Covid-19: Access to and Acceptance of Cash

Patricia Gibson Excerpts

Thursday 3rd December 2020 Westminster Hall

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

I am delighted to speak in the debate, and I echo the congratulations that have been offered to the hon. Member for Blackpool North and Cleveleys (Paul Maynard) on securing it, and on his clear exposition of the scope of the challenges that we and our communities face in access to and use of cash.

I want to express my good cheer at the fact that there is such a level of common purpose in the Chamber today. That does not happen as often as we might like, but there is clear agreement here. I want to pick up on something that the hon. Member for Strangford (Jim Shannon) said. He described himself as old school, because he still uses cheques. I cannot speak for anyone else in the Chamber, but I also use them. I can go one better, because recently, having forgotten my cheque book, I had cause to buy that quaint old relic called a postal order, which is very unfashionable. I was quite surprised; I had not bought one for about 35 years, and they look really quite sexy now—far different from how they used to look.

There was a debate similar to this one at the end of May last year, covering many of the same issues; again, that was referred to by the hon. Member for Strangford. All the issues we would expect were debated: how for some of us cash is convenient but for others it is a vital budgeting tool; the level of control that it offers, which digital transactions do not; and the fact that there is a sensible reason why debt charities always advise those living with damaging levels of debt to cut up their cards as a first step to regaining some financial control. Members around the Chamber have repeatedly referred to the way our cash machines are disappearing from our high streets—faster than snow off a dyke. Some businesses do not accept cash payments at all, and some 1.3 million people in the UK do not have a bank account and already suffer financial exclusion. Those problems were highlighted even before covid-19 and the need to factor in the effect of cash not being accepted in the current climate. The same arguments and concerns have rightly been repeated today.

How different the world looks now, only 19 short months after that debate in May last year. Now we are living with covid-19. We live in a world where the cash network has been placed under increasing strain, pushing it ever closer to collapse. Alongside that, as we have heard from many Members today, there is a continuing trend for considerable shrinkage in the availability of free-to-use cash links in communities; 9,500 have been lost since 2017, and it is feared that further losses are on the way. More than a third of bank branches have been lost in less than five years, and we can all guess that there will be further bank closures to come. That is extremely worrying, because for many of our constituents cash is not just the preferred way of payment—although for many that is the case; for many, cash is the only purchasing method at their disposal, as you said, Ms Fovargue.

The hon. Member for Strangford also reminded us that cash is something that we all sometimes need to rely on, whether we like it or not, because of technical glitches with card machines, and even some high-profile IT glitches in the banking world. I thank the hon. Gentleman for reminding us of that.

The Chancellor committed to introducing legislation to protect access to cash in March 2020; however, the pandemic has dramatically shortened the timeframe needed for intervention, and unless it is introduced urgently the ability to get access to cash and spend it could be permanently lost to many consumers, causing significant harm and financial exclusion.

The speed of the stampede away from cash and towards digital payments is fine for some people, and good luck to them. However, the price of that speed is that many are left behind. The consumer body Which?—many have referred to its excellent work on the matter—revealed that 85% of us would find it difficult to live our lives without the ability to withdraw cash. That makes the 23% rise in pay-to-use cash machines, particularly concentrated in socially deprived areas, all the more worrying. I share the concerns highlighted by the hon. Member for Luton North (Sarah Owen).

This speeding towards digital payments, which were taking hold before covid, has accelerated at an astonishing rate in the current climate, and that has quickened the decline of our high street cash machines and bank branches. The loss of bank branches has affected my constituency of North Ayrshire and Arran. I believe it is one of the worst hit in the UK when we consider the distance to the next bank, although I take on board the challenges that the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) talked about in his rural constituency. These matters have been repeatedly raised in the Commons by me and other Members. I echo the hon. Gentleman’s comments about the pressing need for banking hubs. It is really important that they are expedited in all our communities that have suffered.

[Rushanara Ali in the Chair]

Covid has made the situation of our cash infrastructure all the more perilous. As we have heard, many retailers are simply refusing to accept cash. During the global pandemic, when there is already no end of serious matters to contend with, too many of our constituents have to contend with their lives being made unnecessarily difficult because they cannot pay for the goods and services they need with cash, as the right hon. Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell) set out.

Research by Which? showed that in May, one in 10 people had been unable to pay for items with cash during lockdown because they were refused by the retailer. Of that number, 26% were unable to purchase the items that they needed as they had no alternative to cash. In October, Which? found that four out of 10 of those who responded to its survey left a shop empty handed when they tried to pay for groceries with cash. The right hon. Gentleman also highlighted that. As we have heard, action on access to cash is utterly meaningless if the widespread acceptance of cash is lost in our shops. We urgently need the Financial Conduct Authority to publish a UK-wide tracker of levels of cash acceptance.

I echo the calls for the Minister to set out what interventions his Government will take to ensure that people, especially those who rely on cash, can continue to use it to pay for essential goods and services. There is currently an absence of legislation to protect such access to cash. Alongside that, we need an impact assessment of the effect of cash refusal on consumers, to consider the relationship between the acceptance of cash and consumer access to it.

The genuine fear that we have heard today is that cash payment options have been fatally and profoundly—but, I hope, not irreversibly—affected to the point where the post-covid use of cash in our society is on its death bed. I suppose we are here today to see whether it can be resuscitated. The UK Government have a duty to ensure that access to cash does not disappear, for the sake of our rural and socioeconomically challenged communities, which particularly rely on that medium.

Following the UK Government’s legislative proposals to protect access to cash, the proposal to give the Financial Conduct Authority the responsibility for overseeing access to cash is to be welcomed. Alongside that, it is important that the Financial Conduct Authority is given proper teeth. It needs comprehensive powers to ensure strategic and comprehensive regulation.

It seems clear that expediting those proposals has become ever more urgent, given that the diminishing of the cash infrastructure has been accelerated in recent months. The Financial Conduct Authority should be given a statutory duty to protect our cash infrastructure. It should be responsible for monitoring and reporting on levels of cash access, as well as designing and implementing a framework funded by the industry by which a minimum level of access to cash can be maintained. Our cash infrastructure will not be sustainable without that level of intervention from the Government. We can already see it crumbling before our eyes at a shocking rate, as every single participant in the debate has mentioned.

In addition, the Government should set out a clear timetable—others have also called for this—for introducing a Bill to Parliament as soon as possible. That should include the detail, scope and contents of the proposed legislation, with a clear exposition of how it will build on and complement current work being done to protect consumers’ ability to access cash. I know that Conservative Governments are often reluctant to have such direct intervention on such matters, but when direct intervention is required, the Government must be brave enough to make that intervention.

--- Later in debate ---

[Jesse Norman]

The Government absolutely recognise—I am not going to comment on the shape of what is to come, because I do not think that would be appropriate—the concern about free access to cash. As the hon. Lady will know, a lot of work has been done on trying to preserve inclusivity in the face of markets and pandemic-induced change that may be prejudicing that access.

[Patricia Gibson]

Will the Minister give way?

[Jesse Norman]

I really do not have much time, and I want to respond to the comments and to give my hon. Friend the Member for Blackpool North and Cleveleys the chance to wind up, so let me press on with a couple of key things.

It is worth mentioning that the industry is already taking action to support cashback. Mastercard and Visa have already announced incentives, and of course we have the community access to cash pilots.

The set of authorities that govern this area has been raised. It is important to say that the Government’s view is that the FCA may well be best positioned to take on the function of co-ordinating in an overall responsible way, while we also intend for the PSR and the Bank of England to continue their existing functions. As colleagues will know, the FCA already has a statutory objective to secure an appropriate degree of protection for consumers and existing regulatory relationships with industry.

My hon. Friend asked about wholesale cash distribution. As I think he knows, there was a previous consultation paper by the Bank of England on the future of the wholesale cash distribution model, which set out a high-level road map. A lot of work is being done between the Treasury and the Bank to address those issues.

The hon. Member for Makerfield will be aware that there are existing policies within the LINK ATM network, in particular, to protect the distribution of free cash through ATMs. The Treasury is supporting the Bank of England in trying to enable a sustainable model—sustainability is important—to permit effective wholesale cash distribution.

I ought to sit down now. I thank colleagues very much indeed for their interesting and constructive contributions to the debate.