Cost of Living: Financial Support for Disabled People

Debate between Hannah Bardell and Paul Maynard

Monday 22nd May 2023 Westminster Hall

[Paul Maynard]

The hon. Member mentioned the Retail Energy Code Company only briefly, and I wanted to talk a little more about it because the detail in it is actually quite interesting. I am not mocking the hon. Member at all, I just have the time to cover it in more detail, whereas she had more to cover. I urge her not to take offence unnecessarily.

The Retail Energy Code Company advises energy companies on the code of conduct they must adopt towards their customers. Given some of my casework, I am not sure how much the energy companies are listening to it, but that is its role within the energy sector. Andrew Mower, who has been working with it on a set of proposals on how to deal with energy costs for disabled people, has done a superb job in exploring this area and finding some of the flaws in the proposals that have been made in recent months.

In particular, it is worth looking at the NHS schemes that exist at the moment for those on oxygen concentrators and dialysis machines. It is a perfectly good model; I am glad to see the NHS recognising that it has to help people meet energy costs, but it is not universal. It goes back to my old friend the postcode lottery. In addition, the subsidy does not go up when energy prices go up, so people are always playing catch-up. People are paid in arrears, so they have to stump up the cash to pay their bills in the hope that they will get the money back at some future date. That money may not actually reflect the bill they have to pay.

It is interesting how the NHS model, which we think may be the answer to many things, actually causes as many problems as it solves. Similarly, with social tariffs, Mr Mower points out the immense difficulty they have found in the broadband sector when trying to come up with a social tariff that actually works and does not disrupt the market in perverse ways with unintended consequences that could see social tariffs costing more than the one that is available on the market to families now. Social tariffs by themselves are quite difficult to get right and need to be extremely flexible. I am not convinced that Ofgem spending hours each week reinventing what this week’s social tariff should look like every time the energy cap changes is actually the answer either.

[Hannah Bardell (Livingston) (SNP)]

The hon. Gentleman is very informed and detailed on this topic so I defer to his superior knowledge, but does he not agree that the Retail Energy Code Company, Ofgem and all those involved in the market are clearly failing the most vulnerable in our society? I have vulnerable and disabled constituents who are turning off their energy just so they can survive, yet the disaster of the structure and the standing charges—which the hon. Gentleman mentioned —means they are no better off, but they are freezing cold.

[Paul Maynard]

I share the hon. Lady’s view about the reality that her constituents, and indeed mine, are facing. I share some of her criticisms of the energy companies themselves. The Retail Energy Code Company is trying to provide an answer, which I hope the energy companies will listen to and I hope might just persuade her that it is worth a second look, but I do not know. Time will tell, perhaps.

When coming up with proposals for the disability sector, many charities emphasise the broadness of eligibility and auto-enrolment. That is entirely logical and sensible for them to do. They have learned from the reality of the priority services register. In my constituency, I find that the people who really ought to be on that register are the least likely to be on it, so charities are right to be concerned about whether some sort of voluntary enrolment would actually get to where we want it to go. At the same time, they are missing out the potential for a more tailored scheme, which goes back to my earlier point. Everybody’s energy costs are going to be different, and one-off payments do not necessarily meet that challenge.

Cash Acceptance

Debate between Hannah Bardell and Paul Maynard

Monday 20th March 2023 Westminster Hall

[Paul Maynard]

I take the right hon. Gentleman’s point, but I am not lecturing the banks on the basis of being a politician. I apologise if my approach today is technocratic, but I am not seeking to be political. The Minister can explain what the Government are actually doing on this front.

We have all had substantial lobbying on this issue. My inbox has been full of press clippings, videos of the hon. Member for Linlithgow and East Falkirk and so on. I am a little troubled by the emphasis on the compulsory acceptance of cash, and particularly by the suggestion that we should adopt something like the Spanish legislation that limits card payments to a €30 minimum. If someone wants to spend less than €30, they cannot use a card. That seems to be the very opposite of payment choice, and the cost would be passed on to consumers through higher prices. The cost to retailers comes in the form of driving further to deposit the takings at the end of the day. If they have to drive a long distance, they might have to close earlier to get to the post office or bank before it closes. That means they forgo income, so they might have to raise their prices.

In my constituency, the signs in shops saying “No card payments under £3” or, “No card payments under £5” have disappeared since the pandemic. That is progress; it gives people more choice. New technology, such as handheld card readers, has made payments both easier and cheaper, although I recognise that the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) might intervene to say that broadband is still not good enough in many rural areas to make such things reliable, particularly in the tourism sector.

Before people out there start to shout at me, let me say that I certainly do not believe that cash should be killed off and that the future is entirely digital—far from it. People will always need cash, particularly the financially vulnerable and marginalised in society. My constituency of Blackpool North and Cleveleys has eight of the 10 poorest neighbourhoods in the country, and I know that some people rely on cash to manage their income. Some are nervous about using technology; they may struggle to remember their PIN or manage their personal finances. They may be among the 1.8 million people who are still unbanked, relying on a jam-jar approach and monitoring pots of money for bills, which cannot be done with a card.

I was troubled by some of the proposals briefed out ahead of this debate. One suggestion was that in return for requiring businesses to accept cash, certain denominations of coin would be done away with—giving with one hand while taking with the other. That fills me with dread. Another suggestion was requiring “exact-amount services”, which is a euphemism for “rounding up”—something priced at 33p would be priced at 35p, for example. That would make no sense in the midst of a cost of living crisis. There is no mandate for it from the public, and it has no legitimacy in the eyes of consumers or, indeed, retailers.

The Minister is here to tell us what the Government have done, but I will make brief reference to the legislation on access to cash, which is entirely welcome. I would love him to talk about free access to cash, but I bet he will not—he has been disappointing me on that front for some time, so I will not hold my breath. I am also a bit frustrated that the policy statement explaining how we will guarantee access to cash will not come out until we pass the legislation, so we cannot judge how spot on it is, but he may be listening to me on that.

I have not heard many people talk about the notion of cashback without purchase, something for which the Government have legislated. It solved a long-term problem known as the £3.22 issue. Someone may want to take out a precise amount of money—they might not want £10 or £20 because they are managing their finances. They cannot take £3.22 out of an ATM, but they can now take out that amount from their local PayPoint in the newsagent without having to make a purchase. It is life changing for many people in areas such as the one I represent, but all the vested interests in this debate hate talking about cashback without purchase. They do not want people to know about it. They would far rather that the most vulnerable people in my constituency went down to a pay-to-use ATM.

The banks have produced some fascinating research into why people in the most deprived parts of this country often go to a pay-to-use ATM, which may charge £2 or £2.50 to take out small amounts of money, when they are actually very near to a free-to-use ATM. Understanding that strange behaviour is a real challenge for the financial services sector, and it is something that I find frustrating about this entire debate.

I commend the work of the access to cash review and Natalie Ceeney, who has done so much on access in recent years. Like her and the group, I believe that banking hubs are the way forward, but I also know from Link’s work scrutinising the impact of bank closures that the introduction of a banking hub is not the only remedy to bank closures. I think of post offices, ATMs, and deposit-taking “reverse” ATMs. I was doing my own private secretary work, as a sort-of pretend Minister, by checking on my phone what happened in Holt when Barclays closed; I understand that an ATM is now going to be installed. When I checked Axminster, I found that its residents are getting a banking hub—I am not sure when, but congratulations on that. I am sure they have heard how good it was in Cambuslang.

Many campaigners ask, “Is this enough? Are we going far enough and fast enough? Why aren’t they all open now? Why doesn’t a banking hub open the moment the bank shuts its doors?” but 38 banking hubs and 38 more deposit-taking ATMs have been announced so far, which is a pretty good first step. I would love things to move faster—that might stop the Daily Mail campaigning against banking hubs—but they are a rather new concept and certain legalities need sorting out. Indeed, in one case, they are still trying to remove asbestos from the preferred location. People who thought that the moment a branch shut a banking hub would pop up as a like-for-like replacement misunderstood the situation.

Campaigners set the bar so high that I think they will not be satisfied until they have a maternity unit included in the hub, as well as everything else—they almost seem not to want to win this battle that they have been fighting for so long. We need to keep the pressure on those introducing the banking hubs; we need to ensure that the pace of their introduction accelerates and that these initial hurdles are overcome, but I do not think we should talk down the idea of banking hubs because somehow they are not perfect.

I wonder if the aspirations are too high. I listened carefully to the House of Lords debate on the Financial Services and Markets Bill, in the special way that the House of Lords does it. Their lordships suggested in one amendment an obligation on banking hubs to have a representative from every single bank. That just is not feasible. Digital-only banks, such as Monzo and First Direct, offer a better service to customers because they do not have the overheads of a physical network. We would wholly undermine their business model if we were to insist that banks like Monzo suddenly have to recruit someone to physically exist in a banking hub. That makes no sense at all.

What the banking hubs should be used for is digital training and addressing financial exclusion. Someone mentioned decimalisation—I think it was the hon. Member for Linlithgow and East Falkirk. To me, a more pertinent example is the switch from analogue to digital television and the emphasis, training and preparation that went into that process, so that no one was left unserved when analogue was switched off. People knew it was coming and were helped through that process. I am not saying that cash will ever be switched off, nor do I want it to be, but we could learn from that process how we walk and talk people through it.

I want to make two final points. One is around deposit-taking ATMs. This may sound like a rather anodyne and technocratic point—I suppose it is—but not all ATMs are equal. Members may have heard me refer earlier to the challenges retailers face in having to go much further to deposit their takings at the end of the day. A deposit-taking ATM is fundamental to solving that problem.

The post office is not always the solution. My post office in Cleveleys is tiny, despite it being a town of 16,000; people queue out the door even when there are no financial services activities, let alone every time a bank branch closes and they have to start using the post office again. I was speaking to the postmaster of the nearest post office to where I live. I have been hearing worrying tales that local businesses are struggling to deposit cash because the banks are putting limits on the amount a business can deposit in any one calendar year, to the point that some businesses are having to shut down, simply because they cannot deposit the cash takings at the end of the day. I tell the financial services sector and all those banks that normally monitor what I say in this place that I am not happy. I expect an email tomorrow morning from at least one of those banks that are obsessed with everything I say. This policy is a real deterrent.

I end on a note of agreement, though, with the UK Cash Supply Alliance. I know I have been giving them a bit of a hard time in the debate. This is the most technocratic issue imaginable, but it is the cost of the hardwiring of our cash system. The wholesale distribution of cash remains far too costly—£5 billion to the economy overall—and there is far too much duplication. We have not seen the radical reform I believe was needed when the Bank of England set up the wholesale distribution steering group to try to find an alternative model. I fear that some in the cash distribution sector are defending their commercial turf under the guise of protecting customer interests. That is simply not good enough.

I had a fascinating trip to Vaultex near Warrington several years ago. Vaultex is one of the cash-handling and cash-distribution centres that covers the north of England. All our bank notes come in and come out of the centre. I have never stood near so much money in my life. There is absolutely no chance of getting in or out with it—it even has a special roof that a helicopter cannot be landed on just to avoid any shenanigans—but what I saw there was duplication after duplication. Every bank required their bank notes to be counted, stored and separated in a specific way; there was no attempt to rationalise the process. I sat there thinking, “If only more banks could agree to handle their money in the same way, it would start to reduce this £5 billion cost.” I do not know how that is going. I gather there were proposals for a public utility model that would help to bring it all together to reduce the costs, but it is such an opaque process. The Bank of England does not update the minutes on its website for this wholesale distribution steering group, so I know very little about what is going on, which is frustrating.

Reducing that £5 billion cost is the answer to what we have been discussing today, making it cheaper and more affordable for small businesses to keep taking cash. If that does not happen, we will have a problem. The best way to protect the acceptance of cash is not by penalising consumers with higher costs or penalising retailers by forcing them to raise costs, but by addressing the reason why retailers choose not to accept cash in the first place, which is about cost and convenience. We should reduce the cost of wholesale distribution, and make depositing cash easier with more deposit-taking ATMs. If we do that, we will start to tackle the vested interests which have hovered ghoulishly over this debate for far too long.

[Hannah Bardell (in the Chair)]

I call the SNP spokesperson.