Cash Acceptance

Monday 20th March 2023 Westminster Hall

[Relevant Documents: Second Report of the Scottish Affairs Committee, Access to cash in Scotland, HC 80, and the Government response, HC 695; Summary of public engagement by the Petitions Committee on acceptance of cash, reported to the House on 14 March, HC 73.]

00:00

[Hannah Bardell (in the Chair)]

Before we begin, I want to put on the record that we are delighted to see so many members of the public in the Public Gallery for this important debate. I ask that everybody’s phones are turned off and that we keep noise to a minimum to allow Members to enjoy the flow of debate and for those watching at home.

[Martyn Day (Linlithgow and East Falkirk) (SNP)]

I beg to move,

That this House has considered e-petitions 605030 and 622284, relating to the acceptance of cash.

It is genuinely a pleasure to serve under your chairmanship, Ms Bardell. The petitions before us attracted more than 58,500 signatures between them, having closed on 5 July 2022 and 10 March this year respectively. I thank the creators and signatories of the two petitions. Their actions have meant we are here today to debate an issue that is clearly of interest and concern to many people across the UK.

The petitioners call on the Government to:

“Make it illegal for retailers and services to decline cash payments”,

and to:

“Require all businesses and public services to accept cash payments”,

with the exception of internet-based businesses. They argue:

“Not everyone wants a digital trail and others simply cannot pay by card.”

The petitioners expressed concern about cashless payments creating an “enforced dependency on banks” and a

“threat to privacy as people cannot make anonymous payments.”

They stated:

“If we wish to uphold freedom of choice and the right to privacy, it is imperative that we protect the use of cash.”

[Margaret Ferrier (Rutherglen and Hamilton West) (Ind)]

In response to the Petitions Committee’s online survey, 61% of respondents said that they use cash to help with budgeting and, in the light of the cost of living crisis, by way of tracking their spending. Does my hon. Friend agree that the UK Government must recognise and protect cash as a tool that helps people to survive the cost of living crisis?

[Martyn Day]

My hon. Friend makes a good point. Indeed, I emphasise that it is essential not only for many people who budget, but for those on lower incomes, the elderly and those with disabilities, who need that facility the most.

[Ronnie Cowan (Inverclyde) (SNP)]

As my hon. Friend mentioned, freedom of choice is imperative. Currently, we need cash and card. We need to make everyone comfortable with the direction of travel. Does he agree that an education programme is required akin to the one we had back in the day when we introduced decimalisation? Given the average age of people in the room, I may have to explain what decimalisation is.

[Martyn Day]

I am grateful to my hon. Friend. I am perhaps giving my age away, but I came in with decimalisation. I recall the ready reckoners that my elderly relatives had for me to play with as a toy many years ago. An education programme would be helpful. In 20 to 30 years from now we will be in a different place, but here and now there is a real demand for cash, particularly for many vulnerable groups, such as disabled users who need cash and may not even have their own bank accounts.

[Sir Peter Bottomley (Worthing West) (Con)]

Just in case the hon. Member for Inverclyde (Ronnie Cowan) was referring to those of us with more experience, I should say there was a time in 1971, when I was selling coin-operated tea and coffee machines, when someone wrote in saying, “The elderly will find the new coins difficult. The elderly don’t live forever; could the change be postponed until they’re all dead?”

The more serious point, which will be shared throughout the House, is that people should not be excluded from being able to buy or pay for things just because they do not have a card or an account. Many people rely on the use of cash. Those businesses that do not need their custom ought to be told, “You should have it because you should not exclude people just because they aren’t up to date or a 14-year-old with a debit card.”

[Martyn Day]

The Father of the House makes a valid point, and one that I shall echo a number of times as I make progress through my speech—if there are no other interventions.

Zachary Stiling, creator of the more recent petition, told me:

“We must protect the individual’s right to use cash in all physical transactions. While there are many obvious advantages to digital payments, it is not suitable at all times or for all people…There are dangerous political implications with going cashless, as instances of banks and financial service providers closing accounts for political reasons are not unprecedented and are clearly at odds with liberal society’s cornerstone of freedom of belief.”

As we have heard from a number of interventions, freedom of choice is a central tenet of this issue. To be clear, the choice to use cash is still one that many people wish to make. Indeed, 95% of respondents to the Petitions Committee survey ahead of this debate stated that they preferred to use cash to pay for things over other means of payment. I know from my own experience that I would be happier using cash when I am in a pub or a restaurant than when I am shopping. It is different horses for different courses.

Figures from the Royal Society for the Encouragement of Arts, Manufactures and Commerce 2022 cash census showed that 96% of people withdraw cash at some frequency, with 83% having cash either in their wallet or at home. Furthermore, figures from the Financial Conduct Authority’s 2022 “Financial Lives” survey showed that 6% of adults in the UK had used cash to pay for everything, or for most things, over the 12 months from May 2021. That is a significant number of people.

[Mr Gregory Campbell (East Londonderry) (DUP)]

Last year, I was at a coffee outlet in London City airport that only took cards. A constituent asked me to take up the issue, which I did. A few weeks later, it introduced a process for cash and card. Three months later, the constituent sent me a photograph of a sign saying, “Cards not working today, only cash.” How ironic was that?

[Martyn Day]

The hon. Member makes a very good point on which I wholeheartedly agree. As I said, 6% of adults use cash payment for almost everything. That figure increases to 9% of those in the most vulnerable circumstances. I shall return later to the impact of cash refusal on the most vulnerable in our society.

Although the covid-19 pandemic undoubtedly affected payment habits, there has been both a sustained, albeit partial, recovery and a stabilisation in trends around the use of cash, as noted by the Bank of England in its third quarter bulletin in 2022. The Bank also noted that the value of bank notes in circulation remains close to an historic high, reflecting the fact that up to 60% of the population are holding more cash as a store of value.

Beyond freedom of choice, there are other clear benefits to using cash. One benefit for retailers is that unlike card schemes, for which they must pay set-up and transaction fees to providers, with cash every penny goes to them. Another benefit that should not be underestimated is the role that cash can play when other payment methods fail, as the hon. Member for East Londonderry (Mr Campbell) illustrated. I am sure that many of our constituents have had the experience of being unable to use online services or cards in the face of card rejection, IT glitches or system outages.

I can give an example from my own life, when I visited a friend who was recovering from surgery in hospital. I stopped for fuel on the way, which was lucky for me because although I had no cash in my pocket, my card was accepted, and when I got to their house I had an email from my bank telling me that it thought there had been a suspicious card transaction so my card had been stopped; had I tried to buy fuel on the way home, I would have had no means of paying for it. Cash is essential.

[Margaret Ferrier]

Figures show that 70% of people prefer to use cash because they are concerned about the privacy of alternative forms of payments, and 49% said they used cash because of concerns about fraud. Does my hon. Friend understand the worries that a move to a cashless society could militate against consumer privacy and may leave sectors of society more vulnerable to fraud?

[Martyn Day]

I agree entirely with my hon. Friend’s good points. It appears to be something that concerns very many people. Research from Which? has shown that 82% of Scottish consumers are likely to keep cash in case electronic payments are down.

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

My hon. Friend is making a powerful case about the importance of having the choice to use cash. Does he agree that access to cash is fundamental to this debate? In order for people to have the choice to use cash, access to it is at the basis of all that we are seeking to do.

[Martyn Day]

Absolutely, and I will come to that later in my speech. I hope the Minister takes cognisance of that well-made point.

There are also those who have valid privacy concerns about electronic payments. In an age of technology, algorithms, digital footprints and cyber-crimes, it is understandable that some—perhaps many—of our constituents would prefer the financial privacy offered by cash transactions. Some constituents wrote to me in recent weeks to make that point. Many stated that they regard barriers to using cash as a violation of their right to privacy. Cash clearly remains an important and valued part of our transactional landscape. As such, the ability to access and use cash must be protected.

In their response to both petitions, the Government state:

“The Government does not intend to mandate cash acceptance.”

They say that they will instead make provisions through the Financial Services and Markets Bill to ensure reasonable access to infrastructure such as withdrawal and deposit facilities. Of course, the availability of such infrastructure is clearly a concern for consumers and businesses. In Scotland, 53% of bank branches have closed since 2015, and since 2018 some 20% of Scotland’s free-to-use ATMs have closed. In many communities, banks have withdrawn completely, often leaving the post offices as the last place in town to do basic banking.

[Damien Moore (Southport) (Con)]

The hon. Gentleman is talking about banks closing; the bank on my high street is still open but will not give cash and directs people to the post office. Does he agree that it is appalling that we have banks on our high streets that are not providing the services that customers want?

[Martyn Day]

Absolutely; the hon. Gentleman makes a good point, for which I thank him. I am flabbergasted that a bank is not dealing with cash—it beggars belief.

The issues raised need to be addressed, but protecting access to cash is not the same as protecting the right to use cash—a right that, for many, amounts to an absolute necessity. For some of our constituents, not being able to use cash is a profound barrier in everyday life. Cash can be a vital means of budgeting. As noted in the 2019 access to cash review, that is especially true for those on lower incomes. The 2022 cash census identified that there are cash users who are highly dependent on cash for budgeting and would struggle to swich to digital payments. It concluded that 15 million people in the UK use cash to budget. That is backed up by the responses to the Petitions Committee survey: 61% of respondents stated that they use cash to budget.

Earlier, I touched on the impact of cash refusal on vulnerable groups, to which I now return. The access to cash review drew a stark conclusion. It identified that more than 8 million adults in the UK

“would struggle to cope in a cashless society. For many people in the UK, using cash is not a matter of choice, but of necessity.”

It highlighted that

“poverty is the biggest indicator of cash dependency”.

Dependence on cash is closely tied to barriers to digital connectivity—for example, for those living in rural areas and those with low or no digital engagement.

In its 2022 policy briefing on the subject, Age Scotland raised the importance of cash for older people. It highlighted that many on low or fixed incomes prefer to use cash to budget. It also noted that

“140,000 adults in Scotland do not have bank accounts”,

and that

“34%...of over 60s in Scotland do not use the internet”.

Furthermore, a 2020 survey by the Financial Conduct Authority explored the relationship between cash usage and factors including education, health and wealth. It noted that 26% of those in poor health use cash to a great extent, and that some people with physical or cognitive disabilities find payment methods other than cash difficult to use.

[Margaret Ferrier]

My hon. Friend is generous to give way again. It has been reported that about 10% of people have been unable to pay for medical supplies with cash. We know that older people and those with some physical and mental health problems prefer using cash. Is my hon. Friend concerned that certain societal groups may be at risk of being unable to access the medical care they require if they cannot pay with cash?

[Martyn Day]

That is a valid concern that I hope the Minister will address when he responds to the debate.

Some 8% of respondents to the Petitions Committee survey said that they had a physical or mental health issue that made using alternatives to cash difficult. The issues included bipolar disorder, anxiety disorder, depression, arthritis, visual impairment, cognitive disability and strokes. It is reasonable to conclude, therefore, that the impact of cash refusal is felt acutely by those on lower incomes, those who experience barriers to digital payments, those who are disabled, and those with physical or mental health conditions. Indeed, the Government acknowledge that in their response, stating that they want to ensure that vulnerable people

“have appropriate access to banking”

and payment services.

However, to reiterate my earlier point, protecting access to banking and payment provisions, although important, does not address the issue of cash acceptance. There is growing evidence that cash refusal is becoming a very real issue. The covid-19 pandemic has undoubtedly accelerated the cashless trend. As Which? research has shown, the pandemic led to an increase in the number of retailers that refuse to accept cash. The cash census similarly found that as the economy reopened in the summer of 2020, retailers were increasingly going cashless, with 42% of people reporting that they had visited a shop that did not accept cash in July 2020.

The results of the Petitions Committee’s survey also make for stark reading: 77% of respondents said that a business had refused to let them purchase something with cash, with the most common refusals of cash coming from restaurants, takeaways and transport; and 88% said that cash refusal had a large or moderate impact on them, describing feelings of embarrassment or anxiety as a result.

Our daily lives are filled with examples of the cashless trend as the consumer experience becomes increasingly dominated by technology, from bus companies encouraging people to use contactless payments to card-only self-checkout machines in supermarkets. However, the march towards cashless risks the exclusion of a great many people and a profound and negative impact on their lives.

The Government’s current position of focusing on infrastructure but ultimately leaving the decision in respect of cash acceptance to individual businesses simply does not go far enough. It is essential that gaps in the provision of banking facilities are addressed so that people can access cash easily in their community and small business owners do not have to travel many miles to access deposit facilities. However, that alone does not guarantee cash acceptance. It is a difficult issue for many businesses, especially where the ability to deposit cash might involve lengthy journeys away from their business.

The Association of Convenience Stores advises that 60% of transactions in independent convenience stores are paid in cash, and that 99% of shops in its sector continue to accept cash, with retailers striving to give customers access to their preferred payment options. While supporting access to cash to facilitate financial inclusion, the ACS would rather the decision on what payment methods to accept be left to individual businesses and not mandated by the Government, whereas an overwhelming 98% of respondents to the Petitions Committee survey agreed with the petitioners that shops and services should be required to accept cash. This is clearly an issue that affects and concerns many of our constituents, customers and businesses alike. The Government need a plan to ensure that those dependent on cash are not left behind, and part of that must be about protecting their right to use cash.

The UK Cash Supply Alliance has called for businesses to be required by law to accept cash payments for in-person services equivalent to the maximum value of contactless transactions. In their response, the Government talk a lot about what is reasonable—“reasonable access”, “reasonable provision” and so on. Ensuring that individuals and businesses have easy and convenient access to banking facilities is not only reasonable but essential, and a requirement to accept cash for lower-value transactions is also reasonable. To have the certainty that when we walk into a shop or restaurant our cash will be accepted is reasonable and, for many, vital. The Government can and must act to protect access to cash, the ability to use that cash, and the ability of businesses to easily deposit that cash. Those are very much connected issues, and they must be equally addressed.

This is a complex issue, and I am aware that I have touched on a lot of different factors in a short space of time. Indeed, I could have touched on many other factors, but I look forward to comments from other Members. I have covered some factors in more detail than others, and I look forward to the Government’s response at the end of the debate.

16:50

[Duncan Baker (North Norfolk) (Con)]

I thank the hon. Member for Linlithgow and East Falkirk (Martyn Day) for such a good speech, and for hosting today’s debate. We are discussing a topic that I find greatly interesting. In a previous life—not many Members realise this—I was a businessman, but also a postmaster, or at least I had the legal title of a postmaster. As such, understanding retailing as I do, access to cash is an absolute necessity in all parts of society, particularly, as has been mentioned, in rural communities. It is therefore important that we discuss the thorny issue, which has already been touched on, of the wilful negligence of banks in closing their branches on our high streets up and down the country, despite all of the changing public behaviour, and the issue of traders accepting cash as payment.

Despite the advances of technology and those changing consumer behaviour patterns, it is clear to me that the acceptance of cash should remain an option for the foreseeable future. The country at large, and the public, are simply not in a position to close that door off. All the research that has ever been conducted in this area shows that people must be able to still access cash.

In 2021, I presented my own Banking Services (Post Offices) Bill. It did not get very far, but, nevertheless, the intention was to try to ensure that banks were required to offer banking services for their customers, including the provision of cash, via the post office network. The 11,500 post office branches on our high streets seemed like absolutely the right place to be the authorised financial services dealer to enable cash to always be accessed on our high streets.

[Margaret Ferrier]

Cambuslang, in my constituency, was honoured to host a bank hub, through the pilot scheme between post offices and the high street banks, to help protect community access to cash at a time when more and more banks were facing closure on local high streets. The hub on Cambuslang’s Main Street has been a great success and very popular with constituents. Does the hon. Member agree that more bank hubs could and should be funded for communities in need?

[Duncan Baker]

I thank the hon. Member for her question. Yes, bank hubs would be a very good idea. The Minister will probably correct me, but I believe that the Government have initiated putting bank hubs in throughout the country. However, my point about using the post office network is that it is already there. There are already 11,500 post offices on our high streets.

Instead of a sweetheart deal with banking services between the Post Office and the Government, we should legislate, and make it legally binding that post offices must always be allowed to offer banking services, so that we do not have some bank, at the drop of a hat, withdrawing its services because it does not like the deal that it is getting from the Post Office. We should set it in stone so that people and consumers always have that offering on the high street.

The European Central Bank found that cash remained the most frequent method of payment in 2022, at 59%. Despite that, and all of the research that we have outlined, we continue to see a steady decline of bank branches on our high streets. In 2021, 736 bank branches closed throughout the UK. From my constituency, I remember some of closures proposed by Barclays. The reason for closing was that the research indicated a drop in footfall. I said to the bank team that presented the findings, “We have had lockdown; consumers have not been able to go to the bank. You cannot possibly use a drop off in footfall as an excuse to shut a bank branch when the public have been prohibited from even accessing our towns and villages.” It was absolute madness.

In the east of England specifically, we saw a 39% decrease in the number of banks between 2012 and 2022. The far-reaching impacts that this has had, especially in areas where many older people live—I have the oldest demographic in the entire country—cause huge concern throughout my constituency and other rural areas, because all the research shows that the vulnerable and elderly are simply not able to go cashless at this moment in time.

I witnessed at first hand the serious impact of last year’s Barclays bank closure in my home town of Holt, where I was born, despite the fact that we are a centre for retail in the area. We have a huge number of visitors coming to Holt, and Barclays was the last bank in the town to close. Cue pandemonium for a retirement area with elderly people—a vibrant market town that is rich with many retail shops—who were left with no ability to do their banking, which affects not just residents and businesses but visitors, who also need access to cash. Luckily, we were able to use a banking hub, exactly as the hon. Member for Rutherglen and Hamilton West (Margaret Ferrier) suggested, to try to safeguard people needing access to cash.

The research suggests that 10 million people would struggle to cope in a cashless society. Many of them are on low incomes and are older, but they also include people who have disabilities or ill health and those who run small businesses—a plethora of people across society. By preserving the physical infrastructure, whether through a post office or a banking hub, we also preserve the right for the most vulnerable to use cash, to make sure that they too can be looked after.

I was a retailer at one stage, so I appreciate traders’ attitudes towards accepting cash, which can become expensive. The banks make it expensive and more difficult for people to do their banking. If banks shut, people have to use courier services, which charge, and there is a delay in deposits coming into the bank. I understand that it is far easier to stop using cash, but that does not mean that it is the right thing to do. Limiting the acceptance of cash payments puts pressure on people, who can become financially excluded. It may be very difficult for the Government to enforce the preservation of cash payments in a free market, but they should be straining every sinew to incentivise providers and make sure that they continue to accept cash.

The access to cash review provided some sensible and feasible recommendations to help keep cash payments an option for the foreseeable future, and I am sure the Minister will have looked at it. The crux of all this is that I recognise that, at some point—one day—cash will begin to fizzle out, but it is fundamental that we help consumers for as long as physically possible, because it is necessary. It is not about stifling technology or progression. It is a fundamental basic requirement that millions and millions of people up and down the country still need access to cash.

The use of cash will always play a vital role for many people—for budgeting and for people who may have poor spending habits, because it is a great way to help people manage their bills. Keeping cash as a viable option will help to support those on low incomes and vulnerable people, as well as our high streets and small businesses. I do not think that cash should be something that we begin to dismiss and wind down. The crux of this is about not only keeping cash in circulation, but making sure that the Government play their part in ensuring that there is a proper, viable infrastructure for cash to circulate, which means doing something to legislate for the banks, whose corporate social responsibility has gone out of the window as they have closed as many branches as they can around the country. That has to be something we address as well.

16:59

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

It is a pleasure to serve under your chairmanship, Ms Bardell. I thank my hon. Friend the Member for Linlithgow and East Falkirk (Martyn Day) for securing this important debate. I thank the Petitions Committee, and most importantly the petitioners who allowed the debate to happen today.

This is about compelling the acceptance of cash. There have been some important points made about the fact that the issue has real implications for budgeting for many households. At its heart is the systematic reduction in the availability of cash, which has accelerated the refusal of cash. If cash is taken out of the system, of course that makes it more difficult for businesses to make that choice. That does not mean they should be allowed to make the choice to refuse cash, which should continue to be an important part of the system.

[Ben Lake (Ceredigion) (PC)]

I am grateful to my hon. Friend for giving way and for making such an important point. The reduction in banking facilities, especially in rural areas such as his and mine, has accelerated the move to a cashless society, as he rightly mentioned. With banking costs, the depositing of cash for businesses is becoming even harder and more expensive. Does he agree that in this conversation, the Government need to ensure that banking services, including deposit services, are retained in rural areas to make it easier for particularly small businesses to continue to accept cash?

[Drew Hendry]

I completely agree with my hon. Friend and his timely intervention. I will come on to that when I talk about the impacts on my constituency, which is largely rural.

Access to cash is vital for people across the communities in Inverness, Nairn, Badenoch and Strathspey. I have been speaking to people out and about in my constituency, and I want to relate some of the issues in the villages and towns. Although I will focus on one item for each of them, all these things affect all of them, all the time. It is vital for people living in the highlands to get access to cash. The lack of availability has direct impacts on our communities.

For example, Aviemore is a popular tourist destination. Large numbers of visitors come throughout the year. Cash means additional spend, and the lack of it can restrict add-on sales. Not everybody wants to tap their card. If there is an opportunity to spend some cash, they will spend it on smaller purchases, as well as some larger ones. Impulse buying is also restricted in the same way. That is all vital in an experience-based economy like we have, where visitors come to enjoy the different activities that they can take part in.

Kingussie and Newtonmore, like Aviemore, are in the Cairngorms national park area. There is limited infrastructure. The closure of bank branches and the reduction in the number of cash machines have made life in those villages far more difficult than it was before. For example, with the increased cost of transport, the extreme inconvenience makes life challenging and difficult for many, especially those with no access to private transport and precious little access to public transport.

People in Grantown-on-Spey, also in the Cairngorms national park, rely heavily on tourism as well. They are directly affected by access to cash. I can relate a personal experience from last year. The Grantown show is the big showpiece event of the year; people come from not only miles around but countries around the world to experience it. It is a fantastic event. However, by the opening time of the show last year, Grantown-on-Spey had run out of cash. The paltry cash machines that were left in the village after the others had been stripped out by the removal of the banks had actually run out, and all the shops that were able to issue cash said that they did not have any more to give out. That was before the thing had got into its swing. It is immeasurable and impossible to judge the impact that having no cash had on that key day for the local economy.

Nairn has been badly affected by bank closures and the reduction in the availability of cash. Businesses—whether they are microbusinesses, or small or medium businesses—have all historically relied on cash. It has been really difficult for businesses there, particularly looking at the struggles on the high street. The locals have performed miracles in keeping up interest in Nairn as an attractive place, and the local business improvement district organisation has done its utmost, but there has no doubt been an impact on Nairn’s ability to thrive. It is restricted from achieving its potential, at least in part.

Fort Augustus is a fantastically picturesque village at the southern end of Loch Ness in my constituency. Many older and disabled people there tell me that they rely on cash. It is a serious issue that affects people’s mobility; it affects their ability to manage their financial affairs and participate in social and economic activities in their local area. We have not even touched on younger people who are not at the point of accessing a bank account by tapping their phone or a card. They often start off with pocket money given to them in cash so they can start to learn about money. As my hon. Friend the Member for Linlithgow and East Falkirk said, the ability to handle money and count it out is a vital part of financial education. There are unintended consequences to restricting the availability of cash because some people cannot access plastic.

The lack of access across my constituency is very noticeable now. It has had a significant impact on towns and villages. I cannot mention them all today, as it would take me ages to cover all the places in my constituency, but it is important to point out that these are real issues for real people in towns and villages. Other Members in this Chamber who have rural constituencies will have these issues in common. For many communities, this is an issue of sustainability, affecting tourism, businesses, young and older people and those with disabilities.

When we hear about a banking crisis the Government jump into action to protect the banks, but where is the same activity to support our communities who are in a banking crisis? They do not have banks or access to cash anymore. Where is the activity and energy for them? The Government need to step up and make sure there is continuity for people and a reversal of this journey to drain cash out of these communities the way that has happened.

There should be a move to increase cash machines. We hear about reasonable access, but what does that mean? They are just words without any meaning. What people in my communities want to know is where, how and when they can get access to the cash they need. Yes, I support the move towards more shared hubs, but let us make sure those hubs are available to all communities and that everybody can access them in the proper way. We should be requiring banks to supply cash, particularly in rural areas when there are events coming up. This should be about protecting cash payments and access to cash.

Finally, if we are to move to a situation where the Post Office takes the strain, that is fine, but post offices must be properly supported and recompensed for taking on this social need. They are next to breaking as well. If we are relying on post offices to pick up the slack, what do we do when post offices are no longer there? People are genuinely worried about that. I thank my hon. Friend the Member for Linlithgow and East Falkirk for bringing this debate forward. We could have another half a dozen debates about the effect of lack of access to cash. I look forward to hearing from the Minister what he is actually proposing to do to help communities to maintain the cash in their communities.

17:09

[Richard Foord (Tiverton and Honiton) (LD)]

It is an honour to serve under your chairship, Ms Bardell. I thank the hon. Member for Linlithgow and East Falkirk (Martyn Day) for introducing the debate.

When I was a child, scratching around in the earth in Somerset I happened upon what I thought was a stone—it was more like a flat pebble—but was, in fact, a Roman coin. Reflecting on that today, it strikes me that we have spent 2,000 years in this country handling real currency. Coins and, in more recent years, notes have been with us for such a long time. I am therefore alarmed that our generation might see the end of real hard currency.

Members have expressed many real concerns this afternoon. Thinking about rural areas like mine, I am most concerned about the plight of older people. Both my hon. Friend the Member for North Shropshire (Helen Morgan) and I get stacks of correspondence from elderly constituents who just cannot abide trying to remember the PIN for a card that they have no assurance works, and have no faith or trust is reliable. In October 2022, the Bank of England stated:

“Cash remains an important payment method in the UK, and a critical means of payment for many people.”

In addition I endorse what the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) said about children and educating them about money. We do not know what the consequences may be for a generation who are not schooled with tangible money, but they may not be able to budget quite as well as their parents’ or grandparents’ generations for that fact.

We should also think about how our small businesses are affected. In rural areas such as my part of Devon, small businesses are concerned about the closure of not only banks, but cash machines. The other day, I received correspondence from the secretary of the Axminster chamber of commerce, who pointed out that the town of Axminster lost its last bank last autumn, and the neighbouring town of Honiton is set to lose its last branch of HSBC this summer. This issue is affecting in quite a miserable fashion some of the small businesses that depend on being able to deposit and withdraw money locally.

[Drew Hendry]

The hon. Gentleman makes a good point about businesses in rural areas. When these facilities are withdrawn, businesses often face insurmountable challenges in terms of what they then do, where they travel to and how they staff their businesses when they have to travel to different places to carry out transactions or indeed take on new methods. Sometimes they just do not have the time to do that. Does the hon. Gentleman agree that this is a significant issue that is never covered in any of our discussions?

[Richard Foord]

I completely agree. It is great that we have an opportunity today to hear reassurance from the Minister on what the Government are doing to address some of these concerns. We have to ensure that nobody is locked out of our society simply because it is seen as easier for others to use electronic payments. Some people are more inclined to give to charity or leave tips if they can do so with notes and coins.

I am also curious to know what the Government think of tax evasion in relation to tangible money. When the Government think about phasing out cash, do they have one eye on how small and medium-sized enterprises pay VAT? Is that a factor when they think about how we will access money in the future?

As I draw my reflections to a close, I want to talk about another personal experience, this time of travelling in China. Before the pandemic, I was working in China, and my Chinese colleagues found it hilarious that I had brought notes and coins with me, because they were so used to using Alipay on their mobile phones. In some societies, it has become unfashionable—really passé—to use coins and notes. I am proud that we live in a liberal democracy that serves to protect the rights of minorities. One of those rights ought to be the continued use of tangible cash.

17:15

[Paul Maynard (Blackpool North and Cleveleys) (Con)]

It is a pleasure to serve under your chairmanship, Ms Bardell. I thank the hon. Member for Linlithgow and East Falkirk (Martyn Day) for his presentation of the topic.

I declare an interest: I am a member of the Consumer Council for Link, which runs the national network of free-to-use ATMs. It also assesses the impact of banking closures and looks at what should replace them, whether it is a banking hub such as the one in Cambuslang, which the hon. Member for Rutherglen and Hamilton West (Margaret Ferrier) mentioned, or one of the alternatives.

The hon. Member for North Ayrshire and Arran (Patricia Gibson) and I are often in this Chamber discussing this very topic. When we were first here, almost three years ago, I made the point then the issues are twofold: acceptance of cash and access to cash. There is no point accessing cash if it cannot be spent, as she said; but here is no point accepting it in the first place if no one has it to spend.

This debate is not really about acceptance of cash; that is a misnomer. It is about who pays for our cash system. Is it businesses? Retailers do not get to keep every penny if people pay by cash, and the extra costs associated with handling cash and with the cash system are passed on to consumers. The financial services sector —everyone boos it quite happily—passes the cost on to account holders. Fundamentally, the cost of our cash system always ends up back with the customer. Tinkering with the intermediaries handling the cash and introducing new rules, as some have advocated today, will not change that fact, even if it makes for some media-friendly, savvy headlines in the Daily Mail.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

The hon. Gentleman makes a very good point. Nothing in life is free; eventually, somebody has to pay for it. This trend has been driven by Governments of all colours for decades. The most significant move towards a cashless society was the Labour Government’s decision to prevent people from being able to access pensions at the post office by handing over a pension book, and insisting that all pensions go into bank accounts. There will have to be a different culture in Government before they have the authority to lecture banks.

[Paul Maynard]

I take the right hon. Gentleman’s point, but I am not lecturing the banks on the basis of being a politician. I apologise if my approach today is technocratic, but I am not seeking to be political. The Minister can explain what the Government are actually doing on this front.

We have all had substantial lobbying on this issue. My inbox has been full of press clippings, videos of the hon. Member for Linlithgow and East Falkirk and so on. I am a little troubled by the emphasis on the compulsory acceptance of cash, and particularly by the suggestion that we should adopt something like the Spanish legislation that limits card payments to a €30 minimum. If someone wants to spend less than €30, they cannot use a card. That seems to be the very opposite of payment choice, and the cost would be passed on to consumers through higher prices. The cost to retailers comes in the form of driving further to deposit the takings at the end of the day. If they have to drive a long distance, they might have to close earlier to get to the post office or bank before it closes. That means they forgo income, so they might have to raise their prices.

In my constituency, the signs in shops saying “No card payments under £3” or, “No card payments under £5” have disappeared since the pandemic. That is progress; it gives people more choice. New technology, such as handheld card readers, has made payments both easier and cheaper, although I recognise that the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) might intervene to say that broadband is still not good enough in many rural areas to make such things reliable, particularly in the tourism sector.

Before people out there start to shout at me, let me say that I certainly do not believe that cash should be killed off and that the future is entirely digital—far from it. People will always need cash, particularly the financially vulnerable and marginalised in society. My constituency of Blackpool North and Cleveleys has eight of the 10 poorest neighbourhoods in the country, and I know that some people rely on cash to manage their income. Some are nervous about using technology; they may struggle to remember their PIN or manage their personal finances. They may be among the 1.8 million people who are still unbanked, relying on a jam-jar approach and monitoring pots of money for bills, which cannot be done with a card.

I was troubled by some of the proposals briefed out ahead of this debate. One suggestion was that in return for requiring businesses to accept cash, certain denominations of coin would be done away with—giving with one hand while taking with the other. That fills me with dread. Another suggestion was requiring “exact-amount services”, which is a euphemism for “rounding up”—something priced at 33p would be priced at 35p, for example. That would make no sense in the midst of a cost of living crisis. There is no mandate for it from the public, and it has no legitimacy in the eyes of consumers or, indeed, retailers.

The Minister is here to tell us what the Government have done, but I will make brief reference to the legislation on access to cash, which is entirely welcome. I would love him to talk about free access to cash, but I bet he will not—he has been disappointing me on that front for some time, so I will not hold my breath. I am also a bit frustrated that the policy statement explaining how we will guarantee access to cash will not come out until we pass the legislation, so we cannot judge how spot on it is, but he may be listening to me on that.

I have not heard many people talk about the notion of cashback without purchase, something for which the Government have legislated. It solved a long-term problem known as the £3.22 issue. Someone may want to take out a precise amount of money—they might not want £10 or £20 because they are managing their finances. They cannot take £3.22 out of an ATM, but they can now take out that amount from their local PayPoint in the newsagent without having to make a purchase. It is life changing for many people in areas such as the one I represent, but all the vested interests in this debate hate talking about cashback without purchase. They do not want people to know about it. They would far rather that the most vulnerable people in my constituency went down to a pay-to-use ATM.

The banks have produced some fascinating research into why people in the most deprived parts of this country often go to a pay-to-use ATM, which may charge £2 or £2.50 to take out small amounts of money, when they are actually very near to a free-to-use ATM. Understanding that strange behaviour is a real challenge for the financial services sector, and it is something that I find frustrating about this entire debate.

I commend the work of the access to cash review and Natalie Ceeney, who has done so much on access in recent years. Like her and the group, I believe that banking hubs are the way forward, but I also know from Link’s work scrutinising the impact of bank closures that the introduction of a banking hub is not the only remedy to bank closures. I think of post offices, ATMs, and deposit-taking “reverse” ATMs. I was doing my own private secretary work, as a sort-of pretend Minister, by checking on my phone what happened in Holt when Barclays closed; I understand that an ATM is now going to be installed. When I checked Axminster, I found that its residents are getting a banking hub—I am not sure when, but congratulations on that. I am sure they have heard how good it was in Cambuslang.

Many campaigners ask, “Is this enough? Are we going far enough and fast enough? Why aren’t they all open now? Why doesn’t a banking hub open the moment the bank shuts its doors?” but 38 banking hubs and 38 more deposit-taking ATMs have been announced so far, which is a pretty good first step. I would love things to move faster—that might stop the Daily Mail campaigning against banking hubs—but they are a rather new concept and certain legalities need sorting out. Indeed, in one case, they are still trying to remove asbestos from the preferred location. People who thought that the moment a branch shut a banking hub would pop up as a like-for-like replacement misunderstood the situation.

Campaigners set the bar so high that I think they will not be satisfied until they have a maternity unit included in the hub, as well as everything else—they almost seem not to want to win this battle that they have been fighting for so long. We need to keep the pressure on those introducing the banking hubs; we need to ensure that the pace of their introduction accelerates and that these initial hurdles are overcome, but I do not think we should talk down the idea of banking hubs because somehow they are not perfect.

I wonder if the aspirations are too high. I listened carefully to the House of Lords debate on the Financial Services and Markets Bill, in the special way that the House of Lords does it. Their lordships suggested in one amendment an obligation on banking hubs to have a representative from every single bank. That just is not feasible. Digital-only banks, such as Monzo and First Direct, offer a better service to customers because they do not have the overheads of a physical network. We would wholly undermine their business model if we were to insist that banks like Monzo suddenly have to recruit someone to physically exist in a banking hub. That makes no sense at all.

What the banking hubs should be used for is digital training and addressing financial exclusion. Someone mentioned decimalisation—I think it was the hon. Member for Linlithgow and East Falkirk. To me, a more pertinent example is the switch from analogue to digital television and the emphasis, training and preparation that went into that process, so that no one was left unserved when analogue was switched off. People knew it was coming and were helped through that process. I am not saying that cash will ever be switched off, nor do I want it to be, but we could learn from that process how we walk and talk people through it.

I want to make two final points. One is around deposit-taking ATMs. This may sound like a rather anodyne and technocratic point—I suppose it is—but not all ATMs are equal. Members may have heard me refer earlier to the challenges retailers face in having to go much further to deposit their takings at the end of the day. A deposit-taking ATM is fundamental to solving that problem.

The post office is not always the solution. My post office in Cleveleys is tiny, despite it being a town of 16,000; people queue out the door even when there are no financial services activities, let alone every time a bank branch closes and they have to start using the post office again. I was speaking to the postmaster of the nearest post office to where I live. I have been hearing worrying tales that local businesses are struggling to deposit cash because the banks are putting limits on the amount a business can deposit in any one calendar year, to the point that some businesses are having to shut down, simply because they cannot deposit the cash takings at the end of the day. I tell the financial services sector and all those banks that normally monitor what I say in this place that I am not happy. I expect an email tomorrow morning from at least one of those banks that are obsessed with everything I say. This policy is a real deterrent.

I end on a note of agreement, though, with the UK Cash Supply Alliance. I know I have been giving them a bit of a hard time in the debate. This is the most technocratic issue imaginable, but it is the cost of the hardwiring of our cash system. The wholesale distribution of cash remains far too costly—£5 billion to the economy overall—and there is far too much duplication. We have not seen the radical reform I believe was needed when the Bank of England set up the wholesale distribution steering group to try to find an alternative model. I fear that some in the cash distribution sector are defending their commercial turf under the guise of protecting customer interests. That is simply not good enough.

I had a fascinating trip to Vaultex near Warrington several years ago. Vaultex is one of the cash-handling and cash-distribution centres that covers the north of England. All our bank notes come in and come out of the centre. I have never stood near so much money in my life. There is absolutely no chance of getting in or out with it—it even has a special roof that a helicopter cannot be landed on just to avoid any shenanigans—but what I saw there was duplication after duplication. Every bank required their bank notes to be counted, stored and separated in a specific way; there was no attempt to rationalise the process. I sat there thinking, “If only more banks could agree to handle their money in the same way, it would start to reduce this £5 billion cost.” I do not know how that is going. I gather there were proposals for a public utility model that would help to bring it all together to reduce the costs, but it is such an opaque process. The Bank of England does not update the minutes on its website for this wholesale distribution steering group, so I know very little about what is going on, which is frustrating.

Reducing that £5 billion cost is the answer to what we have been discussing today, making it cheaper and more affordable for small businesses to keep taking cash. If that does not happen, we will have a problem. The best way to protect the acceptance of cash is not by penalising consumers with higher costs or penalising retailers by forcing them to raise costs, but by addressing the reason why retailers choose not to accept cash in the first place, which is about cost and convenience. We should reduce the cost of wholesale distribution, and make depositing cash easier with more deposit-taking ATMs. If we do that, we will start to tackle the vested interests which have hovered ghoulishly over this debate for far too long.

[Hannah Bardell (in the Chair)]

I call the SNP spokesperson.

17:30

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

Let me begin by thanking my hon. Friend the Member for Linlithgow and East Falkirk (Martyn Day) for his excellent exposition of the challenges that we face. This e-petition debate calling for the legal right to use cash payments in shops and requiring all businesses and public services to accept cash payments is very important. Since I was first elected, repeated concerns have been expressed about the decline of our cash infrastructure and the need to preserve it. I have spoken in every single debate on this matter, along with the hon. Member for Blackpool North and Cleveleys (Paul Maynard), yet here we are again. It feels like we are banging our heads against a wall as we face, with increasing urgency, the existential crisis facing our cash infrastructure.

The arguments are well rehearsed, and have been again today. There is no denying that, as a result of changes wrought by the covid pandemic, the future of cash is even more uncertain. Many of us in this Chamber and beyond fear that its demise has been accelerated. Ultimately, this is a debate about inclusion—financial inclusion—and consumer choice. The situation becomes ever more urgent with every debate that we have on this issue and with each passing day. I wish to pay tribute to and commend the Scottish Affairs Committee for its report, which is a most informative and constructive contribution to the wider debate.

From the outset, it is important to underline the fact that the right to use cash, as the hon. Member for Blackpool North and Cleveleys said, cannot be separated from free access to cash. There is no point in legally ensuring the right to use cash if there is no reasonable access to cash. It is important to remember that, in Scotland, this debate takes place in the context of bank closures. This matters, because without access to cash it is simply not possible to use cash. That cannot be said too often. Fifty three per cent of Scotland’s bank branches have closed. In my constituency, the situation is nothing less than appalling. Kilbirnie has no bank. Beith has no bank. Dalry has no bank. West Kilbride has no bank. Kilwinning has no bank. Stevenston has no bank. Ardrossan has no bank. Indeed, in the whole of my constituency only Saltcoats, Largs and Isle of Arran have a bank branch. If we are to protect the cash infrastructure, we need a two-pronged approach: protecting access to cash and protecting the legal right to use cash.

Overall, Scotland has suffered the highest percentage loss of bank branches among all the nations in the UK. It is against that backdrop that any debate about access to cash and the use of cash must take place. Alongside this, we see our post offices under threat, as postmasters struggle to make even the minimum wage. In all the towns in my constituency, the post offices—those towns have no banks—play a vital role in supporting our cash infrastructure, because the banks have washed their hands of the matter. Yet, as an example, the town centre in Kilwinning has now lost its post office. Although Post Office Ltd is working hard to find a sub-postmaster to take on the franchise, it is proving very challenging because it is so hard to turn a profit or even make minimum wage for the franchisee. Of course, it is true to say that the last Labour Government closed down a whole slew of post offices, including many in my constituency, and stripped others of the services that they were able to deliver. All this has been exacerbated by the winding down of the energy support on which post offices currently rely.

Of course, it would help if the banks paid postmasters properly for the work they do on the banks’ behalf as they abandon our towns. Banks must value postmasters, who are picking up the pieces left behind by doing the banks’ work for them and for insufficient remuneration. The situation is simply unacceptable and has placed an unsustainable burden on postmasters, and I look forward to hearing the Minister’s thoughts on that specific matter.

As if all this was not enough, we see a worrying decline in cash machines, especially free-to-use cash machines, in communities across Scotland. This is especially so in rural areas, as we have heard. The Centre for Social Justice recently found that 38% of people on low incomes report having faced cash machine charges, compared with 17% of all consumers. That is what you call a poverty premium: the exploitative practice of placing a disproportionate number of pay-to-use cash machines in our most socioeconomically challenged communities.

Access to cash is vital if we are to demand, as we should and do, that there be a legal right to use cash, and there must be a requirement that all businesses and public services should accept cash. As we have heard, the vast majority of us use cash often and when it is convenient to do so. Indeed, for many rural dwellers, there may be little choice due to digital challenges, which may be exacerbated by the weather, as we have seen in recent weeks, as well as by technical glitches, which can strike without warning at any time. For the most vulnerable customers, there must be the option to access and use cash if that is what they require and is most convenient for them.

The Financial Conduct Authority has found that over 1 million adults in the UK do not have a bank account. There are also many who struggle to manage budgets electronically, and others who simply prefer to manage their daily transactions in cash, such as older people and those on a budget. They would face financial exclusion if our cash infrastructure is allowed to deteriorate further. We know that many consumers were unable to buy what they needed during covid, and that 38% were turned away when trying to buy food from shops using cash. What happens to those who have no alternative to cash payments? Are they to be abandoned? What happened to the customer being king?

Anyone who has ever faced any level of financial difficulty knows that, when this is the case, banks cancel credit cards and advice centres giving debt advice advise clients to cut their cards in half. They do that to help people control their spending and manage their budget better, because we know that using plastic can often lead to losing track and overspending.

[Margaret Ferrier]

Research has shown that carrying cash can help people with gambling issues to budget, avoid debt and better control their habits. By contrast, it is harder for people to retain control and keep track of their spending while using debit cards. Does the hon. Lady agree that the UK Government must ensure that cash remains a viable payment method to safeguard against the risks of gambling harm?

[Patricia Gibson]

Yes, and we expect gambling companies to step up and take greater responsibility for the harm that gambling outlets can cause. Of course, we know that there are more ways to gamble on high streets in socioeconomically deprived communities than in better-off communities, which is another scandal that we really should debate another day.

People actually handling cash and seeing in real time what money they are spending is critical to helping them budget—even more so when budgets are under so much pressure and are so much more precarious during this cost of living crisis, when everything costs more each time we go to the supermarket.

There is, of course, another side to this. Electronic payments incur a cost for firms, especially those making many small transactions. The UK Government should seek to address that to help to support our overall cash infrastructure. It is not right that businesses should have to pay those fees. While the provisions of the Financial Services and Markets Bill, which grants new powers to the Financial Conduct Authority over the UK’s largest banks and building societies to ensure that cash withdrawal and deposit facilities are available in communities across the country, were welcome, as many people have said in this debate, we need more detail. We need to know how that will work in practice. Again, I am hoping that the Minister will tell us more about that when he responds.

However, it is and has been clear for a long, long time—it was made even clearer as we tried to get back to normal after the pandemic—for a range of reasons that have been well rehearsed today and previously that consumers want and need the choice to pay for goods and services in cash. Consumers must not be forced down a cashless road which they do not want or are simply unable to go down. The Government should uphold that right and protect our cash infrastructure for all the sound reasons debated today. They should enshrine that right in legislation, which is becoming increasingly necessary.

Fundamental to all this is protecting free access to cash in all our communities. Financial inclusion matters, and the Government have a moral duty to uphold that in principle as well as in practice.

[Hannah Bardell (in the Chair)]

I call the Opposition spokesperson.

17:42

[Tulip Siddiq (Hampstead and Kilburn) (Lab)]

It is a pleasure to serve under your chairship, Ms Bardell. I thank the hon. Member for Linlithgow and East Falkirk (Martyn Day) for bringing this important and timely debate to the House—I do not think it is necessary to be of a certain age to appreciate how important it is. Last year alone, there was a net loss of 797 banks and financial services shops providing cash and other services, while the latest Bank of England data, from July 2022, found that 35% of people have encountered a shop that does not accept cash. That should concern us all. I have had lots of representation from constituents in Hampstead and Kilburn who have found shops that will not accept cash, which has proven to be a real problem, as we have heard from Members across the House today. According to a recent report from the Royal Society of Arts, 10 million people depend on cash, and the pandemic, which saw an acceleration in the digitisation of payment services, has made it increasingly difficult for many to pay for the goods and services they need.

We know that a massive 3.8 million people in financial difficulty and 15 million people in total use cash for budgeting purposes. The need to protect cash services is only growing in importance, with data collected by the Post Office showing that the use of cash has risen in recent months. As the cost of living crisis deepens, the poorest in society are increasingly turning to cash, as has been reiterated many times in this debate, to manage their budgets on a week-by-week basis, and often day by day.

Of course, Labour welcomes the fact that the Financial Services and Markets Bill, on which the Minister and I both worked, and which is currently in the other place, will finally introduce protections for access to cash. However, we are worried that the Bill has some serious gaps: it fails to even mention cash acceptance, makes no commitment to protect free access to cash—something that Labour is concerned about—and does nothing to protect essential face-to-face banking services, on which the most vulnerable in our society depend for financial advice and support.

According to data collected by the consumer group Which?, there has been a notable decline in the provision of free-to-use ATMs in recent years. In January 2023, there were 12,000 fewer free-to-use ATMs in the UK than in August 2018—a huge decrease of nearly 24%. Does the Minister agree that with the poorest in society increasingly reliant on cash, forcing them to pay for access in the midst of the worst cost of living crisis on record risks further deepening financial exclusion in this country? Will he take action to address the problem? Which? has warned that if the Government do not make clear that their Bill will protect free cash withdrawals and deposits for consumers,

“the entire objective of…the Bill will be undermined.”

Cash acceptance is fundamental to securing the future of cash. There is little point in the most vulnerable having access to cash if they have nowhere to spend it. That is why the Labour party tabled an amendment to the Bill when it was in the Commons, which would have placed a duty on the FCA to collect data on cash acceptance. My colleagues in the House of Lords have been pushing the Government to empower the FCA to monitor and report on levels of cash acceptance across the UK. In his response, the Minister will likely say that we have to wait for the Government’s access to cash policy statement. If so, can he confirm when the statement will be published? Does he also agree that if his Government are committed to protecting the future of cash, there is no reason not to make protections for free access and an FCA remit on cash acceptance explicit in the Bill?

I want to turn briefly to the important and connected issue of protecting face-to-face banking services, which has been mentioned a few times in this debate. Again, analysis by Which? found that over half of the UK’s bank branches have closed since 2015. Additionally, at least 263 branches are expected to close by the end of the year. That will cut off countless people from essential services—I know that from listening to constituents in Hampstead and Kilburn.

Age UK has called for the Financial Services and Markets Bill to be amended to protect the in-person services that older people rely on, such as opening new accounts or applying for a loan, to ensure that banking services can meet their needs. It is not only older people who will struggle without support. Natalie Ceeney does amazing work and has already been mentioned. As chair of UK Finance’s Cash Action Group, she warned in evidence to the Public Bill Committee that there is significant overlap between the people who rely on access to cash—around 10 million UK adults—and those who need face-to-face support. She said,

“every time I meet a community, the debate goes very quickly from cash to banking. It all merges. The reason is we are talking about the same population.”––[Official Report, Financial Markets and Services Public Bill Committee, 19 October 2022; c. 49, Q98.]

She is completely right. It is the most vulnerable, people from deprived socioeconomic backgrounds and the older parts of society who rely on the extra face-to-face help, such as making or receiving payments or dealing with a standing order. Those are the people who will be left behind if the banking question is left unaddressed.

We also should not forget those without the digital skills needed to bank online, people in rural areas with poor internet connections, and the growing number of people who are simply unable to afford to pay for data or wi-fi as the cost of living crisis deepens. That is why I tabled amendments to the Bill that would give the FCA the powers it needs to protect essential in-person banking services. The Government did not vote for my proposal, but it is not too late for the Government to support the amendments in the Lords.

To be clear, we are not calling for banks to be prevented from closing branches that are no longer needed—far from it. Access to face-to-face services could be delivered through a shared banking hub or other models of community provision. We recognise that it is inevitable that payment and banking systems will continue to innovate. That is a good thing—online banking is a far more convenient way for people to manage their finances—but we have to ensure that the digital revolution that we are talking about does not further deepen financial exclusion in this country, and that will require protecting face-to-face services and putting in place a proper strategy for digital inclusion.

Banking hubs or other models of community provision will have to be part of the solution. Those spaces have the potential to tackle digital exclusion through their dedicated staff who can teach people how to bank online and provide internet access for those without it. However, only four banking hubs have been delivered, out of the underwhelming 38 promised. To ensure that no one is left behind, these services need to be protected in legislation.

If the Government are serious about securing the future of cash, they must listen to all the concerns raised both today and by many of their own Back Benchers during the Financial Services and Markets Bill debate. They must empower the FCA to monitor cash acceptance and protect free access to cash. I hope the Minister will be able to commit to that today, listen to the concerns voiced in this debate, and take heart from the fact that there are so many people in the Gallery who obviously care passionately about this important issue.

17:50

[The Economic Secretary to the Treasury (Andrew Griffith)]

It is a pleasure to serve under your chairmanship, Ms Bardell, and it is always a pleasure to follow the hon. Member for Hampstead and Kilburn (Tulip Siddiq). I commend the hon. Member for Linlithgow and East Falkirk (Martyn Day) on securing this debate. I also commend the many members of the public who signed the e-petitions to rightly raise this important issue here, in the home of democracy, where it falls to us to resolve these matters. I know that the hon. Member for Linlithgow and East Falkirk has a long-standing issue with cash access and acceptance. We have had a wide-ranging debate, and I will try to address as many of the points raised by colleagues as possible. As the hon. Member said right at the beginning, this is a complex issue.

It falls to me to inject some balance into the debate. Cash has many virtues, and I assure Members that the Government recognise the role played by cash when other technologies fail and the real concerns regarding privacy and the potential, in a cashless society, for states to control freedom of speech. One of the first issues that I dealt with as Minister was the withdrawal of certain account facilities from the Free Speech Union. However, we should also recognise that despite its many virtues, cash is expensive to handle, can be subject to theft and can make businesses—particularly small businesses in the rural areas we have heard a lot from today—feel vulnerable and potentially targeted by criminals. The physicality of cash means that it has a higher carbon footprint, and it can be less convenient when someone is fumbling around and does not quite have the right change.

[Drew Hendry]

I am grateful to the Minister for giving way. He makes a fair point about vulnerability, with people feeling perhaps a bit unsafe with cash, but does he not agree that part of the reason why businesses are now feeling a bit more vulnerable with cash is because of the bank closures that have been allowed to go ahead? Now, they have to travel greater distances to deposit cash. Is the Minister willing to come up with a solution for businesses so that they can continue to have cash and use it safely?

[Andrew Griffith]

The hon. Member makes a good point. He talked a lot about his rural constituency, which is a little larger than mine but also very rural, and brought that to life by talking about the Grantown-on-Spey annual show. He is quite right, but if he will bear with me, I will talk about the solution to precisely the problem he raises. This is not just an issue of access to cash, or the use of cash, but, as my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard) said, about how we can ensure that businesses and retailers have access to facilities to deposit cash. I will come on to discuss the legislative action that I assure the House we are taking on precisely that point.

I have followed this debate extremely closely so, to be clear, let me say for the Government that there is no plan, no drive and no conspiracy to eliminate cash. This Government continue to support the ability of citizens to use cash as an alternative to digital payments, and I am proud that the Government are taking legislative steps to support the use of cash well into the foreseeable future. It is this Government, for the first time, who are taking those legislative steps.

A number of Members have talked about the fact that the way people make payments is changing. We have seen that over time. Analogies have been drawn with the transition from analogue to digital television and with decimalisation—I do not remember that, but the Father of the House was not shy about his recall of going through that transition. Digital payments play an important role in people’s lives. We see that from our own experience in the Tea Room of this House and also from the data. The industry body UK Finance found that in 2021 non-cash transactions accounted for 85% of UK payments, up from 45% a decade earlier and 60% in 2016. That is a really fast rate of change. I do not say that to unsettle anybody in respect of the continued attachment to cash, but it does mean that we in this place have to contemplate very rapid changes in society and technology.

Cash remains important for millions of people across the UK. We are an ageing society, and many Members have talked about the vulnerable groups—my hon. Friend the Member for North Norfolk (Duncan Baker) thought it was about 10 million people—who make up a significant part of society. We should rightly have great recourse to work out how we can protect them, whether that is through support with the convenience of managing their finances or with other vulnerabilities. Members made some great points about the importance of managing finances through the use of cash.

This is about striking a balance in society, which we have sought to do through the Financial Services and Markets Bill. I want to offer reassurance and protection for those who seek it. I am conscious that not everyone will be as familiar with the clause-by-clause detail of the Bill as the hon. Member for Hampstead and Kilburn and I am. That Bill, which has made its passage through the House, will mean that for the first time, not just since the hon. Member for Tiverton and Honiton (Richard Foord) scrabbled for coins himself but since ancient Celts first manufactured coins on this great isle of ours, there will be statutory protection of access to cash and the ability to deposit cash. It is important that we get that Bill on the statute book in this time of rapid change. It will cover access to deposit facilities on a similar basis as access to cash withdrawal.

My hon. Friend the Member for North Norfolk reminded us that this is the domain not just of the banks and ATMs, but also the extensive post office network. I know that postmasters—notwithstanding the loss to the profession of my hon. Friend—do a fantastic job in our rural communities. We should support them, and we do want to see that support. The provision of cash and banking services can be one way in which we underwrite their continued service to the community.

[Patricia Gibson]

Will the Minister explain what my constituents in Kilwinning will do when the town centre has lost its bank? It will be a population of 16,000 with no bank and no post office. What advice would he give to the businesses and residents of Kilwinning?

[Andrew Griffith]

I advise the hon. Lady to explore with Link the provision of potential alternative cash machines and to explore with the Access to Cash Action Group the potential for a banking hub. A number of Members have procured banking hubs for their constituencies. The hon. Member for Tiverton and Honiton has a banking hub and has spoken up about that issue.

[Richard Foord]

On banking hubs, the Axminster chamber of commerce has been trying to get through to the Access to Cash Action Group to find out when it will get its community banking hub, but has been unable to get through, so will the Minister comment a little further on Access to Cash Action Group communications?

[Andrew Griffith]

I will happily entertain treatises from the hon. Gentleman if he would like me to follow that up. There are 70 cash hubs on their way. Members throughout the House, including a number of his colleagues in Devon, have procured them. It sometimes takes a little while for them to appear because of planning issues or the need to get the right power arrangements and safe access in place for constituents. If the hon. Gentleman will bear with the banking hubs and work with them, he will find that there are solutions out there.

My hon. Friend the Member for Blackpool North and Cleveleys talked about the no-purchase cashback facility, which turns every single convenience store and retailer in the country into a potential cash-dispensing hub.

[Patricia Gibson]

Will the Minister give way?

[Andrew Griffith]

I will give way one final time before the hon. Lady combusts.

[Patricia Gibson]

I gently say to the Minister that local corner shops do not want to be cash dispensers. There are all sorts of security issues relating to no-purchase cashback.

[Andrew Griffith]

The hon. Lady makes an important point, although perhaps not the one she intended, about some of the challenges of cash in a rural location.

[Paul Maynard]

Will the Minister give way?

[Andrew Griffith]

I will because my hon. Friend made some strong points earlier.

[Paul Maynard]

Does the Minister think it is important to recognise that cashback without purchase is a voluntary decision by the retailer? Retailers are not obliged to embark upon it if they do not wish to; it is a commercial enterprise.

[Andrew Griffith]

My hon. Friend is absolutely right. That is one of the principles in how we have approached the issue. Although we are taking powers in the Financial Services and Markets Bill to mandate access to cash and cash machines, we must remember that 95% of the population are within 2 km of a free cash machine.

[Drew Hendry]

Will the Minister give way?

[Andrew Griffith]

I will make some progress, because I have been relatively generous in taking interventions.

Cash acceptance is an emerging issue that we contemplate for the future, but it is not a prevalent issue today, other than when people conflate it with the loss of bank branches. That is understandable, but we are seeing very rapid changes in society. I am clear that it is not the Government’s position—I think this is also true of the Labour party and, probably, the Scottish Executive—that we will mandate cash acceptance on retailers or public services. If anyone has done battle with a local authority parking machine, or the Mayor of London’s cashless transport system, they will know that it is often public services that do not take cash, while 98% of retailers are happy to continue to take cash indefinitely, particularly if the facilities can be made available. Public services are often the first to migrate to a cashless economy.

[Drew Hendry]

I am grateful to the Minister for giving way one final time. I would love him to come to the highlands and take a 2 km walk around parts of my constituency and point out where the cash machines are. We always try to find things to agree on in Westminster Hall, so I agree with the Minister’s earlier comment that his Government have “no plan and no drive”. If the 70 hubs are to be spread across the UK, will the Minister tell us when my constituents in villages and towns will see hubs arrive near them?

[Andrew Griffith]

It would not be for me to promise any Member a hub; it is for them to make the case. I observe that many other Members have been able to make that case successfully, and the hon. Gentleman has proven very persuasive today, so I wish him well in procuring a hub for his constituency. I will now make some progress, in the interests of time.

It is important to have the flexibility to respond to changes in the market. What we are doing in the Financial Services and Markets Bill should not be underestimated. As I said, for the first time in law we are protecting the ability of people and businesses—businesses are in scope as well—to deposit as well as accept banknotes and coins. The Government’s position is that it is much better that we will the means to enable businesses to continue to take cash, rather than simply will the ends without addressing any of the means, as some would do.

Apart from the Bill, the Government work with the financial services regulators to monitor and access trends related to cash. The hon. Member for Hampstead and Kilburn asked if the work to track the accessibility of cash will be done; it will. As part of that, the Financial Conduct Authority has surveyed retailers and found that even of small businesses—this is not an issue for big businesses, by and large—98% would never turn away a customer if they needed to pay by cash. I extend an invitation to any Member to share with me, the Treasury and the FCA any specific examples of retailers declining cash. I am conscious of a number of examples in the public sector—local authority car parks, and even municipal transport run by executive bodies—but I am not aware of a high level of prevalence among retailers.

We must also recognise that technology is providing solutions. Big Issue salespeople are now equipped with tap readers, and report 30% higher donations being given when people tap rather than use cash. That was my experience when I joined the Royal British Legion to collect for poppy sales. There are a number of other examples of how technology can try to solve the gap, notwithstanding the fact that we will continue to ensure that we protect access to cash. We have talked about the good work of the cash access group and of Link, and it should be incumbent on any Government to continue to ensure that we put those important solutions in place.

Once we have passed the Financial Services and Markets Bill, we will provide the policy statement about the importance of access to cash, the prevalence of that across the UK and what thresholds will be appropriate for Government to take different decisions or possibly to look at mandating things. My hon. Friend the Member for Blackpool North and Cleveleys talked about wholesale cash distribution, and the back end is important if we are to continue to ensure that businesses have the access to cash that they need. It is important that the wholesale cash infrastructure in the UK works and, in the Bill, again for the first time, we will take powers to regulate that, mindful that over time we expect to see the volume of cash decrease.

I have set out what the Government will do: the important step of taking powers in legislation that will soon be on the statute book, giving the FCA the ability for the first time to regulate access to cash. I have given our commitment to continue to monitor the situation, accepting that we all have constituents we are concerned about and that we are seeing fast-moving changes in society. I also give Members the reassurance that the Government’s desire or policy is not to eliminate cash. We have no such objective, but quite the opposite: the Government recognise the importance of the utility of cash in the system and will do whatever we can to ensure, practically, that our constituents continue to have the ability to use cash, as has always been their historical right.

18:08

[Martyn Day]

On behalf of the Petitions Committee, I extend my thanks to all Members who came along today to make speeches or interventions. We have had a reasonable and well-informed debate, which has very much summed up the changing nature of the relationship with cash in our society. This issue goes to the heart of choice, financial inclusion, budgeting and privacy, all of which show how vital the access to and use of cash are for many of our constituents, in particular the most vulnerable. I remain of the view that it would be perfectly reasonable to have a legal requirement for a minimum level of acceptance of cash by retailers for in-person transactions.

Question put and agreed to.

Resolved,

That this House has considered e-petitions 605030 and 622284, relating to the acceptance of cash.

18:09

Sitting adjourned.