Access to Cash

Alex Davies-Jones Excerpts

Wednesday 20th October 2021 Westminster Hall

[Mrs Maria Miller (in the Chair)]

I encourage Members to wear masks when they are not speaking, and to give each other space when moving around, or entering or leaving the room.

[Alex Davies-Jones (Pontypridd) (Lab)]

I beg to move,

That this House has considered access to cash.

It is a pleasure to serve under your chairship, Mrs Miller. Given recent events, I feel it is important to take a moment to pay tribute to our wonderful colleague, Sir David Amess, who was a regular contributor to Westminster Hall debates. His presence here will forever be missed.

I am pleased to have secured this debate, particularly as our ability to physically access cash has been restricted as we continue to tackle coronavirus, and given the recent increase to the contactless card spending limit from £45 to £100.

I come to this debate with a specific constituency interest in mind. One of the jewels in the Pontypridd crown is the Royal Mint, based in Llantrisant. It is a major local employer, and I must give its tourist attraction, the Royal Mint Experience, a quick plug. The Royal Mint is the manufacturer of UK coins, and is not directly involved in policy on the use of cash, but it is a key contributor to ensuring that certain skills, and the capability to circulate coins, still exist in this country. I was joined there by the Under-Secretary of State for Wales, the hon. Member for Monmouth (David T. C. Davies), only a few months ago; we struck coins, and met young people on the kickstart scheme. I will, however, try to refrain from reminding the Minister that despite all the country’s coins being made in my constituency, we sadly see precious little money in return from the Government. Perhaps that is a matter to be discussed another time.

Instead, I will focus on the sad, widespread repercussions of reduced cash flow, which is having a major impact on high streets up and down the country. Many have been hit by multiple bank closures, including in my constituency of Pontypridd and across Caerphilly. Banks not only provide vital services for a huge range of community groups, but are often the epicentre of our high streets, and are vital in encouraging local trade and footfall for surrounding businesses.

[Martin Docherty-Hughes (West Dunbartonshire) (SNP)]

In West Dunbartonshire, we have seen a huge decrease in the number of banks, and I congratulate the hon. Member on making that point. Do they agree that if we are moving to a cashless society, that cannot happen in a vacuum, and that the Government must step up to ensure that people have access to cash in local communities?

[Alex Davies-Jones]

I completely agree. It is vital that the Government step up to ensure that this transition to a cashless society—if that is where we are heading, which seems to be the case—is made quickly. I will return to this point later, but I must begin by placing on the record my gratitude to all the organisations that have supported me and my team in preparing for this debate, notably the team at the LINK group, who have assisted with many of the stats I will refer to; I am particularly grateful to them for their expertise. In addition, Cardtronics found time to advise us on the potential repercussions of losing more and more free-to-use ATMs, for which I am thankful.

Put simply, when it comes to how we access and spend cash, it is clear that our habits as a nation are changing. In my household, physical cash is essentially non-existent, and I often actively avoid carrying cash. In a world where tools such as Apple Pay mean that I can pay with my phone, my watch, or even just my face, carrying a large amount of cash seems to add an element of risk, and it ultimately feels largely unnecessary.

This stands in stark contrast to my attitude towards cash when I was growing up. I still remember the genuine thrill I felt as a youngster when I received what I suppose would be considered a wage for completing my household chores. That £3 per week felt like my ticket to freedom, and I loved to collect my pounds and pennies in my piggy bank, all to be spent, no doubt, in one go on something like Bliss magazine, the latest Tamagotchi or Steps’ latest single. This fondness and nostalgia for the Great British pound is widespread. According to the access to cash review interim report, “Is Britain ready to go cashless?”, despite the increasing use of cards and electronic payments, approximately 8 million people, which is 17% of the country, said that cash feels like an economic necessity.

For me, years down the line, I have changed not only my spending habits, but my attitude to cash. What was once seen as an exciting physical representation of my earnings is now something I tend to actively avoid. However, I recognise that plenty of people feel completely differently, with many preferring to use cash for security or cash management reasons. It is important to acknowledge that when we talk about access to cash, acceptance of cash is part of that debate as well. That is where the marked difference between the needs of those living in my semi-rural constituency of Pontypridd and those in inner-city dwellings becomes even more obvious.

In London, it is not uncommon for businesses to be entirely cashless. That is in stark contrast with the many small businesses in my community that rely on cash payments, due to the cost or impracticalities of accepting card transactions. I am pleased that there appears to be widespread support for the preservation of free-to-use ATMs, which are vital for protecting access to cash.

[Sir Greg Knight (East Yorkshire) (Con)]

I congratulate the hon. Lady on securing this debate. Does she agree that people should only need to travel short distances to pay in or take out cash, and that cashback should be readily available without purchase?

[Alex Davies-Jones]

I completely agree, but “a short distance” in my constituency of Pontypridd would be vastly different from “a short distance” in other constituencies.

[Chris Elmore (Ogmore) (Lab)]

I congratulate my hon. Friend, neighbour and fellow Taff-Ely MP on securing this debate. She will know that I have spent many years working on this issue.

Our constituencies are similar in geography. The UK Government’s response is to say that people will have a cashpoint within a kilometre. I know my hon. Friend’s constituency well, and she knows mine well. Mine has ranges of mountains and hills, and there is often only one road coming into and out of a valley. The reality is that although “a kilometre” is a measure of distance, it can feel vastly different to constituents depending on how they travel, and whether they are relying on bus or train services to access cash. The Government need to understand that this is not just an issue in cities, where transport is free-flowing and connectivity is often very good. In seats like ours, there can be huge differences in how people can access cash.

[Alex Davies-Jones]

I completely agree. My hon. Friend is absolutely right to make that point. In constituencies such as ours, we are not exactly talking about a kilometre as the crow flies. People would need to travel on several buses or walk a much greater distance to reach a free-to-use ATM.

Many Members before me, including the hon. Member for North Ayrshire and Arran (Patricia Gibson) and the hon. Member for Blackpool North and Cleveleys (Paul Maynard) to name but two, have been particularly vocal in their support for free-to-use ATMs. Thanks to LINK and UK Finance, we know that ATMs remain the most popular way of withdrawing cash—about 93% of cash withdrawals take place at a cash machine. There are 53,500 ATMs in the UK, 12,500 of which are pay-to-use. Only 41,000 are free to use. Some 94% of cash withdrawals are free of charge, but it will come as no surprise that cash withdrawals have dropped significantly. Coronavirus has undoubtedly expedited the move towards a cashless society.

As of August 2021, ATM usage is down a whopping 45% on pre-pandemic levels. This worrying trend impacts us all, but we can all agree that it is the elderly and the most vulnerable who are likely to be most impacted. Some groups of people may be nervous about using technology and may fear the potential cyber-security repercussions of using contactless payment systems. Others may struggle to remember their personal identification number, or may simply not have the form of identification available to set up a complex banking service.

I was also shocked to learn from the Treasury Committee report on increasing financial inclusion that there are still around 1 million people in the UK without a bank account. Some older, lower-income households rely on cash to budget because of a lack of access to online banking. In the conversations about the importance of cash and access to cash, we must acknowledge the clear regional divides that still persist. For example, here in London, 75% of card usage is now contactless, yet parts of my constituency simply do not have the broadband infrastructure to support contactless payments. The lack of investment in basic infrastructure means that many businesses in my area, through no fault of their own, are restricted in their ability to expand or develop. Our country is likely to follow the path taken by our friends in the European Union, notably Sweden, and become increasingly cashless to keep up with modernising in a global economy, but that modernisation cannot come at the expense of some of our most vulnerable groups, with communities and regions being left behind once more.

[Gareth Thomas (Harrow West) (Lab/Co-op)]

Perhaps I can encourage my hon. Friend to pay tribute to the community credit unions that have branches, and that actively encourage people to bring cash in and that help them to take cash out. Does she agree that community credit unions need more support from the Government to expand their networks and offer more services, so that they are even more attractive?

[Alex Davies-Jones]

I completely agree. In my constituency we have Dragonsavers, a vital service for local community groups, and the Welsh Labour Government are looking to set up Banc Cambria, so that we have banks on our high streets. They are looking at where it would be feasible to open branches.

While it is rare for me to have reason to doubly praise the Government, I am pleased to see that the plans outlined by the Treasury earlier this year suggest that people should not have to travel beyond a reasonable distance of around 1 km to withdraw or deposit cash. Such commitments are vital to the survival of cash circulation in this country, but as has been mentioned, only if the local geography of our towns and cities across the UK are taken into account when considering that 1 km radius.

For hon. Members not familiar with the south Wales valleys, my hon. Friend the Member for Ogmore (Chris Elmore) and I can assure them that our hills and beautiful valleys are not for the faint-hearted. These geographical barriers cannot be ignored when factoring in access to cash for community members, both now and in future. I therefore hope to hear from the Minister exactly how the Treasury plans to safeguard those vital services, particularly for those living in rural and semi-rural constituencies such as mine.

There is some hope, though. As hon. Members will be aware, LINK is a not-for-profit with a strong public interest remit that runs the UK’s largest free-to-use cash machine network. Instead of owning and operating those machines, LINK’s job is to ensure that every community has free access to cash by paying commercial incentives to ATM operators to put free machines where they are needed.

Indeed, after representations from a number of residents, I was thrilled to see LINK secure a new ATM at the village store in Efail Isaf in my constituency. The ATM is now secured for a minimum of five years, and it will go a long way to helping those in our area. For two years, LINK has invited communities to request free-to-use ATMs such as this one, and in that time it has installed more than 70 of them in response to local demand, alongside a year-long trial that saw LINK working with partners to develop a new way of accessing cash, by allowing consumers to withdraw cash over the counter from participating retailers.

I am pleased to see innovative steps being taken to secure access to cash for all those who need it. What will be essential, however, is maintaining those fantastic services. I truly believe the Government must act on the recommendations recently produced by Cardtronics and the Federation of Small Businesses, which ask Her Majesty’s Treasury to mandate bank membership of LINK in order to protect its fantastic withdrawing and free-to-use ATM delivery schemes.

In addition to my very real concerns about the impact of a potentially cashless society on certain populations, this conversation must also address the many logistical challenges and concerns around the largely inevitable shift to a cashless world. We need a long-term solution, whereas I fear the Treasury is currently in denial about the fact that we seem to be heading at a record pace for an almost wholly cashless society.

[Sara Britcliffe (Hyndburn) (Con)]

Speaking of the work of Cardtronics, one of the recommendations to the Government on protecting cash is that we should protect cash acceptance in our businesses. Does the hon. Lady agree that that is something the Government needs to consider?

[Alex Davies-Jones]

I completely agree. For many businesses in my seat in Pontypridd—in the market, for example, we have some brilliant stores—it is not feasible to take cards. We are talking about an average transaction of £1 for Welsh cakes from our great Welsh cake shops, for example; it just is not feasible for a business to take card payments when they are charged for those. It would massively reduce their profits and make their business completely unviable.

Steps can now be put in place to ease the shift to a cashless society. We have seen neighbouring countries switch their entire currency; while I am very reluctant to turn this into a debate on the euro, in fear of somehow reigniting the Brexit debate, if other nations have managed such a transition, we should be able to follow suit. With that in mind, I hope the Government’s promised access to cash Bill will include some form of commitment to setting up a regulatory body to ensure a smooth transition. That regulator could work with different interest groups, infrastructure providers and charities such as Age UK to support those most impacted through this transition period.

Of course, this recommendation has been well researched, notably by Natalie Ceeney, who chaired the initial access to cash review. I hope to hear more from the Minister on the issue, along with a timeline on when we can expect the legislation to come forward to the House.

My final point concerns the worrying trend of bank closures that we are seeing up and down the country. While I fully recognise that the Treasury is unable to interfere in decisions made by private corporations to remove their presence from the high street, we must acknowledge the devastating impact that those closures have on the availability of, and people’s access to, cash.

In preparation for this debate, I spoke to a number of people living in my area who have sadly been impacted by decisions made by both Lloyds TSB and HSBC to withdraw three branches from my constituency. While not all banking services relate to the process of depositing or withdrawing cash, it is undeniably those basic services that are the most missed when a bank chooses to leave the high street. With the role of the post office ever changing, it has been quite a confusing time for many residents in my area, who have felt forced to shift their ordinary banking practices as a consequence of these closures. With this in mind, I am particularly interested to know what plans the Government have to improve the availability of deposit-taking facilities across the county; I hope the Minister will refer to this in his remarks.

Ultimately, we need to see this promised access to cash Bill sooner rather than later; the big changes are happening in our communities right now. People across the country are already being negatively impacted, and I fear many more will be excluded unless action is rapidly taken. The Government have made a start, and I commend them on their commitment to preserving access to cash, but they need to follow through with specific action to protect those constituents of ours who fall into potentially vulnerable categories. I look forward to hearing from the Minster, and hearing what hon. Members have to say on this important issue. Diolch.

[Several hon. Members rose—]

--- Later in debate ---

[Alex Davies-Jones]

It has been a complete pleasure to take part in today’s debate. We have had a broad range of speakers from across the House, all showing a consensual approach to the importance of preserving access to cash. As the Minister alluded to, it is indeed a rarity for debates held in this place to be so consensual, and this is not a party political issue. I hope that we can continue to capitalise on that consensus going forward.

I said at the beginning of the debate that I recognise the impact that coronavirus has had on people’s desire to carry, accept and access cash, and I really believe that we are living in changing times, where modernisation is key. Many of my comments focused on the impact of reduced cash circulation in the context of the individual, but a number of Members have rightly raised issues around the difficulties of businesses that carry cash. With bank closures on the rise, as mentioned by my hon. Friend the Member for Erith and Thamesmead (Abena Oppong-Asare), cashing up at the end of the day may no longer be the simple task it once was for a small business. Small, independent businesses have been hit the hardest throughout the pandemic, and we must now ensure that we prioritise them going forward.

With that in mind, I very much welcome the comments from the Minister on the urgency to resolve the problems that we have raised today. I also welcome his commitment that no one will be left behind in the digital connectivity roll-out—a promise on which I will ensure he is held to account. I hope he recognises that although good progress has been made on the access to cash Bill, it needs to be accompanied by a real-life approach to supporting people through what is inevitably a transition to a cashless society. That will need very close attention if we are to support our must vulnerable populations.

The Minister’s comments will help us to move in the right direction, and I am grateful for that. I look forward to seeing his promises enacted in future legislation put forward by the Government.

Question put and agreed to.

Resolved,

That this House has considered access to cash.