whether it is wise to remove the option of cheque use, but there is a further issue. Who should make the decision? We in this place may agree or disagree with the decision to scrap the cheque, but surely we can find common ground on the view that the decision is too important to be left to the Payments Council, which is essentially a trades association. Eight of its 28 members do not even offer current accounts and cheque books. Many are foreign-owned banks that do not offer current accounts and cheque books, while many are businesses based on alternative methods of payment, such as PayPal or Cash Zone. How on earth can the decision represent an independent and impartial view? Yet those businesses would still have a say in whether the UK should retain its centralised cheque clearing system. Can this be right? I think not.
The subject of my Bill is not a purely financial consideration; I believe that it is a matter of public interest. The consideration of the demise of the cheque should be made by a body that has the independence, the objectivity and the competence to balance the needs of consumers with the savings to the banks; but further, I would argue that any final decision should be made by a body accountable to Parliament. I urge hon. Members to support my Bill, which will bring cheque payments under the consumer protection remit of the Financial Services Authority or its subsequent body.
I am a new arrival in this House, so I am a late arrival to this worthy cause. I pay tribute to my colleagues, and to my hon. Friend the Member for Solihull (Lorely Burt), for providing a lead on this campaign before I arrived here, as well as right hon. and hon. Members of other parties who have supported this campaign in the past. I have joined a campaign that has increasing momentum, and I ask for the support of the whole House to allow us to take it to its next stage.
Question put and agreed to.
Ordered,
That Mr David Ward, John Thurso, Lorely Burt, Stephen Williams, Dr John Pugh, Jim Dobbin, Tom Blenkinsop, Kelvin Hopkins, Dr Julian Lewis, Mr Greg Knight, Robert Halfon and Andrew Stephenson present the Bill.
Mr David Ward accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 17 June, and to be printed (Bill 101).