Financial Services and Markets Bill (Seventh sitting)

Shaun Bailey Excerpts

Committee stage
Tuesday 1st November 2022 Public Bill Committees

[Martin Docherty-Hughes]

It is good to see you in the Chair, Mr Sharma, and other hon. Members here today. It is a pity that my hon. Friend the Member for Glenrothes cannot be with us, as he has played a large part in constructing these amendments. I know that other hon. Members will want to participate in a debate on free-of-charge access to cash. I look forward to hearing what they have to say. At the moment, depending on what the Minister has to say, it is my intention to press the amendment to a vote, but I will listen to the Minister’s comments.

It is important to give some examples about the reduction in free access to cash. People sometimes wonder where the constituency of West Dunbartonshire is. We are bound by Glasgow to our east, where we become an urban element of the west of Scotland. We move further west through Clydebank, into Dumbarton and through the Vale of Leven, becoming suburban and then semi-rural, to the base of Loch Lomond itself. The community has a diverse demographic, with a range of deprivation that also impacts on people’s need to access physical cash.

In the last four years in West Dunbartonshire—I am sure this experience is mirrored not only in Scotland but the rest of these islands—we have seen a drop of 27% in access to ATMs, or automated teller machines. That is three ATMs, coupled with closures of local bank branches. We are a population of more than 90,000, but we seem to have only three or four bank branches left, which is extraordinary. My constituents face being forced to travel across a range of areas, including sometimes into the city of Glasgow, to access cash. My hon. Friend the Member for Glenrothes and I think it is vital to protect our constituents and the constituents of all other Members, too, in making sure that they have access to free-of-charge cash, notably for the most disadvantaged groups and the elderly.

Let me declare a non-pecuniary interest as the chair of the all-party parliamentary group on Estonia. Estonia is usually used as an example of what a digital state should be. After the fall of the Soviet Union it picked itself up and ran with a full digital agenda. One of its biggest learnings was that no one should be left behind in the race to digitalisation, critically in relation to access to cash. For the Estonian Government, and the Estonian Parliament, making sure that any financial system is not only fit for purpose in the digital age but that it takes everyone with it, including access to services and free access to cash, was their big learning curve. They believed that they failed in that process to begin with.

I hope that, when reflecting on the amendment, the Government realise that there is a huge opportunity to maintain access to cash for a range of reasons. We can talk about our constituents, and predominantly those who are elderly or from disadvantaged groups who use cash on a more regular basis. We can also talk about small and medium-sized businesses, a lot of which have moved to digital transactions. When Members go to a small shop in their own constituencies, they will notice that a lot of transactions have moved to digital due to the pandemic, but shops still have a substantial amount of cash that comes through their doors. One of the big problems that shops also have—not just free access to cash for those consuming their products—is depositing their takings at the end of the day. They are finding that very difficult as well. Businesses rely on consumers who use cash, especially in disadvantaged communities.

I am mindful of what the NM Group said in its submission:

“Cash remains an important form of payment for millions across the UK, particularly during times of economic hardship.”

The narrative of the cost of living crisis is used across the House, so there is clearly an agreement that people are facing economic hardship and that access to cash during that time is critical. That is why we think amendment 40 is important, as are the other amendments in this group.

We should also note that the payment method with the lowest economic friction, providing businesses and members of the public with a crucially important alternative, is cash. It is an important way for people to manage their finances, especially those in a disadvantaged group or those who are elderly who do not use digital money. I also note that the figures published by LINK, UK Finance and the Post Office show that around £10 billion in cash is withdrawn each month. That is £120 billion per annum in physical cash from ATMs, or from bank counters and post offices. The volume of withdrawals from the LINK system alone equates to about two withdrawals per month for each adult member of the UK population.

To bring my thoughts to a conclusion, we need to also be mindful of some of the infrastructure. UK consumers can access cash from over 55,000 ATMs, 11,500 post offices and certain bank branches—if they are not closing down in our local communities. The number of post offices is actually shrinking; there are no longer two or three post offices in a community—there is maybe only one. Over 90% of cash withdrawals take place at actual ATMs. The critical issue around free cash deposit and withdrawal services within the amendment is extremely important.

The access to cash review in 2019 noted that we cannot sleepwalk into a cashless society. That reflects back to what I was saying about the Estonian learning about digital infrastructure: it can leave a substantial number of people behind. That was the reality for Estonia. Cash continues to be important. Contactless payments and online banking can make it easy for some people to live entirely cash-free. However, given the volumes of cash in society, its usage remains extremely high. That reminds us that we do not live in a cashless society. The LINK network still handles around 1.6 billion transactions a month—that was the average in 2021. On average, adults still withdrew over £1,500 a year. During a global pandemic, cash was still being physically used. It is important to listen to the Minister and the Government’s view on it, although it is my intention to press the amendment to a vote. I look forward to hearing what others say.

[Shaun Bailey (West Bromwich West) (Con)]

It is a pleasure to see you in the Chair, Mr Sharma—

[Siobhain McDonagh (Mitcham and Morden) (Lab)]

I apologise to the hon. Member; I am getting my procedure a bit mixed up, Mr Sharma, so I wonder whether you could clarify something for me. I have amendments 16, 17 and 18, on the issue of free access to cash. When will it be convenient for me to come in?

[The Chair]

They are in this group, so you may speak to them in this debate.

[Shaun Bailey]

Thank you, Mr Sharma. I do not want to add too much to what the hon. Member for West Dunbartonshire has said. He has articulated well the reasons why the original clause and his amendments are vital to our communities. The stark reality is that cash is still an important part of our local economic infrastructure, and more so for my communities, where we have seen two bank closures in the last 18 months. Many have had free access to cash taken from them. That is compounded by other infrastructure challenges, such as the lack of public transport and the inability to access free cash services elsewhere.

The amendments tabled by the hon. Member for West Dunbartonshire are interesting and strike a balance in seeking to ensure that our communities can access a vital service, mainly cash. I listened with interest to him explaining the rationale behind his amendments, because I think we agree. We have to remember who these measures are ultimately targeted at. I often think of people with vulnerabilities who utilise cash as part of their budgeting. They use it every day, and for them it is a vital part of being able to continue to sustain themselves. Although the technological revolution over the last few years in particular might be great for some, for others it is not. For the communities that I represent and the areas where people are really trying to get by, cash plays a vital role in ensuring that people can function and manage their finances and their affairs. It is therefore vital that we have a strategy in place.

The amendments proposed by the hon. Gentleman, particularly the element of keeping the service free of charge, is important, particularly for communities like mine. We all talk about acute pockets of deprivation, but I remind the Committee that I represent the fourth most deprived ward in the west midlands. For many people, paying for ATMs is simply unacceptable. It takes away from them a vital part of the means they need to subsist and survive. Ensuring that we have a strategy to keep access to cash free for those who rely on it every day is vital. If we do not, we create a cycle whereby, because people have to pay out to access the means by which they survive, they use less and less of their income.

At a time when we are dealing with an acute cost of living crisis and people’s incomes are stretched, it is vital that the main source that they can use to survive is not tagged with a condition that makes it harder for them to access it. I agree with the philosophy, so to speak, behind the hon. Gentleman’s amendments. This is about enabling people to just survive and do the basics that they need to do. It is as simple as that.

I think of a constituent who came to my constituency office the other week. She could not access an ATM and was absolutely distraught. Her bank branch had just been closed and she did not know where to go. She was distraught and we had to help her out. That is at the forefront of my mind when I think of these amendments and what the Government are trying to achieve through their policy and strategy documents.

I ask my hon. Friend the Minister—I am afraid that he has had a bit of a shopping list from me, which I know his officials will have noted down—to ensure that cash is kept at the forefront of the Treasury’s thinking. I appreciate what the clauses are meant to achieve, but I hope that the Minister will take note of the intention behind the amendments, even if the Government decide not to support them, and ensure that the issue is brought to the forefront.