ATM Closures

Douglas Ross Excerpts

Tuesday 4th December 2018 Westminster Hall

[Douglas Ross (Moray) (Con)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Member for Rutherglen and Hamilton West (Ged Killen) on securing the debate and on introducing it so well. I was delighted to agree to be a co-sponsor when the hon. Gentleman applied for the debate to the Backbench Business Committee, and I am grateful to that Committee for granting it.

I will divide my comments into two parts. First, it is abhorrent that we should be charged to take our own money out of ATMs. There are still a few in Moray that charge for use. If I come upon one, I will actually go away to another. It might end up costing me more in money, time, fuel and inconvenience, but out of principle I would rather go to another destination than pay a company to access my own money. It is simply unacceptable that, in 2018, we still have to pay some companies to take out our hard-earned money. My constituents in Moray are particularly aggrieved about that.

However, I will focus my remarks on the availability of ATMs in high streets and rural communities, as the motion mentions. ATMs have been critical to many communities in Moray for several years, particularly in Lossiemouth and Keith. A couple of weeks ago, Bank of Scotland announced the closure of eight branches across Scotland. Some are in the constituency of my hon. Friend the Member for Angus (Kirstene Hair), but 25% of those eight are in Moray—one in Keith and one in Lossiemouth. As well as potentially closing the branches next year, the bank will also remove the ATMs.

In the 2011 census, the population of Lossiemouth was just over 6,000. That has now boomed to more than 7,000. The P-8s are coming to RAF Lossiemouth in one of the biggest UK Government investments in our defence estate, which will boost personnel numbers at the base alone by 400, and those personnel will bring their families with them as well.

The town is expanding at an excellent rate, which is encouraged by the local community, yet Bank of Scotland has decided to close its very last branch in the town. With that it will take away the ATM, so a town with a population of more than 7,000 that is expanding will go from three ATMs to two ATMs. One of those is in the local post office at Buckley’s, which is up for sale. If it is sold and that ATM is lost, we could have a population of more than 7,000 and only one cash machine. That is simply unacceptable and cannot be allowed to happen.

[Luke Graham]

My hon. Friend makes a powerful point. Does he agree that banks are speaking with a little bit of a forked tongue? They are closing branches in the areas that really need them, such as his constituency and mine, but are happy to open them in places such as Canary Wharf and Chelsea, which are very well served by the financial system and by broadband, and where more people bank online than in our constituencies.

[Douglas Ross]

I absolutely agree. That issue came up at the two public meetings I have held in Lossiemouth and Keith since the potential closures were announced. The questions at Keith centred on the fact that this would not happen in the central belt of Scotland or in the capital down here in London, where there is a large footfall. Closing one branch would have less impact on communities in Glasgow or Edinburgh than closing the last branch in a town such as Lossiemouth.

My hon. Friend the Member for Angus made the excellent point that some people may decide not to shop locally if they cannot access an ATM so that they can pay by cash. We heard at my Lossiemouth public meeting that a lot of takeaway shops only accept cash payments. It is not that people go there and decide not to buy; they have already purchased on the phone. They place an order, the food is then made, and they turn up to find out that payment is by cash only. With the cash machines potentially going in Lossiemouth and Keith, they may have no opportunity to get money out, and therefore the takeaway business loses income, because it has already produced the order.

Another important point is that, yes, this has a huge impact on local residents, and particularly the elderly, but Lossiemouth and Moray are beacons for tourists coming to Scotland. We want to welcome as many tourists as possible. What will they think when they want to buy something from the local shop, when they want a memento of their visit to Lossiemouth and Moray, but there is no cash machine for them to get their money out to purchase the goods in the town? We have to consider that going forward.

The local Conservative councillor for Heldon and Laich, James Allan led a great campaign in Moray. I pass on my best regards for Councillor Allan, who unfortunately ended up at Dr Gray’s hospital yesterday. He is recovering well. James has been a real champion of this issue in his hometown of Lossiemouth. When the Royal Bank of Scotland left the town and took away its ATM, he led the campaign to reintroduce it. The RBS building has been taken over by a commercial businessman who would be absolutely delighted to retain the RBS ATM in the town, because he knows the needs of local people. He would facilitate and work that machine, but RBS has so far refused to allow the machine to reopen. It really has to consider its obligations to the community. It may leave and close branches, but it should not take lock, stock and barrel away with the ATMs as well.

James has done an excellent study of the number of cash machines in the local area. Lossiemouth, with a population of more than 7,000 and expanding, currently has three cash machines, which will potentially be down to one. Forres, with a population of 12,500, has eight cash machines. Fochabers, which I used to represent as the councillor for Fochabers and Lhanbryde, has a population of 1,700 and three cash machines, compared with a community the size of Lossiemouth, which is expanding and will potentially go down to one cash machine.

I have to say that the mobile banking provision, which the banks always say will support the communities, does not serve our communities particularly well. It is potentially available for one hour every week or every fortnight, and many of the functions of an ATM are not available at a mobile banking service. The Moray Rambler introduced by RBS now covers a far wider area than only Moray, because RBS has closed so many other branches in Aberdeenshire and the highlands and so on, and our service in Moray is diminished even further.

I will finish on a recent court judgment about ATMs in England and Wales. I was involved in an issue with Buckley’s newsagents in Lossiemouth, again with Councillor Allan. It has an ATM that faces out on to the high street, to ensure that people can use it 24 hours a day. The owner, Tony Rook, could put it inside, but it would then be available only when the shop is open. As a servant to the community, he decided to have it outward-facing. He is being punished by the Scottish Government, who have implemented far higher business rates for outward-facing ATMs than those inside a shop.

I hope that the Minister will clarify this. The issue was passed on to me by Councillor John Cowe, who attended the public meetings in Lossiemouth and who is encouraged by the judgment that came down, I think, last month. Since 2010, supermarkets and convenience stores have been liable to pay rates on the machines, but the courts have now decided that that is not correct and have ruled in favour of the supermarkets who took this forward, particularly Sainsbury’s and Tesco, meaning that the £300 million already charged will now be refunded. I agree with the Tesco spokesperson who said:

“We welcome today’s result and the confirmation of our belief that ATMs should not be separately rateable.”

I will be interested in the Minister’s response and particularly whether he has had any discussions with his Scottish Government counterpart about how they will look at the issue in Scotland, because the ruling was for England and Wales only. It will be very important and useful for us to learn what the Scottish Government will do as a result of the judgment, because it will make a big difference to people such as Tony Rook at Buckley’s newsagents.

I am grateful for your indulgence, Mr Hollobone. This is an important debate for our communities, and I am grateful to the hon. Member for Rutherglen and Hamilton West for initiating it. Banks and ATM providers have a moral obligation to the communities that we all represent and serve. The message is coming through loud and clear. Do not take away ATMs, which are an integral part of our communities; they are important for everyone who lives in and visits them. We need them, we need them to be free and we need them to be accessible and available. By shutting them down, banks and ATM providers are shutting down many of the communities that rely on them.

--- Later in debate ---

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

I thank the hon. Member for Rutherglen and Hamilton West (Ged Killen) for bringing this important debate, and for the work he has done on this issue. I am pleased to participate in this debate on the important issue of our constituents’ access to their own cash free of charge and, ultimately, the issue of social and financial inclusion.

We have heard that 2.2 million people across the United Kingdom are entirely reliant on cash, as opposed to credit or debit cards. It must be correct that we should all be able to access our own cash without incurring any charges. The fact is, those who are reliant on cash transactions tend to be less well-off and are the least able to pay any additional cost to access what little cash they have.

As the hon. Gentleman pointed out, earlier this year LINK, the UK’s largest cash-machine network, announced that it would go ahead with plans to cut its interchange fee by 20% over the next five years. As a result, we have seen hundreds of ATMs closing. Scotland has been hit hard, with 221 free cash machines lost between January and July 2018—around one every day. There are now fewer than 6,000 free cash machines left in Scotland. That sits uncomfortably alongside bank branch closures, as the hon. Member for Strangford (Jim Shannon) pointed out, with banks closing at a rate of 60 each month, leaving significant towns in my constituency—such as West Kilbride, Dalry, Brethe, Stevenston, Ardrossan, Kilwinning—with no bank at all thanks to RBS closures. The communities affected will never forgive RBS for this abandonment and betrayal. I believe that RBS will never again be trusted, nor will it have its reputation repaired. It is still disappointing that the UK Government did not intervene and use what influence they had in that matter.

We have also heard that post office closures, stretching back to 2007 and 2008, have compounded the issue, as the hon. Member for Makerfield (Yvonne Fovargue) pointed out. As the hon. Member for Strangford said, we have the additional problem of postmasters not being replaced; so the issue is snowballing.

I fairly enjoyed the hon. Member for Moray (Douglas Ross) doing his impersonation of a trapeze artist when he tried to blame—if I heard him correctly—the shortage of ATMs and the impact on small businesses on the Scottish Government. He will be well aware, I am sure, that thousands of businesses in Scotland have benefited from the small business bonus. I think anybody in Westminster Hall would agree, looking at the evidence, that the major issue facing small businesses is the concern and uncertainty caused by Brexit. We will just leave that there.

[Douglas Ross]

Will the hon. Lady give way?

[Patricia Gibson]

I will not give way. I will proceed.

So far, 2018 has seen 670 local bank branches closing across Scotland, following close on the heels of the 879 that closed in 2017. In response to this debate, the banks will no doubt tell us that fewer and fewer of us use cash in our transactions; but research shows that at least three-quarters of us use cash at least two or three times a week and it is still the most popular method of payment. The hon. Member for Stoke-on-Trent North (Ruth Smeeth) pointed out—as did almost every contributor to the debate—that those on lower incomes and older people are likely to be hardest-hit by any reductions in access to cash. The less well-off you are and the older you are, the more likely you are to rely on cash transactions, with just over a quarter of people not using card payments at all.

This perfect storm of a reduction in free ATMs and bank closures means that now there are real concerns about the effect that the closures will have on consumers and small businesses without adequate access to cash. This financial and social exclusion is utterly unacceptable. Consumers are gradually being forced into online banking, and the evidence suggests that now they are being gradually forced into cashless transactions—so much for consumer choice.

We heard from the hon. Member for Rutherglen and Hamilton West that in January 2018, LINK announced a series of four reductions in the interchange fee—the amount paid every time a customer uses a free ATM, and which funds the entire free-to-use network—from around 25p per transaction to 20p. However, concerns have been raised and, as we heard from the hon. Gentleman, the third and fourth reductions have been cancelled and put on hold respectively. Cutting the interchange fee was supposed to reduce machines in areas where there were considered to be too many, but maintain geographical coverage of ATMs across the UK. LINK commissioned a review to consider consumer requirements for cash machines over the next five to 15 years. That review was cognisant of the fact that financial inclusion is extremely important for all consumers and will remain so. Their needs and requirements must be met. Like all hon. Members in Westminster Hall today, I look forward to the findings of that review in March.

Meanwhile, research carried out by Which? is truly shocking. It shows that free-to-use ATMs are closing at a rate of 250 a month, while over 100 ATMs with so-called protected status have stopped transacting in the same period. The hon. Member for Rutherglen and Hamilton West set out the challenges associated with ATMs with protected status. Analysis shows that from November 2017 to April 2018, following LINK’s announcement about cutting the fees paid for each ATM transaction, the rate of cashpoint closures increased from around 50 per month to 300 each month. LINK’s own figures show that between January and June this year, 500 cashpoints closed each month. The implications of all this are extremely significant, with more machines being lost in rural communities despite LINK’s pledge that changes would only target urban machines, not rural ones.

Just under half of us use a cashpoint at least once a week, with 80% of us saying that access to free-to-use cash machines is important in our daily lives for paying for goods and services. Forcing people to pay to access their own cash would leave around 10% of us struggling and would constitute nothing less than financial exclusion. It would hit small and local businesses hard, as was set out in some detail by the hon. Member for Strangford. As the hon. Member for Rutherglen and Hamilton West said, already many people struggle to access free cashpoints, with around 11% of us having to walk for more than 30 minutes to access the nearest cash machine and around 9% saying that the nearest machine is simply too far away to reach on foot. That, coupled with the fact that many people do not have access to a car, makes life extremely difficult, as the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) reminded us.

One in five of us currently does not have access to free-to-use cash, but it seems this might get worse. That is why the calls from Which? for the Payment Systems Regulator to bring more regulatory scrutiny and intervention to bear on this issue are so important. I agree that it is time for the financial inclusion programme to be amended to ensure that the entire ATM network is fit for purpose. LINK has tried to address concerns that all ATMs 1 km or more from the next free ATM will be exempt from any reductions and cuts to fees for transactions made and is increasing the subsidy for these machines, but there is some concern that these measures, although well-meaning, simply do not go far enough. Exempting individual cashpoints from cuts to fees might not be enough to save them. Cashpoint closures are not decided by LINK. We know that recent closures and the inability of LINK to quickly and effectively replace protected machines shows the shortcomings of the current approach.

We have heard from many Members today that it really is time for the Payment Systems Regulator to show its teeth. It seems eminently sensible for the PSR to conduct its own review of LINK’s financial inclusion programme, including the ATM replacement process, because that must be fit for purpose. The Government must also beef up the powers of the PSR to allow it to protect cash, and impose a duty of care on it to ensure the sustainability of the UK’s cash infrastructure. I believe that would do much to protect consumers, the choices they want to make and their financial inclusion.

If it had the power from Government, the PSR could introduce robust measures to ensure that all our communities have free and easy access to their own cash. I urge the Minister to set out how he can empower, and what he is prepared to do to empower, the PSR, to ensure that there is a robust future for free-to-use cash machines. In correspondence with me on 12 September, the PSR has admitted that it is “concerned about these closures”.

[Douglas Ross]

rose—

[Patricia Gibson]

I am hoping the Minister will heed the calls he has heard from all parts of Westminster Hall today to work across party lines to ensure a sustainable, inclusive approach on this issue that works for all consumers.

--- Later in debate ---

[John Glen]

I acknowledge that we are not seeing the end of cash. The challenge is how we adapt to the different mode and frequency of its use. There is no simple single solution. Clearly, creating a complete network in sparsely populated areas will not always be the right answer.

Although the hon. Member for Makerfield (Yvonne Fovargue) is not in her place, for general edification I will respond to her point about the lack of notice when ATM operators move. They have a duty to inform LINK that a protected ATM will close. LINK can offer premiums to all its members to incentivise the replacement of the machine. It has set up a publicly available monitoring tool on its website that shows ATM availability. It has the power to mandate and directly commission an ATM deployer where one is necessary.

LINK’s measures aim to reduce the duplication that I mentioned earlier and to intervene where necessary. It aims to incentivise broad, national coverage of free ATMs and to protect every community across the UK from losing free ATM access. Specifically, LINK has ensured that free ATMs that are 1 km or more from the nearest free ATM are exempt from any reductions in the interchange fees that fund free ATMs. It has put in place specific arrangements to protect free ATMs more than 1 km away from the nearest free ATM, including boosting the interchange fee available in those areas. It has also enhanced its financial inclusion programme by tripling the interchange fee available to the lowest-income areas of the UK, to ensure that they all have at least one free ATM. Some 93%—an all-time high—of the most deprived areas in the UK have a free ATM.

That fact has to be seen in the context of the £2 billion of investment in the Post Office since 2010. The £370 million that is earmarked for 2018-21 is designed to maintain the last post office in the village and ensure that consumers can use the over-the-counter option to secure cash.

[Douglas Ross]

I am grateful to the Minister for his courtesy in giving way—a courtesy that was sadly lacking in the hon. Member for North Ayrshire and Arran (Patricia Gibson). As he is speaking about post offices, does he think that the hon. Lady did not take my intervention because she is fully aware that business rates are overseen by the SNP Scottish Government in Scotland? The problem for the Lossiemouth post office is that it is being punished by the SNP Scottish Government for having its ATM facing outwards and accessible 24/7 rather than inside the post office, which has therefore reduced the hours when the ATM is accessible.

[John Glen]

In response to my hon. Friend’s earlier request, the Government are aware of the Valuation Office Agency’s ruling and are considering their response, which will come in due course. He points out that there is a clear distinction in that behaviour.