Treasury

Mark Pawsey Excerpts

Tuesday 21st December 2010 Commons Chamber

[Mark Pawsey (Rugby) (Con)]

May I extend my good wishes to you, Madam Deputy Speaker, and to all Members and staff?

It is a great pleasure to follow the hon. Member for Streatham (Mr Umunna), because I, too, wish to raise a matter relating to high street banks. I shall discuss the proposals to withdraw the ability to write cheques, and in referring to that issue my remarks will in part be the reflections of a new Member—perhaps appropriate for this time of year—and draw on my early experience in a new role.

In August, I received a letter from a constituent, Miss Patricia Keats, who wrote to tell me that she was 87 years old, and since the closure of her local post office had found it difficult to get hold of cash. With her pension paid directly into her bank account, she found it convenient to ask a friend to take out cash for her and then to use her cheque book to pay that person. In addition, Miss Keats told me how useful her cheque book is for paying people who help her at home, such as her chiropodist; and how useful it is, when she watches a disaster unfold on TV, such as in Haiti or in Pakistan, for sending a donation. So, she wrote that she has real concerns about the banks’ proposals.

I am afraid that when I received Miss Keats’s letter I did not respond as thoroughly as I might have. I replied, simply pointing out that the proposal is fairly distant; that it will not come in until 2018; and that alternatives are being considered. I regret my response: I did not consider the issue sufficiently thoroughly, take account of her personal circumstances and wishes or do as much as I should have done to represent her interests. I am pleased to have the opportunity to put that matter right by going into the issue in more detail today.

This is a matter for the Payments Council, the organisation that directs the strategy for UK payments. The industry set it up in 2007 to ensure that payment systems and services meet the needs of payment service providers, users and the wider economy. Last year, the council’s board decided to set a target date of 2018 for closing central cheque clearing.

Some 4 million cheques are still written every day, so there is still a large number although it fell by 12% between 2000 and 2008, leading retailers such as Tesco and Marks and Spencer to refuse to accept them in their stores. Many people will know from their everyday experience that cheque usage is falling as people make payments by other methods, such as direct debits and internet banking.

[Mr Bone]

My hon. Friend is making an excellent speech, but I have a member of staff who does not know how to write a cheque and never has. There seem to be two economies.

[Mark Pawsey]

My hon. Friend makes a fair point, but somebody in the older age group has drawn the issue to my attention, and I shall go on to mention how it affects not just those people but others.

It is true, none the less, that those most resisting change are older residents, such as Miss Keats, who often do not have internet access or are uncomfortable with the open-ended commitment of a direct debit, which involves a supplier, frequently a large, faceless corporation, being able to put its hand into their bank account.

I am myself of a generation that grew up with a cheque book, and I do not wish to see them go, despite having seen cheques used inappropriately; I am thinking about the idiot in the student union bar who, rather than taking out some cash, insists on paying for half a pint of bitter with a cheque, to the irritation of other customers and bar staff alike. It is clear that people generally do not want cheques to go. For settling an account with a provider of goods or services, sending a cheque is a simple and easy method of payment—not least because the cheque book stub is a convenient reminder of which bills have been paid.

Charities in particular do not want cheques to go; they fear that that would mean a decline in their incomes because many of their donors are nervous about other methods. Small businesses do not want them to go either, because it is easy to reconcile accounts when payments are made by cheque, often with invoice numbers written on the back.

[Justin Tomlinson]

I fully support that point about small businesses. As one who has spent many years reconciling accounts, I think that too often internet bank accounts do not show the full details, while it is always crystal clear who a cheque has come from.

--- Later in debate ---

[Mark Pawsey]

Absolutely. I spent 25 years running a small business and I know that the information on the back of cheques is of great value.

I am pleased that the Government recognise the seriousness of the issue. I appreciate the recent ministerial letter that recognised people’s concerns. It acknowledged that no decision on closure will be taken before 2016 and that that would depend on suitable replacement methods having been established. I am also pleased that the Government welcome the Payments Council’s commitment to reassure cheque users that their interests will not be ignored. But it is not enough simply to say that 2018 is a long way off, and it is not helpful to tell people that a facility will be withdrawn in the future without telling them what the alternatives might be. Individuals, businesses and charities want certainty about what might be happening.

I hope that this afternoon I have put right a wrong in my response to Miss Keats and that I have done justice to the points that she raised by asking the Minister to go a little further than he has until now and respond to the final plea that Miss Keats made in her letter that he

“do what he can do to support the very many people who want and need to keep cheques.”