Banks: Cheques

Lord Lawson of Blaby Excerpts

Monday 6th June 2011 Lords Chamber

[Lord Sassoon]

My Lords, the facts of the situation are that the number of cheques being used has declined dramatically in recent years. There were approximately 4 billion cheques in use in 1990 and by 2009 that had reduced to approximately 1 billion—and it is expected to reduce very significantly again over the next few years. The fact is that the system has declined in use and it will require a very expensive rewrite of the clearing systems if it is to continue in its present form. The last thing that the Government or users of cheques would want to see is charges being passed on to users of cheques if that was a result of banks having to put in place an expensive new system. So one has to be pragmatic about this and give them the time, which they are taking, to come up with an alternative, including a paper-based alternative, that is acceptable to small businesses, charities and other individuals.

[Lord Lawson of Blaby]

My Lords, I am sure the whole House will have welcomed the Answer that the Minister gave to my noble friend’s initial Question, but will he go a little bit further? Will he undertake to use the power of the Government’s holdings in a number of banks—and the way that those banks are privatised, as I hope they will be—to encourage competition in retail banking in this country and, as part of that competition, to try to encourage at least one of the new entrants to continue to provide a checking service?

[Lord Sassoon]

My Lords, I am happy to confirm to my noble friend that competition is key to so much of making our banking system work better than it has in some respects in the recent past. That is precisely why the Independent Commission on Banking was given competition as the heart of its remit. Whether in relation to alternative payment mechanisms or to so many other things in banking, I completely agree that competition has to be at the heart of it. Again, when it comes to the Government’s shareholdings in the banks, the independent commission has made some provisional findings which very much touch on the banks that the Government control.