Access to Cash

Gareth Thomas Excerpts

Wednesday 20th October 2021 Westminster Hall

[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.

--- Later in debate ---

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

I pay tribute to my hon. Friend the Member for Pontypridd (Alex Davies-Jones) for securing the debate and for the way she introduced it. I, too, think that banks should be mandated to stay as members of LINK, and that the pressure on banks relating to costs and to their desire to maximise profits, which has led to so many bank branches closing, is unlikely to dissipate any time soon unless Ministers take action.

The hon. Member for Blackpool North and Cleveleys (Paul Maynard) referred to a big meeting that is taking place in the City, but I fear that it will not lead to a whole slew of new bank branches opening. In fact, the pressure on banks to continue the programme of closures means that we will continue to live with it unless Ministers take action. The right hon. Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell) mentioned post office closures. I fear that those are the beginning of a pattern of closures that Royal Mail is also likely to engage in unless there is ministerial pressure to bring about a change of heart. The ability to withdraw and deposit cash is absolutely what makes the bank closures important. If Ministers will not mandate banks and post offices to maintain existing numbers of bank branches, it will undoubtedly become much harder for people to use cash.

I will use my remaining time to drill down into and encourage the Minister to look at one potential solution: community credit unions. Although they recognise the cost of community branches having a physical presence in their community, they have made a deliberate policy decision to go ahead and set up branches. Unless those credit unions can be helped to expand and offer a wider range of products, they too will face difficult cost pressures.

I know that the Minister is committed to bringing forward legislation to allow some expansion of credit union services, and I welcome that. It would be good to hear that the timescale for that to happen was being sped up. From what I gather, it is a set of changes that, welcome as they are, are not yet ambitious enough. I therefore gently encourage him to consider a more specific programme to encourage a whole range of commercial and public sector organisations to encourage people to join their local community credit union. Why not establish with employers, for the first time, a right to save: the right of the employee to go to the employer and say, “I want to save a small sum of money”—however small—“through a payroll deduction service”—perhaps with a credit union that the employer has sat down with and chosen—“and in that both help myself to be more financially resilient, and help my credit union and my community to grow and offer the services that are necessary”?