Covid-19: Access to and Acceptance of Cash

Jim Shannon Excerpts

Thursday 3rd December 2020 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Member for Blackpool North and Cleveleys (Paul Maynard) on securing this debate. This is not the first time we have debated this subject in Westminster Hall; I understand that the hon. Member for North Ayrshire and Arran (Patricia Gibson) and probably numerous other Scottish MPs have had previously had a similar debate. We are back to rehearse the issues, in a nice way. It was a pleasure to hear the opening speech from the hon. Member for Blackpool North and Cleveleys.

I do not feel particularly old—some days I do, but other days I do not—but I am one of those old-school people when it comes to cash and cheques. People can still get cheque books, by the way; I get one almost every month. By and large, the people from whom I buy stuff have been more than happy to receive a cheque. Unfortunately, that has changed, and I will give a few examples to illustrate the issues to which the hon. Gentleman and other hon. Members have referred. I understand the rationale behind shops asking people to use contactless payment if possible at this time, but that is not and cannot be sustainable. A number of businesses in Belfast and Northern Ireland have refused to take cash during the coronavirus pandemic and have lost business for life.

I digress slightly, but flights from Northern Ireland to here are quite restricted. I have to go over first thing in the morning and come back last thing at night, because there are not many options. British Airways has put a flight on in the last week. It informed us this week that we could not get a boarding pass online, but we had to present ourselves at the airport where a person would hand it over face to face. That is totally contrary to the coronavirus rules, and it is hard to understand how some have changed their methodology while others have not. Incidentally, there is not the same problem with Aer Lingus and other airlines.

I will give an example of the problems with contactless payment. My parliamentary aide, who was determined to shop in the local high street for her Christmas gifts, went to the local Menarys department store in the main town of Newtownards to buy Christmas gifts for her children’s teachers. When she came to pay, an issue with the card machine meant that she could not. That seems to be a recurring problem, although I do not know why. She has told me that she will make every effort to go back and select the merchandise and pay for it, because she knows that coronavirus and the lockdown could be the death knell for the high street. Next week, there will be a debate about the high street, not in Westminster Hall, but in the main Chamber. It will probably be oversubscribed, because every hon. Member present will want to make a contribution if possible. The fact that my aide does not bother to carry money and has her card on her phone meant the loss of that sale, as it would for many people.

I requested a breakdown of access to cash in Strangford and received some interesting results. In total, the constituency lost 13 free-to-use ATMs from January 2018 to September 2020, according to the latest data at that time, despite the fact that the number of pay-to-use ATMs increased by four. There was also a reduction of two ATMs from the start of lockdown in March to May 2020. By the end of 2021, my constituency will have lost seven bank branches since 2015. That figure includes the proposed closure of a TSB branch that was announced earlier this year.

Access to cash is declining and our reliance on contactless is growing, but the technology and security are not keeping pace with that. A chat with local merchants will tell of the unreliability of card machines, or of being caught out when a customer unintentionally leaves before it is realised that their card has been declined. I have seen that happen in the Members’ Dining Room. Let me be clear that that is nobody’s fault; nobody is doing that intentionally, and they have put their card on the reader. Of course, in the Members’ Dining Room, people do not go too far away—they only go to wherever they are going to sit to have a cup of tea, or whatever they are having—and the staff come up and say, “Look, that didn’t go through. Will you go back and do it again?” That can happen, and it underlines some of the issues.

I have been contacted by the Association of Convenience Stores, which represents some 33,500 local shops and petrol forecourts across the whole of the United Kingdom of Great Britain and Northern Ireland, many of which trade as independents under brands such as Spar, Nisa and Costcutter. I support their calls to restore the independent setting of LINK interchange fees for ATMs and to require bank participation in LINK; to enable cashback without a purchase, but without any obligation for retailers to offer that service and with guaranteed fair remuneration; and to develop an access to cash guarantee to ensure that access is maintained where exceptional circumstances lead to a lack of coverage. The hon. Member for Luton North (Sarah Owen) referred to that as well. We do need some help from the Minister, who is here to respond to our requests.

As Which? put it,

“The pandemic has accelerated the decline in cash use and demand: ATM withdrawals fell significantly during the first national lockdown, and with an increasing number of shops encouraging non-cash payments, we anticipate this reduction in cash to persist long after restrictions have been lifted. This is putting immense pressure on the UK’s already fragile cash infrastructure, leaving it at a high risk of collapse.

However, while overall use has fallen, our research has found that cash remains a fundamental payment method for many, often vulnerable, people.”

The right hon. Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell) talked about that just before I rose to speak. We are here to speak for vulnerable people. Every one of us will mention them, we all know them and we know what the issues are for them. I am sure that the hon. Member for North Ayrshire and Arran, who will follow me, will underline that with real understanding and with lots of examples of where the system falls down for them.

In a survey in May, less than half of all consumers said that they were accessing or using cash in the same way as before the pandemic, while almost a third said that coronavirus would not affect their cash use in the next six months. Although the Government pledged to protect access to cash in March, just before coronavirus came online, legislation is needed urgently to prevent people from losing access to their only payment method. We have all said that, but I will say it again. I know that others, including the shadow Minister, will say the same thing.

I believe the Government must set out a clear timetable for introducing a Bill to Parliament, with detail on the scope and contents of the proposed legislation, highlighting how it will build on and complement current work being done to protect consumers’ ability to access cash. Can the Minister set that out?

My constituents have, by and large, supported the coronavirus rules and regulations, and they have understood the need not to use cash, but they also understand the predicament and the problems that come with having a cashless society. We need to make sure that the vulnerable are looked after. Quite clearly, at the moment, they are not.

--- Later in debate ---

[The Financial Secretary to the Treasury (Jesse Norman)]

It is a delight to see you in the Chair, Ms Ali. I am sure all colleagues will join me in taking my hat off to the genius of improvisation and quick thinking that allowed our colleagues, my hon. Friend the Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell) and the hon. Member for Makerfield (Yvonne Fovargue), to take the Chair—the vital element. Thank you, Ms Ali, for coming in at the end and allowing us all to take our positions in the Chamber.

This has been a very good debate—very thoughtful, very constructive, very well informed and on a very important topic—and I thank everyone who has made contributions to it. I am sure everyone present will join me in thanking in particular my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard) for securing the debate, and also for his excellent and very thoughtful speech. He picked up on themes that he and many other hon. Members have been pressing over the previous years and months. His knowledge of and engagement in the issue of cash access and the use of cash are well known, and I thank him and everyone else for their contributions.

As colleagues will be aware, I am not the Economic Secretary to the Treasury. He, tragically, is unavoidably detained with the trivial matter of the Financial Services Bill—he sends his apologies and thanks. It has been mentioned by several colleagues in this debate that he has been very accessible to them in discussing these issues; his style is a very open and friendly one. We try to do that in the Treasury and he has been an exemplar. I am sure that colleagues will continue to engage with him. I am afraid that, compared to his grandmastery and immense skill, I am very much a novice chess player in this area.

It is clear that digital payments are, as colleagues have mentioned, playing more and more of a role in the lives of people across the country and in the activities of business. In many ways, this is to be profoundly welcomed; it allows for faster, cheaper payments and for easier management of household and business finances—those are the forces that in large part have powered the change hitherto.

The statistics are clear: in 2009, some 58% of payments were made using cash; just a decade later in 2019, it was 23%. That astonishing rate of change has now been accelerated by covid-19, as colleagues have said.

It is important to say that cash has not, by any means, had its day; it is still the second most popular form of payment in this country. According to figures published last year, a reported 2.1 million people mainly use cash for everyday payments, many of whom may be vulnerable, elderly or on low incomes. However, the pandemic has clearly had a marked impact on cash usage. We recognise that and, as I think colleagues have noticed, the Government have not been slow to press forward on the issue. That, of course, creates the impetus and energy that they have shown in bringing attention to these issues in the debate.

I reassure colleagues that the Treasury has been working very closely with regulators and industry to try to ensure that people have access to essential banking services, and to cash in particular. As colleagues will be aware, the Joint Authorities Cash Strategy group only launched in May 2019, but it is very much engaged in facilitating co-ordination and seeking to ensure comprehensive oversight of the UK’s cash infrastructure. If I may, I will talk a little more about the wider picture, then I will come to specific comments and questions that have been raised by colleagues in the debate.

The JACS group is chaired by the Treasury, and brings together the Payment Systems Regulator, the Financial Conduct Authority and the Bank of England. The group has continued to try to coordinate efforts throughout the pandemic and, as Members will be aware, it published an update on the actions of its members in July 2020. Also in the summer, the FCA and the PSR published a statement setting out their approach to addressing issues in relation to access to cash, including local-level areas that have lost access to cash. In September, the FCA introduced new guidance for banks, building societies and credit unions when they are considering closing branches or ATMs.

I think it fair to say that throughout the pandemic, the regulators on the one side and the industry on the other have taken steps to support customers who are reliant on cash. Those have included more proactive communications, cash deliveries to people’s homes, and issuing carer cards to trusted third parties. As a result, the vast majority of people have continued to have access to cash during the pandemic. That, of course, does not address those who may have been struggling, whose position has been highlighted by many of the individual stories told in the debate.

There is the question not merely of cash access, but of cash acceptance, as my hon. Friend the Member for Blackpool North and Cleveleys highlighted. The one is as essential as the other. Of course, to help to control the virus, businesses and individuals have been encouraged to follow the latest Government advice, which involves a range of measures to protect personal health, but also to minimise contact in transactions. However, it does remain the choice of an individual retailor whether to accept a particular form of payment, be that cash or card. What is interesting is how different groups, including the FCA, the PSR and the Bank of England, as I have mentioned, are joining forces to improve data collection and, therefore, gain a better understanding.

My hon. Friend the Member for Blackpool North and Cleveleys raised the question of mandation. The Government do not believe that mandating cash acceptance is the answer, but exploring means to incentivise the acceptance of cash is high on the agenda and was a key issue raised in the call for evidence. If protecting access to cash is a complex issue, requiring a long-term and collaborative effort, it is no less important that that work continues across industry regulators and the Government.

The ATM network has been mentioned by colleagues. LINK, which is the largest network of ATMs, has taken action to ensure that remote and deprived areas continue to have access to free-to-use machines. The Government are working to bring legislation to protect access to cash to ensure that the nation’s cash infrastructure is sustainable over the longer-term, as the hon. Lady for Houghton and Sunderland South (Bridget Phillipson) highlighted, and as was prefigured in the March 2020 Budget.

[Jim Shannon]

As I said in my contribution, the Association of Convenience Stores has put forward ideas for helping the ATM system. I realise this is not the Minister’s responsibility to be honest, but has the Department had the opportunity to talk to those people to see how we could work together?

[Jesse Norman]

I thank the hon. Member very much. I do not know whether the Department has had the opportunity to talk to the Association of Convenience Stores specifically, but I do know that the issue is very much on the agenda—it is certainly on the agenda of the Economic Secretary. It is important to realise, and to remind everyone, that the call for evidence on access to cash only closed last week. The timeliness of this debate rams home that point, and rightly so, but it is merely a week. It says more than I could for the high esteem in which colleagues across the House must hold the Government, if they think we can make a decision without having published a response and having only closed the call for evidence last week.

Nevertheless, the call for evidence is an important aspect. It set out the Government’s view that cash has the potential to continue to play an important role—and cashback within the cash infrastructure—and also asked for views on how that can be achieved. We will publish a summary of responses to the call for evidence and set out steps alongside that in due course. As colleagues will know, the call for evidence asked for views on key considerations associated with cash access, including deposit and withdrawal facilities, cash acceptance and regulatory oversight of the system.

The call for evidence also set out the Government’s views on the aims of legislation: that it should be proportionate, flexible, cost-effective, efficient and sustainable. The Government’s view, and we should be perfectly clear about this, is that legislation will need to ensure that business and people can have access to cash withdrawal and depositing facilities within a reasonable travel distance, as is needed in their day to day lives. I remind colleagues of that central point.