Minimum Service Obligation (High Street Cashpoints)

Huw Merriman Excerpts

1st reading: House of Commons
Tuesday 27th November 2018 Commons Chamber

[Huw Merriman (Bexhill and Battle) (Con)]

I beg to move,

That leave be given to bring a Bill to require banks to provide cash machines to be made available on designated streets; to enable local authorities to designate streets that require cash machines in towns of more than 5,000 residents; and for connected purposes.

While that may not roll off the tongue, at a time when 2.2 million people in the UK rely almost entirely on cash it is critical that people can gain access to their money easily and free of charge, particularly people on low incomes, older people and people in rural areas. However, figures show that since the beginning of the year, free cash machines have been closing at an unprecedented rate. That has alarmed consumer groups, the Federation of Small Businesses, and, as their support for the Bill demonstrates, Members of Parliament.

I was inspired to introduce the Bill by the experience of residents of Battle, in my constituency in East Sussex. That historic town was the scene of the battle of Hastings. In 1066, Norman invaders marched from the constituency port of Pevensey to give King Harold and his men six of the best. Nowadays, Battle residents are having to make a similarly lengthy journey if they merely wish to access, and spend, the cash in their bank accounts. That is largely due to the withdrawal from Battle’s High Street of the big four banks—with them went their cash machines. The last to go was NatWest.

I wrote to Royal Bank of Scotland, the owner of NatWest, asking it to retain the cash machine. It refused, pointing to the 24/7 provision of a machine outside another store. When that machine, the last 24/7 cashpoint in High Street, was lost this month, I asked RBS to reinstate its cash machine or move one up the road from an out-of-town petrol station. It refused. That demonstrates the need for the Government to take action and require the financial services industry to provide at least one 24/7 cash machine in the high street of every town in the United Kingdom with a population of at least 5,000. I make that suggestion in the hope that the Ministry of Housing, Communities and Local Government will accept it as one of the key strands of the forthcoming review and remodelling of the high street that was announced in this year’s Budget.

It may help if I try to put my finger on the reason for the decline in cash machines, and hence the reason why intervention in the shape of the Bill is needed. 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. Hundreds of free ATMs have already closed as a result. The interchange fee is the amount that is paid every time a customer uses a free ATM, which funds the entire free-to-use ATM network.

The change was designed to reduce the number of machines in areas where there were too many, while retaining the geographical coverage of ATMs across the UK. That has failed. In 2018, analysis of LINK data showed that in the six months following LINK’s initial announcement—from November 2017 to April 2018—the rate of cashpoint closures increased significantly. It went from about 50 a month in 2015 to 300 a month during that period. LINK’s own figures show that between January and June this year, 500 cashpoints closed every month.

In January 2018, the consumer group Which? conducted a study of ATM provision across the UK, and identified more than 200 communities with poor ATM provision or no cash machines at all. The survey also demonstrated the impact that a potential reduction in the number of free-to-use ATMs would have on the millions of consumers who use the network. Overall, it identified heavy consumer dependency on ATM usage: just under half those surveyed used a cashpoint at least once a week, while four out of five said that access to the free-to-use network was important to their daily lives and payment for goods and services. The removal of free-to-use access would leave one in 10 struggling to make payments, shutting many consumers out of local shops and services. A reduction would also lead to one in seven being deterred from using outlets that accept cash only, placing a strain on consumers and retailers alike.

The threat of ATM closures is particularly pertinent in the context of widespread bank branch closures across the country. Research shows that free ATMs are an important alternative for consumers trying to access their cash when their local branch closes, but latest figures show that bank branches are closing at a rate of 60 a month, leaving people struggling to access the financial services they rely on across the UK.

The UK has lost almost two thirds of its bank branches in the past 30 years. According to parliamentary records, there were 20,583 branches in 1988, but analysis of current account providers shows that there are just 7,586 today. So far this year 670 branches have closed or are scheduled for closure, putting us on course to overtake the number of 2017 closures.

While there has been a decline in cash use, cash remains immensely popular and important for consumers. Almost three quarters of adults in the UK say they use cash at least two or three times a week.

Some might say that cash provision should be taken up by the post office network. I know that the Government recognise the important role post offices play by providing access to cash and banking services. Under the banking framework, 99% of UK personal banking customers and 95% of UK business banking customers can do their day-to-day banking at the post office. That agreement, in operation since January 2017, marked the biggest expansion of face-to-face banking access in a generation. However, post offices and postmasters and postmistresses do not feel that the banks are remunerating them properly for these transactions, and I fear that many will stop providing the service, just as LINK has ceased providing cash machines.

High street banks have a very special place in my heart. I spent my vacations during A-levels and university working as a cashier for Abbey National in Buckinghamshire. I was responsible for the morning refill of the cash machine—a job they might not have given me if they had known I would become an MP. Many a happy hour was spent with my customers, from “accidentally on purpose” setting off the cashier security screens when a customer was rude to colleagues, to repeatedly asking our favourite customer, Mr R. Head, to produce his identification so that we could roll about on the floor laughing when his driving licence showed his first name to be Richard, to taking a phone call from an irate customer concerned about overdraft charges and then phoning the cheque centre with the opening line of “Some old bag is complaining about racking up charges” only to be informed by the voice at the other end of the line, “This is the old bag speaking. I suggest you reimburse the charges or I will have you fired.” I had rung the customer back by mistake—a schoolboy error.

Fortunately, my pursuit of customer satisfaction improved steadily over the years prior to becoming my constituency MP. When vulnerable constituents, who are the most in need of our support, cannot access their cash and spend it in support of the stores that make up our vibrant high streets, something is not only wrong, but something needs to be done. I therefore recommend that this Bill becomes law.

Question put and agreed to.

Ordered,

That Huw Merriman, Simon Hoare, Stephen Crabb, Kevin Hollinrake, Daniel Zeichner, Dr Sarah Wollaston, Frank Field, John Lamont, Henry Smith, Ian Paisley, Sammy Wilson and Louise Haigh present the Bill.

Huw Merriman accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 25 January 2019, and to be printed (Bill 297).