Covid-19: Access to and Acceptance of Cash

Yvonne Fovargue Excerpts

Thursday 3rd December 2020 Westminster Hall

[Yvonne Fovargue (Makerfield) (Lab)]

Thank you, Mr Mundell. It is a pleasure to serve under your chairmanship. I congratulate the hon. Member for Blackpool North and Cleveleys (Paul Maynard) on securing this debate. We have worked together on this issue for a number of years.

There is no doubt that the covid-19 crisis has hastened the move to a cashless society. Before the restrictions, people were talking about a timescale of years; it is now months, even weeks away. Cash does not seem to be king anymore. As my honourable colleague mentioned, it is coming back and is now at 75% of pre-covid levels—more in some areas—but surveys are being done at the moment to measure the use of cash and I worry that that will skew the results.

For many people, not having cash is a good thing. For an increasing number of people shopping online, using contactless payments and digital transfers, internet shopping is a boon, but it can increase the opportunity to scammers and fraudsters, and there are people who worry about using digital methods of payment and would prefer to keep cash. Many people have no bank account or credit card. They find budgeting far easier with notes and coins—after all, with cash, you cannot spend more than you have in your purse or wallet.

Many of my constituents are going back to those days. I can remember my mother having a little pocket for each bill—that is the way not to get into an overdraft. It has always been thus for people on lower incomes. Even with covid-19, people in deprived areas continue to rely on cash more than those in wealthier areas. LINK research shows a clear connection between deprivation and cash usage. Cash usage has dropped 70% year on year in the wealthiest areas, but only 35% in more deprived areas. That is the case in my constituency. Many people either choose to or have no option but to use cash. It is becoming harder and harder to pay using cash—in fact, we may well be at a tipping point, where the cash services once gone will not come back. Tipping point is a good way of putting it; I have difficulty in paying tips now. I do not really trust putting a tip on to my card. I would rather give the person giving the service the cash, and that is getting more and more difficult.

ATMs are being shut down throughout the country. In some cases, it is a response to falling demand, but once they have gone, it is much more expensive to restore them. It will be harder to get shops to accept cash again after they have insisted on contactless payments and cards for the best part of a year. Cash has been portrayed as somehow dirty and able to pass on the virus. That has not helped.

Research conducted for Money Mail suggests that half of all retailers plan to go cashless or have already done so due to the virus. I do not want to be in a situation where we find that because people choose to or have to use cash, their choice of where to shop is extremely limited. They might be taken advantage of in that situation.

LINK suggests that a cashless society presents a serious problem for 2 million people who still rely solely on cash and Natalie Ceeney, who chaired the access to cash review, says that as many as 8 million people would struggle to cope in a cashless society. These people need cash and they need confidence that the shops they use will accept cash for the goods they want to buy.

We must look at innovative and flexible ways of ensuring people have access to cash—for example, cashback without purchase, where people can go into local shops without buying anything. I welcome the extension of cashback, but it has to be part of a strategy. Things are happening piecemeal at the moment. Bank branches are shutting, ATMs are closing, and increasing numbers of shops are going cashless. We may need to look at making it mandatory for shops to have to accept cash, particularly those providing essentials such as food, medicine and so on. Do we need to look at a universal service obligation, so that banks are required to ensure cash access across the whole country, as happens in Sweden?

We also need to look at deposits. Post offices are almost seen as the silver bullet, but the postmaster in my constituency, who was quite elderly, had to self-isolate, and the post office has now been shut for nine months. People have no access to their cash now in that area. Three post offices in my constituency have also closed, with nobody able to take them over. These are in small pockets of community where to get cash is a journey.

There has been a 23% increase in the number of pay-to-use ATMs in the most deprived areas and that statistic worries me more than any other. If people have to pay to take out their cash, the £1.50 they pay to access their cash can be the difference between topping up their meter and having heat, and not being able to. Perhaps we should be looking at reforming the interchange fees to provide a bigger subsidy for provision in certain areas. It would be good to hear the Minister’s views on that.

I agree that vested interests should not accelerate the decline of cash. There is a case for reducing the number of ATMs in the face of decreasing use, but not the distribution and geographical reach. We need to maintain the footprint as we move forward, and we have to move forward. We need a Bill that deals with the issues and we need it very soon. We also need co-ordination of all the interested parties so that we can have a joined-up approach. Covid-19 has pushed an already fragile cash system to the brink of collapse. Unless the Government act now, we will sleepwalk into a cashless society and millions will be left behind.

--- Later in debate ---

[Jesse Norman]

I thank the hon. Member very much. I do not know whether the Department has had the opportunity to talk to the Association of Convenience Stores specifically, but I do know that the issue is very much on the agenda—it is certainly on the agenda of the Economic Secretary. It is important to realise, and to remind everyone, that the call for evidence on access to cash only closed last week. The timeliness of this debate rams home that point, and rightly so, but it is merely a week. It says more than I could for the high esteem in which colleagues across the House must hold the Government, if they think we can make a decision without having published a response and having only closed the call for evidence last week.

Nevertheless, the call for evidence is an important aspect. It set out the Government’s view that cash has the potential to continue to play an important role—and cashback within the cash infrastructure—and also asked for views on how that can be achieved. We will publish a summary of responses to the call for evidence and set out steps alongside that in due course. As colleagues will know, the call for evidence asked for views on key considerations associated with cash access, including deposit and withdrawal facilities, cash acceptance and regulatory oversight of the system.

The call for evidence also set out the Government’s views on the aims of legislation: that it should be proportionate, flexible, cost-effective, efficient and sustainable. The Government’s view, and we should be perfectly clear about this, is that legislation will need to ensure that business and people can have access to cash withdrawal and depositing facilities within a reasonable travel distance, as is needed in their day to day lives. I remind colleagues of that central point.

[Yvonne Fovargue]

I accept that the purpose is to have reasonable access to cash within a travelling distance. Is that to free cash machines, because that is a key point?