Cash Acceptance

Duncan Baker Excerpts

Monday 20th March 2023 Westminster Hall

[Duncan Baker (North Norfolk) (Con)]

I thank the hon. Member for Linlithgow and East Falkirk (Martyn Day) for such a good speech, and for hosting today’s debate. We are discussing a topic that I find greatly interesting. In a previous life—not many Members realise this—I was a businessman, but also a postmaster, or at least I had the legal title of a postmaster. As such, understanding retailing as I do, access to cash is an absolute necessity in all parts of society, particularly, as has been mentioned, in rural communities. It is therefore important that we discuss the thorny issue, which has already been touched on, of the wilful negligence of banks in closing their branches on our high streets up and down the country, despite all of the changing public behaviour, and the issue of traders accepting cash as payment.

Despite the advances of technology and those changing consumer behaviour patterns, it is clear to me that the acceptance of cash should remain an option for the foreseeable future. The country at large, and the public, are simply not in a position to close that door off. All the research that has ever been conducted in this area shows that people must be able to still access cash.

In 2021, I presented my own Banking Services (Post Offices) Bill. It did not get very far, but, nevertheless, the intention was to try to ensure that banks were required to offer banking services for their customers, including the provision of cash, via the post office network. The 11,500 post office branches on our high streets seemed like absolutely the right place to be the authorised financial services dealer to enable cash to always be accessed on our high streets.

[Margaret Ferrier]

Cambuslang, in my constituency, was honoured to host a bank hub, through the pilot scheme between post offices and the high street banks, to help protect community access to cash at a time when more and more banks were facing closure on local high streets. The hub on Cambuslang’s Main Street has been a great success and very popular with constituents. Does the hon. Member agree that more bank hubs could and should be funded for communities in need?

[Duncan Baker]

I thank the hon. Member for her question. Yes, bank hubs would be a very good idea. The Minister will probably correct me, but I believe that the Government have initiated putting bank hubs in throughout the country. However, my point about using the post office network is that it is already there. There are already 11,500 post offices on our high streets.

Instead of a sweetheart deal with banking services between the Post Office and the Government, we should legislate, and make it legally binding that post offices must always be allowed to offer banking services, so that we do not have some bank, at the drop of a hat, withdrawing its services because it does not like the deal that it is getting from the Post Office. We should set it in stone so that people and consumers always have that offering on the high street.

The European Central Bank found that cash remained the most frequent method of payment in 2022, at 59%. Despite that, and all of the research that we have outlined, we continue to see a steady decline of bank branches on our high streets. In 2021, 736 bank branches closed throughout the UK. From my constituency, I remember some of closures proposed by Barclays. The reason for closing was that the research indicated a drop in footfall. I said to the bank team that presented the findings, “We have had lockdown; consumers have not been able to go to the bank. You cannot possibly use a drop off in footfall as an excuse to shut a bank branch when the public have been prohibited from even accessing our towns and villages.” It was absolute madness.

In the east of England specifically, we saw a 39% decrease in the number of banks between 2012 and 2022. The far-reaching impacts that this has had, especially in areas where many older people live—I have the oldest demographic in the entire country—cause huge concern throughout my constituency and other rural areas, because all the research shows that the vulnerable and elderly are simply not able to go cashless at this moment in time.

I witnessed at first hand the serious impact of last year’s Barclays bank closure in my home town of Holt, where I was born, despite the fact that we are a centre for retail in the area. We have a huge number of visitors coming to Holt, and Barclays was the last bank in the town to close. Cue pandemonium for a retirement area with elderly people—a vibrant market town that is rich with many retail shops—who were left with no ability to do their banking, which affects not just residents and businesses but visitors, who also need access to cash. Luckily, we were able to use a banking hub, exactly as the hon. Member for Rutherglen and Hamilton West (Margaret Ferrier) suggested, to try to safeguard people needing access to cash.

The research suggests that 10 million people would struggle to cope in a cashless society. Many of them are on low incomes and are older, but they also include people who have disabilities or ill health and those who run small businesses—a plethora of people across society. By preserving the physical infrastructure, whether through a post office or a banking hub, we also preserve the right for the most vulnerable to use cash, to make sure that they too can be looked after.

I was a retailer at one stage, so I appreciate traders’ attitudes towards accepting cash, which can become expensive. The banks make it expensive and more difficult for people to do their banking. If banks shut, people have to use courier services, which charge, and there is a delay in deposits coming into the bank. I understand that it is far easier to stop using cash, but that does not mean that it is the right thing to do. Limiting the acceptance of cash payments puts pressure on people, who can become financially excluded. It may be very difficult for the Government to enforce the preservation of cash payments in a free market, but they should be straining every sinew to incentivise providers and make sure that they continue to accept cash.

The access to cash review provided some sensible and feasible recommendations to help keep cash payments an option for the foreseeable future, and I am sure the Minister will have looked at it. The crux of all this is that I recognise that, at some point—one day—cash will begin to fizzle out, but it is fundamental that we help consumers for as long as physically possible, because it is necessary. It is not about stifling technology or progression. It is a fundamental basic requirement that millions and millions of people up and down the country still need access to cash.

The use of cash will always play a vital role for many people—for budgeting and for people who may have poor spending habits, because it is a great way to help people manage their bills. Keeping cash as a viable option will help to support those on low incomes and vulnerable people, as well as our high streets and small businesses. I do not think that cash should be something that we begin to dismiss and wind down. The crux of this is about not only keeping cash in circulation, but making sure that the Government play their part in ensuring that there is a proper, viable infrastructure for cash to circulate, which means doing something to legislate for the banks, whose corporate social responsibility has gone out of the window as they have closed as many branches as they can around the country. That has to be something we address as well.