Financial Exclusion: Access to Cash

Ruth George Excerpts

Tuesday 21st May 2019 Westminster Hall

[Seema Malhotra]

My hon. Friend’s extremely important point is one I was about to go on to. We have seen this debate previously in relation to post offices, and have then seen post offices become an important part of the strategy for maintaining access to cash—Mastercard and others are also working with them. Research from the Post Office shows that about 44% of small businesses believe that the convenience of cash is essential to their business, and also that they use post offices. Yet, alongside this debate, we see these warnings, and alongside the challenges that the post office network faces, deprived and rural communities will have even poorer access to cash.

[Ruth George (High Peak) (Lab)]

My hon. Friend is making an excellent speech. Does she agree that the change in the post office contracts, particularly in the local and local plus contracts, meaning that post offices get only £12 for handling £1,000 of cash, is driving down the provision of post offices in rural communities and towns in particular?

[Seema Malhotra]

My hon. Friend is absolutely right. Post offices in my constituency have raised similar concerns.

--- Later in debate ---

[Ruth George (High Peak) (Lab)]

This is not a minor issue, particularly in constituencies such as mine with a large rural area and market towns. The LINK Access to Cash Review found that cash is an economic necessity for 25 million people, and that 8 million adults—17%—would struggle to cope in a cashless society. In my constituency, as in others that have been mentioned, banks, post offices and ATMs have closed, making it more difficult not just for ordinary people to go about their everyday lives and make transactions, but for market traders, those wishing to hold community events, and charities—[Interruption.] I hope that we can all recover from that cry for attention from the alarm system.

I was speaking about the problems faced by market traders and charities in holding events, fundraising and bring communities together. Such events rely on cash to make them happen. It is already becoming much harder, with insurance premiums and regulations governing them. That means that people are less and less able to hold such events to bring people together. A lack of cash also means that people in rural areas who need it feel that they have to take out larger sums when they travel to a town. That makes them more vulnerable to crime and to people seeking to prey on them. The Government have to be mindful of that.

Post offices are expected to pick up the pieces of access to cash, as well as the lack of banks. As I mentioned, post office contracts are extremely important. Sub-postmasters across my constituency on all different types of contract tell me that they are struggling, but particularly those on the local and the local plus contract. However, it is not possible to scrutinise those contracts and how the changes have affected the profitability of post offices. I urge the Minister to speak urgently to colleagues in the Department for Business, Energy and Industrial Strategy about that much-needed review.

Convenience stores must not be left to carry the load. As chair of the all-party parliamentary small shops group, that is certainly close to my heart. At the moment, 62% of convenience stores provide ATMs, almost three quarters of which are free to use. Interchange fees have been reduced twice already, resulting in cuts worth more than £1,000, split between the operator and the retailer. In spite of the delay in next year’s cut, ATM operators serving 73% of free-to-use ATMs not hosted by banks are now implementing or considering a decision to switch to pay-to-use machines. They are also penalised by business rates; I call on the Minister to look strongly at the fact that average ATM rates add £4,000 a year to the bills of a small retailer. That seems punitive, certainly for free-to-use ATMs at a time when we need to encourage them.

LINK says that we need

“a clear government policy on cash...market forces alone won’t make any of this happen.”

Besides looking for a joined-up policy on cash in rural areas, towns and hard-to-reach areas, I encourage the Minister to look at the review of the interchange fee and at enabling banking in all areas, reviewing post office contracts and profitability, and exempting free-to-use ATMs from business rates. If he wants some practical methods to look at, I hope that that gives him a start.

[Sir Henry Bellingham (in the Chair)]

Thank you for being so brief. I call Paul Sweeney.