Financial Services and Markets Bill

Lord Blackwell Excerpts

Committee stage
Tuesday 7th March 2023 Grand Committee

[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise briefly to offer the Green group’s support for the general sense of direction here on both the provision of cash and the review of resilience. It is not an accident or a convenience that those two things have been brought together, as the noble Baroness, Lady Twycross, just made clear.

We come back to a fundamental question: what is the financial sector for? If it is there to serve the real economy and real lives, it must meet people’s needs in both good and bad times. That applies at the individual level and the national one. The system must be able to stand up to not just financial shocks but the kinds of shocks that we know about in this age of the climate emergency, the nature crises and the threat of pandemics.

As the noble Baroness, Lady Twycross, was speaking, I was reflecting on being in Lancaster in 2016 about a week after Storm Desmond. I saw a city in shock. I saw what happened when they lost electricity for a day and a half or so. Digitisation and the disappearance of cash have come a long way since 2016 but people were absolutely desperate. They were not able to meet their basic needs, which surely must be part of the financial sector’s responsibility.

I broadly agree with the general tenor of everything that has been said but I want to make one strong point of disagreement with what most people have said. There is an idea that this is a transitional phase and that, once we have gone past the generation where people have not had digital in the prime of their life, the phase will end and everybody will then be able to use digital. I was going to tell exactly the same story as the noble Lord, Lord Hunt of Kings Heath, did. I will not repeat it but I will draw a further lesson from it. It is a story about a 91 year-old lady. She may have been able to cope with the telephone system and the buttons at 70 or even 80. I know someone in this situation; he is an older gentleman who finds it harder and harder each year to navigate the complications of digital.

None of us in this Room knows what our capabilities will be in 10, 20 or 30 years’ time. Just because you can do something now, you cannot guarantee that you will be able to do it in 20 years’ time. In terms of national resilience and meeting everybody’s needs, we genuinely have to make sure that, long into the future—potentially for ever if we look at that kind of scale—there will always be somewhere where you can walk up to a person and say, “This is my problem. I need you to help me sort it out”. That person needs to have the resources, knowledge, skills and power to sort out that situation for you because, ultimately, only having a person who looks you in the eye, sees the problem and deals with it will really meet everybody’s needs.

I have one final thought. There is sometimes a feeling that we have to have maximum efficiency and meet the needs of the majority, and tough luck for the rest. If we have a system that meets the needs of the most vulnerable people in our society—this is often said about public transport systems but it applies far more broadly—we have a system that is good for everybody in our society.

[Lord Blackwell (Con)]

My Lords, since I have not spoken in Committee so far, I should remind noble Lords of my interest as a former chairman of a bank and a current shareholder. However, I am not going to defend the service levels of banks, which I recognise need improvement.

On these amendments, I point out that, while I understand the rationale behind the desire to maintain access to cash, everything has a cost. We need to consider the cost of what is proposed as well as the benefit. My noble friend Lady Noakes is right that the shift towards digital and away from cash has snowballed over the past few years. It is not just customers who prefer not having to carry cash around. Many small businesses, clubs, associations and societies find it much easier now to have a low-cost terminal with which they can process membership dues, fees or even small transactions. It makes the accounting so much easier and avoids having to deal with collecting and disbursing large amounts of cash.

The move towards digital is happening across the whole economy. People talk about keeping branches open but there are many branches where only a handful of people come in during the week. When you think about the cost of maintaining the building infrastructure, as well as the staffing, security and systems, the cost per transaction becomes astronomical. Those costs have to be borne by somebody; they are borne by the other bank customers in higher fees, charges and interest rates. Nothing comes without a cost so we have to consider what the appropriate cost-benefit answer is.

As many noble Lords have said, clearly there are people who find it difficult to use digital technology and need access to cash, but there are other ways of—

[The Deputy Chairman of Committees (Baroness McIntosh of Hudnall) (Lab)]

My Lords, I apologise for interrupting the noble Lord but I am afraid that there is another Division in the Chamber. The Committee will adjourn for 10 minutes and we will resume with the noble Lord, Lord Blackwell, when the moment comes.

--- Later in debate ---

[Lord Blackwell (Con)]

I was making the point that maintaining open bank branches as a solution to this problem is potentially a very expensive way of solving the problem and that the cost would be borne by other bank customers. We need to accept that there may be better ways of serving the genuine needs of those who cannot cope well with the digital economy and may need access to cash. Clearly there are potential solutions using other shops or post offices in localities to provide access to cash where that can be done, but another solution that many banks are adopting is the development of mobile banking branches. A mobile branch that visits a village once week may not be as good as a permanently open branch but at least it gives access to cash and the costs become much more affordable and socially acceptable.

We need to be cautious about assuming that maintaining the structure of the past is the right way to meet the genuine needs of those who have difficulties. We need to avoid fossilising a structure that is no longer fit for purpose. If this debate had been happening 20 years ago about telecoms, we might have wanted a law that said there had to be a telephone box in every high street. If we had had this debate 100 years ago, we would be requiring there to be a horse trough in every high street. There have to be other ways in which we can meet the genuine needs of those who have special needs without the blanket approach of insisting that highly costly and inappropriate branches remain open in places where there is no demand for them.