Access to Cash

Abena Oppong-Asare Excerpts

Wednesday 20th October 2021 Westminster Hall

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

It is a pleasure to serve under your chairship, Mrs Miller. I congratulate my hon. Friend the Member for Pontypridd (Alex Davies-Jones) on securing the debate and thank all Members who have contributed. It is clear how keenly the issue is felt by so many of our constituents up and down the country.

My hon. Friends the Members for Pontypridd, for Ogmore (Chris Elmore), for Harrow West (Gareth Thomas), for Makerfield (Yvonne Fovargue), for Stockport (Navendu Mishra), for Slough (Mr Dhesi), for Merthyr Tydfil and Rhymney (Gerald Jones) and for Luton South (Rachel Hopkins) and the hon. Member for Hyndburn (Sara Britcliffe) all spoke about how important access to cash is for the most vulnerable in their communities. They also talked about how many small businesses still rely on cash, especially in areas with poor broadband. We heard from colleagues across the Chamber who represent both urban and rural constituencies, so we know that the issue affects a wide range of areas, although clearly, as we have heard, there are specific issues in rural areas.

The pandemic has brought many changes to our lives. In some cases it has sped up trends that were already occurring. It has accelerated the move away from cash to online purchasing and contactless payments. That has put pressure on the cash system and contributed to a decline in the use of cash to make payments. Withdrawals from cash machines are more than 40% lower than pre-pandemic levels. For many people, this is a shift that they are embracing as digital payments bring greater control and convenience. We in the Labour party support innovation in payments and a thriving FinTech industry. We want UK businesses to create jobs and wealth in the sector, but we do not want a drift towards a cashless society with no thought of the consequences for social inclusion or national resilience.

For the low-paid, older people and those in remote communities, the shift away from cash brings challenges. As has been mentioned, a significant range of evidence shows that many people remain reliant on cash and vulnerable to the rapid changes in this area. That has been evidenced in the debate, particularly by the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone), who talked about his constituency. FCA research shows that 5 million adults use cash for most of their purchases. The Bank of England found that 1.2 million adults in the UK did not have bank accounts, and an analysis in Which? showed that one in six people have struggled with the shift towards cashless payment as a result of the pandemic. Lower-income households and those that do not have or cannot use the internet are much more likely to depend on cash.

There is evidence that during the pandemic, cash use declined less in constituencies with higher deprivation. The access to cash survey carried out a few years ago estimated that 70% of the population would still need cash in the future. Even as technology changes and advances, there is an important duty to maintain an easy-access and free-to-use cash network. We believe that is essential because we do not want to see a proportion of society cut off from full participation in society, unable to access goods and services. We also believe that it is important not to force small businesses to go cashless simply because it becomes too inconvenient and troublesome to work with cash.

There are also important resilience arguments for maintaining a cash network. The covid pandemic exposed weaknesses in our national resilience regarding personal protective equipment and ventilator capacity. We do not know what the next crisis will be. It could be a cyber-attack or some sort of technological breakdown—in those circumstances, cash would be essential. That is why it is important not to drift towards a cashless society without thinking through the consequences. Too often, we have seen banks rush to close branches without recognising the impact on the local community. At the same time, the number of free-to-use ATMs fell by 13% between 2018 and 2019, while the number of pay-to-use machines went up. Many of those pay-to-use machines are in deprived communities.

The Government promised legislation on the issue as far back as March 2020, but the consultation was not published until July 2021. We have also seen changes to allow cashback without purchase and access to cash pilots to show how banking hubs could work. The Government say they are analysing the responses to the consultation, and I look forward to their response in due course. However, I have a number of questions for the Minister on the issues raised today.

First, what do the Government actually mean by access to cash? Does the Minister accept that it must be about more than limited-hours access through local shops, and that it must include both ATMs and either branches or bank hubs, where people can transact business and deposit cash? Do the Government believe that access to cash includes face-to-face services? Labour believes that we need a comprehensive ATM and branch network, because access to cash is about not only withdrawing cash, but being able to deposit cash, for small businesses, as raised by some of my colleagues.

Secondly, do the Government believe that competition law should change to allow banks to co-operate in banking hubs, rather than leaving towns and villages with no banks at all? Thirdly, what are the Government doing to ensure that the agreement between the Post Office and banks continues, so that people can access banking services through the Post Office? Finally, on the Government consultation, when does the clock stop on what comprehensive coverage looks like? Legislation was first promised in March 2020; thousands of ATMs and hundreds of bank branches have closed since then. The Association of Convenience Stores says the clock should stop at that time. The consultation was launched in July 2021, but there have been more closures since then. Legislation will most likely be introduced next year, and there will be even more closures by then. When will the Government declare a moment to say what comprehensive coverage looks like, and that we are not going backwards from there?

I hope the Minister will be able to answer those questions shortly. However, most importantly, I hope that the Government will recognise that now is the time for action. If they delay for much longer, the most vulnerable in our society will be left behind. I think we all agree that that should not be allowed to happen.