Financial Exclusion

Debate between Baroness Tyler of Enfield and Lord Bates

Wednesday 4th July 2018 Lords Chamber

[Baroness Tyler of Enfield]

To ask Her Majesty’s Government what assessment they have made of the impact on financial exclusion of (1) bank branch closures, and (2) moves to restrict the use of cash as a means of payment.

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, the Government are committed to financial inclusion. Along with the FCA, we are taking steps to ensure that everyone has access to useful and affordable financial services, including face-to-face banking services and free access to cash. The Government recognise that banking and ways of making payments are changing rapidly, but we do not make assessments of branch closures or payment methods.

[Baroness Tyler of Enfield (LD)]

My Lords, I thank the Minister for his response. I am sure that he is aware that since 2015, some 2,900 bank branches have closed in the UK, and that only last year, the banks removed some 2,000 ATM machines, despite the fact that cash remains a very popular choice for many consumers. Does he agree that the increasing lack of face-to-face banking services, particularly in rural areas, not only threatens the financial exclusion of particularly vulnerable groups—I am thinking in particular of older people and those with limited mobility—but risks disrupting the entire cash economy in local communities, especially shops and small businesses? Given that, what concrete steps do the Government intend to take to ensure that physical banking facilities and cash payments remain available to all who want and need them?

[Lord Bates]

Perhaps I may first pay tribute to the noble Baroness for her work as chair of the ad hoc Financial Exclusion Committee of this House, which provided important recommendations which the Government are steadily working to implement. The issue she raises is an important one. The way we pay for things is changing, as is how we use banks. Cash used to account for 60% of transactions. That has reduced to 40% of transactions and is predicted to go down to 20% by 2026. As I say, the way that banking is carried out is changing. However, we recognise that there is a particular issue for vulnerable people and vulnerable communities. For that reason, in January 2017 we launched the banking framework agreement between the high street banks and post offices. Some 98.7% of people live within three miles of a post office, even those in rural communities. We have introduced the Payment Systems Regulator, which monitors ATM machines to ensure that they are maintained as a source of free access to large parts of the community. We have a great deal to keep under review, but this is an important issue that the noble Baroness and the Government are very aware of.