Spring Statement

Simon Hoare Excerpts

Tuesday 13th March 2018 Commons Chamber

[John McDonnell (Hayes and Harlington) (Lab)]

I thank the Chancellor for providing me with early sight of his statement, but I have to say that his complacency today is astounding. We face in every public service a crisis on a scale that we have never seen before. Has he not listened to the doctors, nurses, teachers, police officers, carers and even his own councillors? They are telling him that they cannot wait for the next Budget. They are telling him to act now. For eight years they have been ignored by this Government, and today they have been ignored again.

The Chancellor has proclaimed today that there is light at the end of the tunnel. This shows just how cut off from the real world he is. Last year, growth in our economy was among the lowest in the G7—the slowest since 2012. The OBR has just predicted that we will scrape along the bottom for future years. Wages are lower now, in real terms, than they were in 2010—and they are still falling. According to the Resolution Foundation, the changes to benefits due to come in next month will leave 11 million families worse off—and, as always, the harshest cuts fall on disabled people.

The gap in productivity between this country and the rest of the G7 is almost the widest for a generation. UK industry is 20% to 30% less productive than in other major economies—and why? In part, the reason is that investment by the Government, in real terms, is nearly £18 billion below its 2010 level. This is a Government who cut research and development funding by £1 billion in real terms. Business investment stagnated in the last quarter of 2017. Despite all the promises, the Government continue to fail to address the regional imbalances in investment. London will, again, receive five times more transport investment than Yorkshire and Humberside and the north.

How dare this Government speak on climate change? This is a Government who singlehandedly destroyed the solar industry, with 12,000 jobs lost as a result of subsidy cuts. The Chancellor talks about the fourth industrial revolution, but Britain has the lowest rate of industrial robot use in the OECD. The Government have put £75 million into their artificial intelligence programme—less than a tenth of what the US is spending.

[Simon Hoare (North Dorset) (Con)]

Talking of artificial intelligence!

[John McDonnell]

The Tory bully boys can shout all they want. They can make—[Interruption.]

Future of ATMs

Simon Hoare Excerpts

Thursday 1st March 2018 Commons Chamber

[Simon Hoare (North Dorset) (Con)]

I am delighted to rise to speak to an issue that I am tempted to say affects all constituencies throughout the country: the future of automated teller machines and their provision to our constituents.

By way of introduction, I should say that this debate was triggered by LINK—the body that co-ordinates most of the ATM network and sets the rules for ATM providers —which has proposed and confirmed changes to its interchange fees, following a rather flimsy four-week internal consultation with its bank and ATM-provider members. The core of the proposal is that LINK will reduce its interchange fees by 20% over a four-year period, from 25p to 20p per transaction. The first 5% reduction—from 25p to 23.75p—is set to take place on 1 July this year. Interchange fees will then fall by another 5% on 1 January next year, with a further 5% reduction in fees expected again in January 2020 and again in 2021.

Concerns have been expressed by Members from all parties and by organisations as diverse as Which? and the Federation of Small Businesses. More importantly, because they are key to the network, ATM machine providers—companies such as Cardtronics—have made significant representations to us. This issue is potentially so serious that the Treasury Committee has been hearing evidence on it. In a statement on 31 January, the Chair of that Committee, my right hon. Friend the Member for Loughborough (Nicky Morgan), said:

“Any significant reduction in free access to cash would be an unacceptable outcome. This will be the first major test for the Payment Systems Regulator. They must ensure that customers do not lose out as a result of LINK’s proposals.”

I shall return to the PSR in a moment or two.

LINK’s proposal comes against the backdrop of significant bank closures, an issue that is often seen through the prism of a rural telescope, but which also affects larger market towns, suburban areas and large city centres. The cri de coeur usually goes up from the banks, as they reduce their estate, of the need to use digital banking. That is an easy solution for very many people and indeed it is very popular—I use it myself—but in rural areas where broadband speed is not as fast as it needs to be and mobile telephone signals might not be strong enough to enable people to log on to banking services, our banks have been very much at the heart of communities, socially and commercially. With their closures, access to cash through ATMs becomes even more pivotal. There was the flimsy consultation by LINK of its members, who clearly have the whip hand, but there was precious little, if any, identifiable engagement with or consultation of consumers in our communities. I am happy to stand corrected, but I believe nothing came through to Members of Parliament suggesting what LINK might be doing.

Reliance on ATMs grows. I know that the Treasury and my hon. Friend the Minister, who I welcome to his place and with whom I have discussed this issue, believe that the use of cash is decreasing. I am sure that he will give us the up-to-date statistics on that, as there is a trend in that direction. The death of cash has long been predicted, but has never actually come about. It has declined by about 34% in the past decade or so, but there is still a need for cash. I am tempted to say that, disproportionately, the need is among our older people—65% of my constituents in North Dorset are over the age of 70—and those on low or fixed incomes who find managing their weekly budgets much easier via cash transactions than merely by contactless payments or by using some other form of card.

Access to the cash that ATMs dispense clearly provides for a social and financial inclusion agenda. You do not have to take my word for it, Madam Deputy Speaker. It is amazing when people turn up whom one vaguely knew at university. A friend of mine from university days—yes, I can remember that far back—happens to be the chief cashier at the Bank of England. Victoria Cleland is quoted in The Guardian—I was given this quote, as The Guardian is not the newspaper of choice necessarily in the Hoare household—saying that the predictions of the death of cash are premature and that

“cash is definitely here to stay.”

When the chief cashier herself says

“I personally don’t really use contactless”,

that perhaps says something about the over-reliance of some of our service providers on technology, as they neglect the fact that not all our constituents, including the chief cashier of the Bank of England, feel terribly comfortable using it.

I am very grateful for the submissions that I have received from the Association of Convenience Stores. It does not support the LINK decision. It represents 33,500 convenience stores, and in rural constituencies such as mine where the out-of-town shopping mall and the large superstore is not common, such stores provide not only a retail function but will often host an ATM as well.

[Ged Killen (Rutherglen and Hamilton West) (Lab/Co-op)]

I congratulate the hon. Gentleman on securing this important debate. I know that the turnout today reflects not the importance of the debate, but the weather. Does he share my concerns about the comments of the chief executive of LINK who went on record before Christmas in the Daily Telegraph, saying that cash machines will largely disappear, and completely disappear in rural areas? Is that not an odd comment from the chief executive of LINK, which is charged with a public service remit to protect cash?

[Simon Hoare]

It is not only odd; it is both perverse and totally contrary to the expectations of the regulator and the duties that LINK ascribes to itself. I will come in a moment to the role of the Government, particularly the Treasury, in this issue. There is a real danger of constituents being caught in a pincer movement between competing business and commercial interests. There are duties or expectations of the regulator, but it has no real teeth to deliver. If the hon. Gentleman bears with me, I hope to come to that in a moment or two.

The Association of Convenience Stores does not support LINK’s decision. It has raised a number of issues, including bank closures, saying that

“the withdrawal of ATMs has increased the role that ATM providers and convenience stores play in providing consumers with access to cash.”

Of course, ATMs hosted in convenience stores and other retail outlets also provide benefits to the high street and other shopping parades by providing access to cash to facilitate consumer spending. Wanting, quite properly, local money to be spent locally is one of the major arguments deployed by the Federation of Small Businesses with regard to its concerns.

LINK has suggested that retailers could fill the gaps in the ATM network through cashback services. Again, in theory it is probably right. However, the practice of a one or two-man shop—or, indeed, a one or two-woman shop—in an isolated rural setting holding enough cash not just to deal with transactions, but to hand money to people on a cashback basis totally neglects the impact of the insurance premiums that those retailers would have to incur, often in marginal retail businesses. That is not to mention the security concerns of staff working in those shops at a time when rural policing is not of a high visible profile. It seems a rather dangerous premise on which to base a strategy.

I am very grateful for the support of 41 colleagues from across the country and across this House who wrote to Hannah Nixon, the managing director of the Payment Systems Regulator, who has been both punctilious and courteous in her dealings with me. We outlined our concerns in our letter of 29 January, highlighting the potential disproportionate impact on rural areas, although we did not limit our concerns only to rural areas. Again, I thank Hannah Nixon for her promptness, as she replied on 31 January. Her response gave some comfort, but not enough.

I urge the Treasury Bench to think about these things. I appreciate and understand that we want a light touch when it comes to regulation, but a light touch does not mean contactless. A light touch does not mean that we just pull away and let things evolve as is seen fit. Indeed, a number of concerns have been expressed, particularly by the providers of the machines, in relation to what happened across the pond in the United States. LINK here has predicated its decision to reduce the interchange fee primarily—or certainly in great part—because of changes in the market by other providers, such as Visa. We always used to say that when the United States coughs, 20 years later we will probably get the cold. The race to the bottom in reducing overheads through the interchange fee in the United States has led to a significant reduction in the provision of ATMs and in access to cash, often for the poorest American citizens. Let us learn from that example. Let us be alert to it.

I return to the letter of 31 January from Ms Nixon. Two words cause me some concern. She tells me and the other MPs who signed the letter that the Payment Systems Regulator has made

“clear to LINK what we expect”

and that,

“Promoting the interests of users is one of our statutory objectives”.

I am tempted to say that promoting is good, but protecting—looking out for—would be better; and demanding and ensuring, rather than expecting, would give us more cause for comfort.

Sturminster Newton is a very pretty market town in my constituency that saw its last bank close last year. That has been sad. It has had a huge impact on residents and on businesses within the town. My very good friends Andrew Donaldson and Chris Spackman—excellent town councillors and diligent local public servants—have been trying to fill the gap that this has created. The town does have a couple of ATMs, but their capacity is small in terms of the volume of cash they can hold, and one of them has very poor reliability. They were just on the cusp, with Cardtronics, of delivering a new ATM for the town. We should bear it in mind that when Lloyds had its ATM, it was dispensing £180,000 per week, rising to about £200,000 when big events were going on, such as the annual cheese festival.

Councillor Spackman contacted Cardtronics and was put in touch with its EU corporate director. Very helpfully, it was going to come and deliver a new ATM, but that was pulled, citing

“recent proposed reductions to the Link transaction fees”

which

“had reduced the viability of our ATM making it uneconomic for them”—

that is, Cardtronics. He said that he

“doubted any other operator would be interested in installing an ATM in Sturminster Newton”

and that as a result

“there would be ‘cash deserts’ in rural areas”.

Sturminster Newton is quite a small town of about 4,500 people. However, the rural catchment—I declare an interest as it includes the town that my wife and I look to for service provision—has about 18,000 people. Therefore, 18,000 people in a sparsely populated rural area now have real difficulty in getting hold of cash.

I have tabled a number of parliamentary questions, and I am grateful for the answers that my hon. Friend the Minister has given. I drew particular comfort from a letter I received on 7 February from my hon. Friend the Member for Salisbury (John Glen) in his capacity as Economic Secretary to the Treasury. He says in the third paragraph:

“I know you have an interest in this issue. The Government has always aligned with MPs on the question of continued widespread free access to cash, and made it clear to LINK that while sustainability of the ATM network is important, it must not put this access at risk.”

So the Treasury Committee, consumer organisations such as Which? and the Association of Convenience Stores, very many Members of Parliament, Cardtronics as a representative of the ATM providers, and my hon. Friend the Economic Secretary are drawing together a coalition of interest and concern to ensure access to banking and access to cash through the ATM network. I have sat and listened to, and read, submissions from LINK, Cardtronics, and others. Earlier this week, there was a very useful event upstairs in one of the Committee Rooms where both organisations were able to make presentations, and information has been submitted by the regulator.

I ask the Government to accept this point: while the use of cash is on the decline, its death has been greatly exaggerated. Technology will not always fill the gap, and cash will always provide a very important mainstay in our economic and retail life. Against that backdrop, the regulator clearly has a remit, and LINK has an aspiration. The Minister represents Newark, a constituency that in its size and demographic is probably not that dissimilar from my own, and indeed from that of many other Members. I see that his Parliamentary Private Secretary is my hon. Friend the Member for North Cornwall (Scott Mann), who I have no doubt has similar issues in his constituency.

I encourage the Minister not to take a laid-back approach to this. We must hold people to account and ensure that the regulator has the confidence to be as muscular as possible. The current trend that the regulator and LINK seem to have of retrospective review and analysis of how these things have panned out is not good enough and is not giving comfort to me, as the Member of Parliament for North Dorset, to many colleagues across the House and to our constituents that we are looking out for their interests and seeking to preserve their access to a robust and reliable ATM network.

--- Later in debate ---

[Robert Jenrick]

The hon. Gentleman raises an important point, which I hope I will be able to answer over the course of my speech. One of the motivations for LINK and the industry’s actions is to reduce modestly the number of ATMs in those areas with the greatest density, including cities such as London, but their pledge to the Government and to consumers, which I will go on to talk about, is that that will not be to the detriment of those in rural areas, market towns or harder-to-serve areas, which are not exclusively rural but could be areas of greater deprivation, even in cities such as London. We have had a fairly strong promise from LINK and from the regulator that there will be no detriment to rural areas. I will come on in a moment to how that will be enforced in practice.

We all recognise that there is a decline in the use of cash, which is making it harder to maintain our current level of free access to cash. That is the challenge that the changes hope to address. I appreciate that we have to view the issue through the lens of bank branch closures, which affects my constituents and those of most Members across the House. The Government, the financial services industry and the regulator therefore have to act to ensure that the needs of the consumer continue to be met. My comments, on behalf of the Government, represent consumers, not the regulator or LINK. My hon. Friend the Member for North Dorset is absolutely right that we in this House represent the consumers, and their interests must be our primary concern.

Secondly, I wish to address exactly how we do that, which brings me to the particular role played to date by the Payment Systems Regulator and the role it will play in the future, if it lives up to the Government’s expectations. In November, LINK—the main payment scheme behind the UK’s ATM network—launched a consultation on reducing interchange fees by 20%. As I have said, that was designed to reduce the duplication of cash machines in city centres while protecting the more isolated machines. That is the organisation’s stated objective, to which we will hold it to account. At the time, the Government and many Members of this House were clear that any changes must not have a harmful impact on consumers. If machines are lost in cities, the impact should be generally imperceptible, and if they are lost in rural and harder-to-serve areas, they should be replaced, wherever possible.

[Simon Hoare]

I agree with my hon. Friend about the overprovision of ATMs in a city centre environment, but I just want to make sure that he is alert to the fact that ATM providers—the Cardtronics of this world—often use the moneys they secure from such machines to subsidise rural provision. In effect, they are cross-accounting. The opportunity to use that cross-subsidy spare fund will, in effect, disappear as a result of a diminution of ATMs in large cities. That is one of the big problems.

[Robert Jenrick]

My hon. Friend raises an important point to which the regulator must pay close attention, but it estimates that the impact of the changes will be modest, even in city centres with a heavy density of ATMs. The main operators of card machines—the companies he mentioned earlier—are generally financially successful. This industry has more than £1 billion of revenue a year, and its market caps are between £500 million and £1.5 billion. Generally speaking, these sizable businesses are in sound financial health. There is no reason to believe that the changes will alter that, although the regulator must bear that factor in mind.

The PSR, which the Government established to deal with such difficult issues, has taken the lead in examining the area. It has engaged with LINK and held a consultation. My hon. Friend raised concerns about the scope of that consultation, but the PSR believes that it has engaged with MPs, although perhaps not as much as it could have done. It has spoken to a number of different parties across the country—indeed, future consultations could learn lessons from the number of individuals and parties to whom it chose to reach out.

The PSR has come back with three requirements that LINK’s proposals must fulfil. First, there is a commitment by LINK to do “whatever it takes”—we must remember those words—to protect the broad geographical spread of free-to-use ATMs. Secondly, any cuts in the interchange must be incremental, and at just 5% in the first year. There will be a review after one year, so in July next year there will be a review before the next cut of 5% could, or would, be implemented. I have received assurances from LINK and the PSR that no further cuts will take place unless they are satisfied that there has been no significant material detriment to the rural and harder-to-serve areas. Thirdly, there will be a greater than ever focus on financial inclusion, and LINK will continue filling gaps in the network and protecting those ATMs in areas that are harder to serve.

LINK will maintain all free-to-use ATMs that are a kilometre or more from the next or nearest free-to-use ATM, including where a community loses ATM access because of a branch closure. LINK will increase the subsidy for ATMs in areas with poor cash access to keep free-to-use machines going. It will conduct an annual review not just in the first year but, if the changes continue, every year thereafter. That review will consider the impact of the interchange fee reduction on the provision of free-to-use ATMs as phased in over the four-year period, and take action as and when required.

LINK has promised to place a page on its website from 1 July that will have sufficient specificity for every Member of the House to look at their constituency. It will show every free ATM across the country, so MPs will be able to view availability in their part of the world. The website will highlight any areas where free ATM availability is in danger of being lost and state what action is being taken to tackle that. For example, my hon. Friend will be able to look up the ATM that we have heard about in his constituency and see whether it is in danger and what action is being taken to address that. That is important to ensure that MPs and people across the country—including those local councillors who were mentioned—can continue to monitor and ensure that LINK lives up to its promises.

Finally, the way that the PSR will police LINK’s commitments can, and should, be stringent. We set the PSR up in 2015 with a specific statutory objective to ensure that the interests of the users of payment systems—not those of the banks—are promoted, with robust powers to enforce that. We expect the PSR to step in and act if needed. I have spoken to the PSR and to LINK, and the PSR understands the importance that the Government place on free access to cash, and the strength of feeling in Parliament and the country. Both organisations have made an explicit commitment to do whatever it takes to maintain the network and provide an additional subsidy per ATM at whatever level is required, to ensure that any machine that is in danger of being lost is replaced by another within a reasonable distance.

In conclusion, I again thank my hon. Friend the Member for North Dorset for raising this important issue that affects my constituents and people across the country. I have been assured by LINK and the PSR that the motivation for these changes is to ensure that the proliferation of ATMs in urban areas is sustainable, and that we continue to have a free-to-use ATM network—an important issue for the whole country and one that sets it apart from many others—but not at the cost of harder-to-serve areas: the rural areas and the market towns. The promise made to me by LINK is that it will do whatever it takes. The pledge has been made to me by the regulator that it will robustly hold LINK to account for that. The Treasury and I will be watching both very hard to ensure that those pledges are fulfilled on behalf of the people of the country.

Question put and agreed to.

Finance Bill

Simon Hoare Excerpts

Tuesday 12th September 2017 Commons Chamber

[John Redwood]

No, I do not share that view and I do not think that was a very effective point. There was quite a lot in the Conservative manifesto. Indeed, there were some things in the Conservative manifesto that the Conservatives were rather surprised about, and we have been having friendly family conversations about them ever since. I am sure that my hon. and right hon. Friends will discern that there are some better parts of the manifesto which we are most keen to get on with. However, we certainly did not just have a manifesto of page numbers, as I am sure the hon. Member for Nottingham North (Alex Norris) will remember. The smile on his face tells me that he enjoyed some parts of the Conservative manifesto as well. We are all very pleased about that, even though he was probably amused by different parts of that particular publication from the ones that I was amused by and pleased about.

We wish to see a policy that promotes enterprise and growth. That means taxing people in companies with the money fairly and sensibly, but also setting internationally competitive tax rates that they will stay to pay and ensuring that the country is an attractive place in which people want to do business, invest and employ.

[Simon Hoare (North Dorset) (Con)]

My right hon. Friend is talking about practical application, rather than merely theory. When President Hollande took office in France, he hiked the French tax system in order to squeeze the rich until the pips squeaked, as it were. My right hon. Friend will recall that the wealthy French then moved in very large numbers to Chelsea. The lingua franca of Chelsea changed from Russian to French overnight. People will move to where they find the tax regime benign and fair.

[John Redwood]

That is quite right. And they will all contribute to our tax revenues and not to the French tax revenues in the process, which means the French state has an even more difficult task.

There was one particularly important thing in the shadow Minister’s speech. He correctly agreed with the Government that we need to raise productivity. He would not take my intervention, in which I wanted to raise one of the sadnesses in the long period of Labour Government from 1997 to 2010. The Labour Government had so much money to spend because they inherited a prosperous economy. In fact, they extended that prosperity in the first part of their government before they went for the crash in the end. However, although they had quite a lot of money to spend, there was no growth whatever in public sector productivity over those 13 years.

In this House, we all say we want to raise productivity. Surely we should take a special responsibility for public sector productivity because that is the sector in which we directly spend the money, employ the people, hire the managers, and set the aims and objectives. As the Labour party is particularly close to the public sector in many ways, it would be good if it shared with us some thinking on having a policy that really does promote higher-quality and better-paid jobs in the public sector. If we have a more productive workforce, we can pay them better and create better conditions. That is what we all want to do.

Ways and Means

Simon Hoare Excerpts

Ways and Means resolution: House of Commons
Wednesday 6th September 2017 Commons Chamber

[Peter Dowd]

I would not proffer advice to my hon. Friend the Member for North Durham, because he is an expert on that issue, but I will listen clearly to what he says. Unlike the Government, I listen to my colleagues on the Back Benches.

We need only look across the channel to see that every European economy outgrew Britain in the GDP figures for the first quarter. Our productivity rate remains one of the worst in the G7 and is lower than it was 10 years ago. Real wages continue to fall behind inflation. More than ever, we need bold and radical solutions to stimulate growth, raise productivity and encourage investment in our economy. None of the resolutions before us will do that. Even the Archbishop of Canterbury has made that point. Rather than focusing on balancing the budget or tackling our growing debt to GDP ratio, we have a Chancellor who spent the summer in the witness protection programme, rearing his head only to brief against his boss when the coast was clear and the Prime Minister was abroad.

The measures before the House represent the Government’s failure to take the opportunity to begin seriously to tackle the challenges that our economy and country face. For example, it is clear that the Tories have no answers on how to raise productivity and no answers on how to tackle the growing inequality in pay. We are now experiencing the longest period of wage stagnation for 150 years, with nurses having to demonstrate in Parliament Square to make their point. The Tories have no answers when it comes to creating an economy that works for the many and not just for a privileged few.

[Simon Hoare (North Dorset) (Con)]

The hon. Gentleman’s former noble friend Lord Sugar, who knows a little about productivity and running a business, poured a huge amount of cold water on the prospectus that the Labour party put before the electorate a few months ago, which was clearly rejected by the largest number of businesses and business owners. Rather than the vaudeville that the hon. Gentleman seems to be going on about—it is like the Labour party conference speech that he might give, if he is given a platform—why does he not address the issues before the House?

[Peter Dowd]

I remind the hon. Gentleman that businesses are coming to Labour because of the mess that the Conservative party is making of Brexit.