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Christina Rees (in the Chair)
We begin with a Select Committee statement. Pete Wishart will speak on the publication of the Second Report of the Scottish Affairs Committee, “Access to cash in Scotland”, for up to 10 minutes, during which no interventions may be taken. At the conclusion of his statement, I will call Members, if they stand, to ask questions on the subject of the statement. I will call Pete Wishart to respond to those in turn. Questions should be brief. I will begin Mr Shannon’s debate at 1.50 pm promptly. I call the Chair of the Scottish Affairs Committee.
Pete Wishart (Perth and North Perthshire) (SNP)
Thank you, Ms Rees. I also thank the Backbench Business Committee for allowing me to make a statement on our report, “Access to cash in Scotland”, which we published on Monday. It is great to see so many colleagues from Scottish constituencies here today. [Interruption.] And of course from Northern Ireland—I cannot possibly forget the hon. Member for Strangford (Jim Shannon). I look forward to their questions.
We know that lack of access to cash continues to concern many of our constituents, and it impacts on some of the most marginalised and vulnerable people we represent. The Scottish Affairs Committee has taken a long-term interest in the issue: our predecessor Committee released a report in 2018. We looked at the issue in the round and made a number of recommendations. We have also taken an interest in banking infrastructure right across Scotland, publishing reports and holding sessions on that subject over the past few years.
Our inquiry took evidence from representative groups and organisations; we also invited members of the public to complete a public survey on access to cash in Scotland, noting their own experiences and views. We of course thank everyone who contributed to our investigation, as well as those who responded to our public survey.
A key recommendation of the previous report, which the Committee published in 2018, was that the Government consider legislating to ensure that communities continue to have access to vital banking services. We are therefore delighted that the Government have done just that, by including a Bill in the Queen’s Speech to ensure that happens. The financial services and markets Bill is a positive development and a constructive response to the efforts of the Committee and the many representations that have been made by colleagues from across the House. If we have any disappointment, it is that the Bill may be a bit too late because we have lost many elements of our banking infrastructure in the intervening years. We understand that the Government want to conduct a wider and all-inclusive consultation prior to publishing their Bill, but it concerns us that we have lost so many bank branches in the intervening years, and we know that banks are now considering rushing closures ahead of any legislation being passed by the House.
The picture today looks considerably different from when the previous Committee investigated access to cash. The pandemic has changed everything, and the rush to digitalisation and the increased use of digital facilities for personal and business banking have continued. The pandemic accelerated that move, but cash payments are still the second most used form of payment and account for 17% of all transactions.
Currently, 5.4 million people, or about 10% of UK adults, are reliant on cash. In Scotland, that is equivalent to around 500,000 people—half a million of our over 5 million population. In 2019, the “Access to Cash Review” found that over 8 million adults, or 17% of the UK population, would struggle to cope in a cashless society. That was reflected in the public survey I mentioned. The majority of our respondents held very negative views about the potential for the UK to become a cashless society. Some 67% of those who responded to our survey told us they thought it would be “very negative” if the UK became a cashless society.
The other thing that concerned our Committee was the sheer volume of bank closures that we have seen across the UK—specifically in Scotland, of course—over the past few years. Since 2015, Scotland has lost 53% of its bank branches; we have experienced the greatest percentage of loss out of all the UK nations. The figures for the automated teller machine or ATM network are just as bad, with 20% of Scotland’s free-to-use ATMs closing since 2018.
Obviously, the banking industry contributed to our report and inquiry. It told us that it is merely responding to falling customer demand, and that many bank branches and ATMs are no longer commercially viable. I think that all of us understand, appreciate and respect the fact that many more people have taken advantage of the useful digital services that are now available to each and every single one of us. However, we were told by Which? that the impact of bank branch and ATM closures is most severe in remote and rural areas of Scotland, due to challenges around connectivity. Often, people must travel greater distances to reach the nearest cash access point and I am pretty certain that hon. Members will want to raise that issue with me this afternoon.
Which? also told us that the covid-19 pandemic resulted in an increase in the number of retailers refusing to accept cash as a form of payment. There is no doubt that the pandemic forced a number of businesses to adapt and accelerate the move to digital payment. On top of that now, there is the cost of living crisis. We heard in evidence that increases in the cost of living may result in more people choosing to use cash to manage their finances and budgeting. We were told that there is limited publicly available data on retail cash acceptance, but the report of an increase in the number of retailers refusing to accept cash is concerning. We recommended in our report that the UK Government consider asking the Financial Conduct Authority to investigate and monitor cash acceptance levels across the UK.
We also note in our report that the banking industry has undertaken several impressive initiatives to protect consumers’ access to cash. One example is LINK’s financial inclusion programme, which ensures that the most rural and deprived areas in the UK continue to have access to cash. That effort is very welcome, but the programme’s success is reliant on the voluntary membership of card issuers and ATM operators, so we also recommended that the UK Government mandate membership of LINK for card issuers and ATM operators, to ensure that LINK’s initiatives are not simply enacted on the voluntary basis that they are today.
We also heard about the benefits that the introduction of universal deposit-taking ATMs would bring to consumers and especially businesses across Scotland. Such infrastructure would contribute to the sustainability of the ATM network, while providing a secure location for customers and businesses to deposit cash. However, attempts to introduce this sort of infrastructure have been constrained by a lack of progress on the part of the UK Government and the banking industry. Our predecessor Committee considered deposit-taking ATMs, and we repeated its recommendation that the UK Government set up a working group with industry to introduce network-wide deposit-taking ATMs.
Throughout our inquiry, we heard about the substantial role of the Post Office and its increasing provision of banking services, and it continues to provide consumers and businesses with access to basic cash and banking facilities. However, despite the positive interventions made by both the banking industry and the Post Office, the current provision of cash via post offices rests on the short-term and voluntary banking framework agreement. We recommend in our report that the UK Government seek a long-term commitment from the banks to maintain appropriate banking services for their customers using the post office network.
As I said earlier, the Committee of course welcomes the Government’s commitment to protecting access to cash through legislation, but we are concerned that measures may be needed now, until that Bill is introduced and the legislation enacted. Nevertheless, we look forward to working with the Government to ensure that the Bill is a success when it is introduced.
David Mundell (Dumfriesshire, Clydesdale and Tweeddale) (Con)
As a humble Back Bencher, it is always a privilege to be able to question a leading member of the British establishment in Parliament.
I very much welcome the Committee’s inquiry, because this is a serious matter. The hon. Member for Perth and North Perthshire (Pete Wishart) touched on a number of subjects, although he did not mention an issue that is important to my constituents, which is the ability to deposit cash. That, as well as access to and use of cash, is a significant issue.
I want to touch on the hon. Gentleman’s point about banks taking pre-emptive steps ahead of any legislation, which I experienced in my constituency recently when the Bank of Scotland closed branches in Innerleithen and Lockerbie. From my discussions with the bank, it seems that the only basis for that action was to pre-empt legislation that it anticipates the Government bringing forward. In their work on the report, did he and the Select Committee consider how that practice could be prevented ahead of the Government bringing forward the legislation to which he referred?
Pete Wishart
I am grateful to the right hon. Gentleman and I am pleased that he showed sufficient deference when questioning a member of the establishment. I am always glad to accept questions from him in any setting, so it is good that he is here.
On the right hon. Gentleman’s specific questions, he obviously did not hear me point out in my contribution that we looked at deposit-accepting ATMs. We see them as a really valuable introduction and something that could help businesses in rural areas, which find it difficult to deposit their cash in the evening. On that basis, we proposed that a working group should be set up, chaired by the Government, to see what could be done to facilitate that.
Throughout the inquiry, we recognised from the evidence that we heard that that would be a positive development particularly for businesses in rural areas such as the one the right hon. Gentleman represents. When he looks at the report, I hope that he will see the conclusions and recommendations we made on that. I know that the Minister is listening and taking notes, so I hope that we might be able to see that in the legislation in due course.
Patricia Gibson (North Ayrshire and Arran) (SNP)
I thank the Chair of the Scottish Affairs Committee for this comprehensive report. We continue to wait for action from the UK Government, as we have for a long time, on legislation to protect access to cash. Page 11 of the report makes it clear that
“Ministers have not had a clear picture of the implications of bank branch and ATM closures on communities in Scotland.”
Those of us who have repeatedly raised the impact of greatly reduced access to cash in our communities know all too well the damage that it is doing. It is vital that the UK Government do all they can to develop a clear picture of the implications of reduced access to cash in advance of any legislation to protect access to cash. Will the Committee continue to pursue that? Otherwise, as I am sure he will agree, the long-promised access-to-cash legislation that we are waiting for will simply not be fit for purpose. It is urgent, as the report makes clear.
Pete Wishart
We put those questions to the Minister when he appeared before the Committee. He made it clear, very legitimately, that the Government cannot get involved in commercial decisions on closures of branch operations, but that does not mean that they cannot do anything. The Access to Cash Action Group recommended several things that the Government could do so that banks were able to proceed, particularly around consultation with local communities, which is available now.
Data is indeed important ahead of legislation. The Government have an opportunity to find out how much cash usage there is across the UK, how many retailers refuse to accept cash at salepoints, and exact data on bank closures, which does not exist in any tangible or useful form. As the Government head towards the legislation, they have an opportunity to look at that and, hopefully, enable Members of Parliament on both sides of the House to be better informed when they are contributing to discussions about the legislation and to know exactly the state of play when it comes to bank closures and the use of cash.
Douglas Ross (Moray) (Con)
It is fair to say that the Chair and I do not always agree in the Scottish Affairs Committee—indeed, outwith the Committee, we almost never agree—but I pay tribute to the way that he has led this inquiry to the conclusion where we unanimously agreed the content of the report with no changes. That is also credit to our Clerks and it is right to thank them for their work in evidence gathering and report writing.
Does the Chair of the Select Committee agree that it was clear from a number of the evidence sessions that many of the banks are frankly morally bankrupt in the way that they treat their loyal and dedicated customers with contempt? In Forres, we have seen all four of the bank branches close in recent years. Just this week, the final bank—the Bank of Scotland—closed its branch. I held a meeting with my right hon. Friend the Minister and senior managers to discuss the issue, but they refused to come to Forres and speak directly to the customers they were leaving. Does the hon. Gentleman agree that there should be far more engagement between the banks and their customers? Does he also agree that there is an opportunity to have banking hubs? If individual banks do not believe that they have the customers to keep a branch open, they should work together so that a town the size of Forres can still have a banking footprint.
Pete Wishart
I thank the hon. Gentleman for his kind remarks—I am sure we will be back to business as normal on Monday, when the Committee meets again.
The hon. Gentleman’s substantive points were very useful. I agree that banks need to properly explain to local communities the reasons behind closures. I remember a protest in Aberfeldy. It takes a lot to get people protesting in Aberfeldy, but they protested in large numbers about the closure of the Royal Bank of Scotland branch there. Communities get very upset about this issue, and they look for reasons and answers. They want to understand why banks in the heart of the community have been closed, and more could be done to explain that.
There is, of course, a code of conduct that the banks are expected to fall in line with, but I think most people find that insufficient. Again, there may be a role for the Government to intervene and to make sure that we have proper thresholds and guidelines for where banks are to be closed. The previous Government had legislation about the last branch in town, but that seems to have gone and is no longer a feature of the Government’s thinking about this issue. The Minister is listening, and that may be something that he might want to think about as we look forward to the Bill being introduced.
Mr Alistair Carmichael (Orkney and Shetland) (LD)
Like others, I offer the hon. Member for Perth and North Perthshire (Pete Wishart) all the deference that he deserves.
The hon. Member for Moray (Douglas Ross) said that the banks are “morally bankrupt”. Let us not forget that, but for the taxpayer, they would also be financially bankrupt. We have recently seen the withdrawal of the Bank of Scotland from Stromness in my constituency—the last bank in town. If we now hear that there is a rush of banks seeking to avoid the incoming legislation, does the Chair of the Select Committee agree that that is simply acting in bad faith, which the Government should not be tolerating and in respect of which they should be acting?
Pete Wishart
I am grateful to the right hon. Gentleman. He and I are the “Faithers of the Hoose”, given that we were both elected in 2001. [Interruption.] I know that he signed in before me, but I still claim that I was elected before him—we will fight that one out at some point in the future.
The right hon. Gentleman is absolutely right. I think we are all concerned about the intervening period and what happens now to the legislation being introduced. There are several things that I believe the Government could do. A “cease and desist” instruction could be enacted to tell banks very clearly that there is an expectation that no branches should be closed in the period between now and the legislation being introduced. The Government could make it retrospective and say that the clear intention of the legislation is that there should be no branches closed until the Bill has been considered. Again, this is something that could be done in advance of the legislation being introduced. It is really a matter for the Government, but I think the Minister is hearing very clearly.
Looking around the Chamber, most of us represent rural or semi-rural constituencies, and we have this very clear problem. We remain greatly concerned about what happens now. The right hon. Gentleman is right to say that there now seems to be a rush to close branches ahead of the legislation coming in. It is almost perverse that the banks would choose to do so, knowing that we are coming to some sort of solution about how this matter could be taken forward. I really hope that something can be done in the intervening weeks and months.
Wendy Chamberlain (North East Fife) (LD)
It is a pleasure to serve on the Scottish Affairs Committee with the Chair and the hon. Member for Moray (Douglas Ross). I too have had a number of bank branch closures in my constituency. What came through very strongly when we were hearing about the Post Office is that the banks often offload their responsibilities on to post offices, but we are seeing closures of them across our constituencies as well. I have certainly seen that in North East Fife. Although I welcome the hubs, does the Chair agree with me that there is a risk that banks’ overreliance on the Post Office to deliver access-to-cash services prevents it from delivering the wider services that it provides to our communities?
Pete Wishart
I am grateful to the hon. Lady, who is an assiduous member of the Scottish Affairs Committee and who makes very valuable contributions to our reports and inquiries. She is right to suggest that the banks may look at the Post Office as a convenient get-out clause from their responsibilities, and there is no doubt whatsoever that the Post Office has offered a substantial and significant resource when it comes to banking services.
The hon. Lady mentions hubs. I should have said to the right hon. Member for Orkney and Shetland (Mr Carmichael) that the Committee found that banking hubs are the way forward. We saw a couple of the experiments that have been carried out in the past few years—particularly Cambuslang bank hub, which people are finding useful. What we are looking at is an arrangement where there are joint services—