Cash Acceptance

Andrew Griffith Excerpts

Monday 20th March 2023 Westminster Hall

[The Economic Secretary to the Treasury (Andrew Griffith)]

It is a pleasure to serve under your chairmanship, Ms Bardell, and it is always a pleasure to follow the hon. Member for Hampstead and Kilburn (Tulip Siddiq). I commend the hon. Member for Linlithgow and East Falkirk (Martyn Day) on securing this debate. I also commend the many members of the public who signed the e-petitions to rightly raise this important issue here, in the home of democracy, where it falls to us to resolve these matters. I know that the hon. Member for Linlithgow and East Falkirk has a long-standing issue with cash access and acceptance. We have had a wide-ranging debate, and I will try to address as many of the points raised by colleagues as possible. As the hon. Member said right at the beginning, this is a complex issue.

It falls to me to inject some balance into the debate. Cash has many virtues, and I assure Members that the Government recognise the role played by cash when other technologies fail and the real concerns regarding privacy and the potential, in a cashless society, for states to control freedom of speech. One of the first issues that I dealt with as Minister was the withdrawal of certain account facilities from the Free Speech Union. However, we should also recognise that despite its many virtues, cash is expensive to handle, can be subject to theft and can make businesses—particularly small businesses in the rural areas we have heard a lot from today—feel vulnerable and potentially targeted by criminals. The physicality of cash means that it has a higher carbon footprint, and it can be less convenient when someone is fumbling around and does not quite have the right change.

[Drew Hendry]

I am grateful to the Minister for giving way. He makes a fair point about vulnerability, with people feeling perhaps a bit unsafe with cash, but does he not agree that part of the reason why businesses are now feeling a bit more vulnerable with cash is because of the bank closures that have been allowed to go ahead? Now, they have to travel greater distances to deposit cash. Is the Minister willing to come up with a solution for businesses so that they can continue to have cash and use it safely?

[Andrew Griffith]

The hon. Member makes a good point. He talked a lot about his rural constituency, which is a little larger than mine but also very rural, and brought that to life by talking about the Grantown-on-Spey annual show. He is quite right, but if he will bear with me, I will talk about the solution to precisely the problem he raises. This is not just an issue of access to cash, or the use of cash, but, as my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard) said, about how we can ensure that businesses and retailers have access to facilities to deposit cash. I will come on to discuss the legislative action that I assure the House we are taking on precisely that point.

I have followed this debate extremely closely so, to be clear, let me say for the Government that there is no plan, no drive and no conspiracy to eliminate cash. This Government continue to support the ability of citizens to use cash as an alternative to digital payments, and I am proud that the Government are taking legislative steps to support the use of cash well into the foreseeable future. It is this Government, for the first time, who are taking those legislative steps.

A number of Members have talked about the fact that the way people make payments is changing. We have seen that over time. Analogies have been drawn with the transition from analogue to digital television and with decimalisation—I do not remember that, but the Father of the House was not shy about his recall of going through that transition. Digital payments play an important role in people’s lives. We see that from our own experience in the Tea Room of this House and also from the data. The industry body UK Finance found that in 2021 non-cash transactions accounted for 85% of UK payments, up from 45% a decade earlier and 60% in 2016. That is a really fast rate of change. I do not say that to unsettle anybody in respect of the continued attachment to cash, but it does mean that we in this place have to contemplate very rapid changes in society and technology.

Cash remains important for millions of people across the UK. We are an ageing society, and many Members have talked about the vulnerable groups—my hon. Friend the Member for North Norfolk (Duncan Baker) thought it was about 10 million people—who make up a significant part of society. We should rightly have great recourse to work out how we can protect them, whether that is through support with the convenience of managing their finances or with other vulnerabilities. Members made some great points about the importance of managing finances through the use of cash.

This is about striking a balance in society, which we have sought to do through the Financial Services and Markets Bill. I want to offer reassurance and protection for those who seek it. I am conscious that not everyone will be as familiar with the clause-by-clause detail of the Bill as the hon. Member for Hampstead and Kilburn and I am. That Bill, which has made its passage through the House, will mean that for the first time, not just since the hon. Member for Tiverton and Honiton (Richard Foord) scrabbled for coins himself but since ancient Celts first manufactured coins on this great isle of ours, there will be statutory protection of access to cash and the ability to deposit cash. It is important that we get that Bill on the statute book in this time of rapid change. It will cover access to deposit facilities on a similar basis as access to cash withdrawal.

My hon. Friend the Member for North Norfolk reminded us that this is the domain not just of the banks and ATMs, but also the extensive post office network. I know that postmasters—notwithstanding the loss to the profession of my hon. Friend—do a fantastic job in our rural communities. We should support them, and we do want to see that support. The provision of cash and banking services can be one way in which we underwrite their continued service to the community.

[Patricia Gibson]

Will the Minister explain what my constituents in Kilwinning will do when the town centre has lost its bank? It will be a population of 16,000 with no bank and no post office. What advice would he give to the businesses and residents of Kilwinning?

[Andrew Griffith]

I advise the hon. Lady to explore with Link the provision of potential alternative cash machines and to explore with the Access to Cash Action Group the potential for a banking hub. A number of Members have procured banking hubs for their constituencies. The hon. Member for Tiverton and Honiton has a banking hub and has spoken up about that issue.

[Richard Foord]

On banking hubs, the Axminster chamber of commerce has been trying to get through to the Access to Cash Action Group to find out when it will get its community banking hub, but has been unable to get through, so will the Minister comment a little further on Access to Cash Action Group communications?

[Andrew Griffith]

I will happily entertain treatises from the hon. Gentleman if he would like me to follow that up. There are 70 cash hubs on their way. Members throughout the House, including a number of his colleagues in Devon, have procured them. It sometimes takes a little while for them to appear because of planning issues or the need to get the right power arrangements and safe access in place for constituents. If the hon. Gentleman will bear with the banking hubs and work with them, he will find that there are solutions out there.

My hon. Friend the Member for Blackpool North and Cleveleys talked about the no-purchase cashback facility, which turns every single convenience store and retailer in the country into a potential cash-dispensing hub.

[Patricia Gibson]

Will the Minister give way?

[Andrew Griffith]

I will give way one final time before the hon. Lady combusts.

[Patricia Gibson]

I gently say to the Minister that local corner shops do not want to be cash dispensers. There are all sorts of security issues relating to no-purchase cashback.

[Andrew Griffith]

The hon. Lady makes an important point, although perhaps not the one she intended, about some of the challenges of cash in a rural location.

[Paul Maynard]

Will the Minister give way?

[Andrew Griffith]

I will because my hon. Friend made some strong points earlier.

[Paul Maynard]

Does the Minister think it is important to recognise that cashback without purchase is a voluntary decision by the retailer? Retailers are not obliged to embark upon it if they do not wish to; it is a commercial enterprise.

[Andrew Griffith]

My hon. Friend is absolutely right. That is one of the principles in how we have approached the issue. Although we are taking powers in the Financial Services and Markets Bill to mandate access to cash and cash machines, we must remember that 95% of the population are within 2 km of a free cash machine.

[Drew Hendry]

Will the Minister give way?

[Andrew Griffith]

I will make some progress, because I have been relatively generous in taking interventions.

Cash acceptance is an emerging issue that we contemplate for the future, but it is not a prevalent issue today, other than when people conflate it with the loss of bank branches. That is understandable, but we are seeing very rapid changes in society. I am clear that it is not the Government’s position—I think this is also true of the Labour party and, probably, the Scottish Executive—that we will mandate cash acceptance on retailers or public services. If anyone has done battle with a local authority parking machine, or the Mayor of London’s cashless transport system, they will know that it is often public services that do not take cash, while 98% of retailers are happy to continue to take cash indefinitely, particularly if the facilities can be made available. Public services are often the first to migrate to a cashless economy.

[Drew Hendry]

I am grateful to the Minister for giving way one final time. I would love him to come to the highlands and take a 2 km walk around parts of my constituency and point out where the cash machines are. We always try to find things to agree on in Westminster Hall, so I agree with the Minister’s earlier comment that his Government have “no plan and no drive”. If the 70 hubs are to be spread across the UK, will the Minister tell us when my constituents in villages and towns will see hubs arrive near them?

[Andrew Griffith]

It would not be for me to promise any Member a hub; it is for them to make the case. I observe that many other Members have been able to make that case successfully, and the hon. Gentleman has proven very persuasive today, so I wish him well in procuring a hub for his constituency. I will now make some progress, in the interests of time.

It is important to have the flexibility to respond to changes in the market. What we are doing in the Financial Services and Markets Bill should not be underestimated. As I said, for the first time in law we are protecting the ability of people and businesses—businesses are in scope as well—to deposit as well as accept banknotes and coins. The Government’s position is that it is much better that we will the means to enable businesses to continue to take cash, rather than simply will the ends without addressing any of the means, as some would do.

Apart from the Bill, the Government work with the financial services regulators to monitor and access trends related to cash. The hon. Member for Hampstead and Kilburn asked if the work to track the accessibility of cash will be done; it will. As part of that, the Financial Conduct Authority has surveyed retailers and found that even of small businesses—this is not an issue for big businesses, by and large—98% would never turn away a customer if they needed to pay by cash. I extend an invitation to any Member to share with me, the Treasury and the FCA any specific examples of retailers declining cash. I am conscious of a number of examples in the public sector—local authority car parks, and even municipal transport run by executive bodies—but I am not aware of a high level of prevalence among retailers.

We must also recognise that technology is providing solutions. Big Issue salespeople are now equipped with tap readers, and report 30% higher donations being given when people tap rather than use cash. That was my experience when I joined the Royal British Legion to collect for poppy sales. There are a number of other examples of how technology can try to solve the gap, notwithstanding the fact that we will continue to ensure that we protect access to cash. We have talked about the good work of the cash access group and of Link, and it should be incumbent on any Government to continue to ensure that we put those important solutions in place.

Once we have passed the Financial Services and Markets Bill, we will provide the policy statement about the importance of access to cash, the prevalence of that across the UK and what thresholds will be appropriate for Government to take different decisions or possibly to look at mandating things. My hon. Friend the Member for Blackpool North and Cleveleys talked about wholesale cash distribution, and the back end is important if we are to continue to ensure that businesses have the access to cash that they need. It is important that the wholesale cash infrastructure in the UK works and, in the Bill, again for the first time, we will take powers to regulate that, mindful that over time we expect to see the volume of cash decrease.

I have set out what the Government will do: the important step of taking powers in legislation that will soon be on the statute book, giving the FCA the ability for the first time to regulate access to cash. I have given our commitment to continue to monitor the situation, accepting that we all have constituents we are concerned about and that we are seeing fast-moving changes in society. I also give Members the reassurance that the Government’s desire or policy is not to eliminate cash. We have no such objective, but quite the opposite: the Government recognise the importance of the utility of cash in the system and will do whatever we can to ensure, practically, that our constituents continue to have the ability to use cash, as has always been their historical right.