Cash Acceptance

Tulip Siddiq Excerpts

Monday 20th March 2023 Westminster Hall

[Tulip Siddiq (Hampstead and Kilburn) (Lab)]

It is a pleasure to serve under your chairship, Ms Bardell. I thank the hon. Member for Linlithgow and East Falkirk (Martyn Day) for bringing this important and timely debate to the House—I do not think it is necessary to be of a certain age to appreciate how important it is. Last year alone, there was a net loss of 797 banks and financial services shops providing cash and other services, while the latest Bank of England data, from July 2022, found that 35% of people have encountered a shop that does not accept cash. That should concern us all. I have had lots of representation from constituents in Hampstead and Kilburn who have found shops that will not accept cash, which has proven to be a real problem, as we have heard from Members across the House today. According to a recent report from the Royal Society of Arts, 10 million people depend on cash, and the pandemic, which saw an acceleration in the digitisation of payment services, has made it increasingly difficult for many to pay for the goods and services they need.

We know that a massive 3.8 million people in financial difficulty and 15 million people in total use cash for budgeting purposes. The need to protect cash services is only growing in importance, with data collected by the Post Office showing that the use of cash has risen in recent months. As the cost of living crisis deepens, the poorest in society are increasingly turning to cash, as has been reiterated many times in this debate, to manage their budgets on a week-by-week basis, and often day by day.

Of course, Labour welcomes the fact that the Financial Services and Markets Bill, on which the Minister and I both worked, and which is currently in the other place, will finally introduce protections for access to cash. However, we are worried that the Bill has some serious gaps: it fails to even mention cash acceptance, makes no commitment to protect free access to cash—something that Labour is concerned about—and does nothing to protect essential face-to-face banking services, on which the most vulnerable in our society depend for financial advice and support.

According to data collected by the consumer group Which?, there has been a notable decline in the provision of free-to-use ATMs in recent years. In January 2023, there were 12,000 fewer free-to-use ATMs in the UK than in August 2018—a huge decrease of nearly 24%. Does the Minister agree that with the poorest in society increasingly reliant on cash, forcing them to pay for access in the midst of the worst cost of living crisis on record risks further deepening financial exclusion in this country? Will he take action to address the problem? Which? has warned that if the Government do not make clear that their Bill will protect free cash withdrawals and deposits for consumers,

“the entire objective of…the Bill will be undermined.”

Cash acceptance is fundamental to securing the future of cash. There is little point in the most vulnerable having access to cash if they have nowhere to spend it. That is why the Labour party tabled an amendment to the Bill when it was in the Commons, which would have placed a duty on the FCA to collect data on cash acceptance. My colleagues in the House of Lords have been pushing the Government to empower the FCA to monitor and report on levels of cash acceptance across the UK. In his response, the Minister will likely say that we have to wait for the Government’s access to cash policy statement. If so, can he confirm when the statement will be published? Does he also agree that if his Government are committed to protecting the future of cash, there is no reason not to make protections for free access and an FCA remit on cash acceptance explicit in the Bill?

I want to turn briefly to the important and connected issue of protecting face-to-face banking services, which has been mentioned a few times in this debate. Again, analysis by Which? found that over half of the UK’s bank branches have closed since 2015. Additionally, at least 263 branches are expected to close by the end of the year. That will cut off countless people from essential services—I know that from listening to constituents in Hampstead and Kilburn.

Age UK has called for the Financial Services and Markets Bill to be amended to protect the in-person services that older people rely on, such as opening new accounts or applying for a loan, to ensure that banking services can meet their needs. It is not only older people who will struggle without support. Natalie Ceeney does amazing work and has already been mentioned. As chair of UK Finance’s Cash Action Group, she warned in evidence to the Public Bill Committee that there is significant overlap between the people who rely on access to cash—around 10 million UK adults—and those who need face-to-face support. She said,

“every time I meet a community, the debate goes very quickly from cash to banking. It all merges. The reason is we are talking about the same population.”––[Official Report, Financial Markets and Services Public Bill Committee, 19 October 2022; c. 49, Q98.]

She is completely right. It is the most vulnerable, people from deprived socioeconomic backgrounds and the older parts of society who rely on the extra face-to-face help, such as making or receiving payments or dealing with a standing order. Those are the people who will be left behind if the banking question is left unaddressed.

We also should not forget those without the digital skills needed to bank online, people in rural areas with poor internet connections, and the growing number of people who are simply unable to afford to pay for data or wi-fi as the cost of living crisis deepens. That is why I tabled amendments to the Bill that would give the FCA the powers it needs to protect essential in-person banking services. The Government did not vote for my proposal, but it is not too late for the Government to support the amendments in the Lords.

To be clear, we are not calling for banks to be prevented from closing branches that are no longer needed—far from it. Access to face-to-face services could be delivered through a shared banking hub or other models of community provision. We recognise that it is inevitable that payment and banking systems will continue to innovate. That is a good thing—online banking is a far more convenient way for people to manage their finances—but we have to ensure that the digital revolution that we are talking about does not further deepen financial exclusion in this country, and that will require protecting face-to-face services and putting in place a proper strategy for digital inclusion.

Banking hubs or other models of community provision will have to be part of the solution. Those spaces have the potential to tackle digital exclusion through their dedicated staff who can teach people how to bank online and provide internet access for those without it. However, only four banking hubs have been delivered, out of the underwhelming 38 promised. To ensure that no one is left behind, these services need to be protected in legislation.

If the Government are serious about securing the future of cash, they must listen to all the concerns raised both today and by many of their own Back Benchers during the Financial Services and Markets Bill debate. They must empower the FCA to monitor cash acceptance and protect free access to cash. I hope the Minister will be able to commit to that today, listen to the concerns voiced in this debate, and take heart from the fact that there are so many people in the Gallery who obviously care passionately about this important issue.