ATM Closures

Yvonne Fovargue Excerpts

Tuesday 4th December 2018 Westminster Hall

[Ged Killen (Rutherglen and Hamilton West) (Lab/Co-op)]

I beg to move,

That this House has considered the effect of ATM closures on towns, high streets and rural communities.

It is a pleasure to see you in the Chair, Mr Hollobone. I and other hon. Members on both sides of the House have been raising the closure of ATMs and its impact on our towns, high streets and rural communities for some time. The issue is more pressing than ever. In November 2017, LINK, the ATM membership body that sets the funding for free-to-use ATMs, began consulting on proposed cuts to the funding mechanism known as the interchange rate fee—a fee paid to the ATM operator, by the bank or company that issues a consumer’s bank card, when cash is withdrawn. Prior to LINK’s reductions, that fee was 25p. In its consultation, LINK proposed reducing the fee to 20p through four rounds of cuts beginning on 1 July this year and ending in January 2021, although the third cut was cancelled and the fourth has been put under review.

From the beginning, LINK accepted that those changes would lead to ATM closures. In its analysis and consultation documents, it stated that it expected a decline of between 1% and 11% in free-to-use ATMs, but that it was confident that there would be a reduction only in areas with a high concentration of free-to-use ATMs, such as cities. However, the number of closures has been far higher —approximately 250 per month—since LINK announced its consultation. Operators such as NoteMachine and Cardtronics say they expect to lose thousands of machines each, and new installations have been put on hold.

[Yvonne Fovargue (Makerfield) (Lab)]

Does my hon. Friend agree that one of the major problems is that the machine operators—Cardtronics and so on—do not have to inform the LINK network before closing a machine, and that the cost of replacing a machine is prohibitive?

[Ged Killen]

My hon. Friend anticipates my next point. If an ATM is removed, it costs between £7,000 and £10,000 to reinstall. That high capital investment means that, once closed, an ATM is difficult to replace, due to concerns that the investment may not pay off.

LINK sought to reassure the Payment Systems Regulator that the spread of free-to-use ATMs would not be damaged, because it would use its financial inclusion programme to protect ATMs in areas where there was not another free-to-use machine within 1 km. However, although it is well-intentioned and well funded, that programme relies on communities or operators reporting vulnerable ATMs to LINK and nominating them for extra funding, which, as my hon. Friend alluded to, they do not have to do.

The problem is that the existence of the financial inclusion programme is not well communicated, and there is concern that take-up has been poor. Anecdotal evidence suggests that the process for accessing the programme is not well known or straightforward, meaning that communities, operators and councils are often delayed in applying for funding.

I spoke recently to Tesco about its network of more than 4,000 ATMs. As I am sure Members know, many of those ATMs are in groups of two or three outside stores. Tesco told me that in some cases, those two ATMs are the last two in the town, but neither falls under LINK’s financial inclusion programme because both are right beside another free-to-use ATM.

As a consequence of the poor deployment of the financial inclusion programme, more than 100 ATMs with “protected” status have closed. We see examples of the programme failing in Scotland. Just outside Edinburgh, in the EH18 postcode, the nearest free-to-use machine is now 1.3 km away. In the PH24 postcode in the Cairngorms, the nearest machine is 6.6 km away. In TD10 in the Scottish Borders, some consumers must travel 10.9 km to withdraw their cash without charge.

--- Later in debate ---

[Jim Shannon (Strangford) (DUP)]

It is a pleasure to speak in this debate. I congratulate the hon. Member for Rutherglen and Hamilton West (Ged Killen) on bringing forward an issue that is important for every one of us here. It is a particularly important issue for me, as I have fought for ATM retention in many places across my constituency, sometimes successfully and sometimes not, mostly due to bank closures. I will use the time available today to do that.

For those who hail from a rural constituency, the availability of free-to-use ATMs is essential. The hon. Gentleman and the hon. Member for Angus (Kirstene Hair) have both outlined the importance of that. In recent times, bank closures have severely affected rural communities, particularly those in my constituency, where I think we have had seven bank closures. I live on the Ards peninsula, and the effect of the closures on the rural community is intense. When the banks close, often no ATMs are retained because the building is sold and there is nowhere to put it, which is very frustrating. My hon. Friend the Member for East Londonderry (Mr Campbell) made a salient point: whenever the banks move out of the villages and toward the town centres, the business moves with them, meaning that villages and small places come under intense pressure.

[Yvonne Fovargue]

Does the hon. Gentleman agree that it is not just bank closures but post office closures that have that effect? Although the closure programme for small post offices has been completed, two post offices in my constituency have closed because the sub-postmasters have resigned and they cannot get anyone else to do it. The Payment Systems Regulator, which told me that cash is available at post offices, has not taken that into account.