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Retailers: Cash

Volume 826: debated on Thursday 15 December 2022


Asked by

To ask His Majesty’s Government what discussions they have had with retailers and other outlets concerning their acceptance of cash as legal tender.

My Lords, Ministers and officials have meetings with a variety of organisations in the public and private sectors, including on access to cash and related issues. Details of ministerial meetings are published on a quarterly basis. Regarding cash acceptance, it should remain the choice of organisations whether to accept or decline any form of payment. The Government’s legislation in the Financial Services and Markets Bill intends to support cash acceptance by ensuring that businesses have reasonable access to deposit facilities.

My Lords, I am very grateful to my noble friend, in particular for standing in at short notice when the noble Baroness, Lady Penn, was delayed. I think that this is the first time that he has answered a Question; can I be the first to congratulate him? However, are the Government aware of the scale of the problem faced? Some 5 million people—some of the most vulnerable in our society—depend on cash. Forcing such people to use plastic cannot be a good idea. Some 20 million of us use cash more than twice a week, and on average three cash machines are taken out of service every day. If my noble friend and his officials think that I am exaggerating, they might care to read the article in the Financial Times last week about offering lifelines to people struggling in a cashless society.

The Government want to ensure that people have appropriate access to financial products and services, which includes bank accounts, payment services and cash. LINK, the operator of the UK’s largest ATM network, has established a number of initiatives to protect the broad geographic spread of free-to-use ATMs. LINK has committed to protecting free-to-use ATMs more than a kilometre away from the nearest free ATM or post office, and is held to account against this commitment by the Payment Systems Regulator.

My Lords, I also welcome the Minister to his role. Thanks to the excellent work of the Access to Cash Action Group and LINK, new banking hubs are planned where a community is bereft of bank branches, which will permit the kind of deposits that the noble Lord named in his Question. Since the scheme is vital for access to cash, should the banks be permitted to veto approval of a hub in an area that meets the criteria?

Following the Government’s commitment to legislate, industry is working together to develop new initiatives to provide shared access to cash services. This includes a process for LINK to access a community’s cash needs in the event of a closure of a core cash service or a request from a local community. In circumstances where LINK considers that a community requires additional cash services, industry will ensure a suitable shared solution in that community.

My Lords, the Cash Census report published earlier this year warned:

“While a cashless society would feel like progress for some … for millions it would lead to anxiety, economic exclusion, isolation, exploitation, debt”

and “rising costs”. Does the Minister accept that cash is still the major means of spending for a substantial proportion of our society, and that retailers should be required to accept legal currency?

The definition of “legal tender” is quite narrow. However, the ongoing trend in payments in the UK has been away from cash and towards card payments and other digital transactions. However, cash continues to be used by millions of people across the UK, including those in vulnerable groups. The Government are legislating to ensure reasonable provision of cash withdrawal and deposit facilities.

Following that answer, I say that there is a real problem with the non-acceptance of cash. We all find it at different times. It is not a problem for me, but it is for those who do not have bank accounts, debit cards and credit cards. Will the Government consider having a proper review to address this, so that small businesses that find cash a nuisance can manage and that everyday people can use cash when they want to?

As my noble friend will know, technology and consumer behaviour are changing and it remains the choice of individual organisations whether to accept or decline any form of payment, including cash or card, based on a consideration of factors, such as customer preference and cost. However, the Government consider that their legislation in the Financial Services and Markets Bill will support organisations, including local businesses, to continue accepting cash by ensuring that they have reasonable access to deposit facilities. As I said, legal tender has a narrow technical meaning: it means that if you offer to fully pay off a debt to someone in legal tender, they cannot sue you for failing to repay.

My Lords, this is a problem that particularly affects rural areas, where there are far fewer cash-dispensing machines. Also, there are many parts of rural areas where there is no internet, so even if you want to pay by BACS or direct transfer, you just cannot do it. Will the Minister assure us that the Government will properly rural-proof this discussion so that we are able to ensure that rural areas can still function effectively?

As someone who comes from a rural community, I know only too well the trials and tribulations of getting a good connection. The Government recognise that digital inclusion needs to be promoted alongside financial inclusion. That is why we are committed to ensuring that everyone has access to digital infrastructure and the skills necessary to participate fully in society, and that very much includes rural areas. In 2021, the Government launched Project Gigabit, which committed a landmark £5 billion to support the rollout of gigabit connectivity in the hardest-to-reach areas.

I too welcome the Minister to his place. I remember in similar circumstances when I was on that Front Bench explaining to the civil servants that Question Time is a blood sport—and you, my friend, are the fox. When a shop opts not to accept cash, in most cases customers are able to go elsewhere. However, when it comes to services such as car parks, there is often no alternative available. Many are happy to pay for parking on apps or over the phone, but a sizeable number are not. What does the Minister suggest that those people do when they arrive and find, without any consultation, that the pay machines have been decommissioned?

I have suffered that situation myself. A customer intending to park who has not been warned that payment has moved from a cash or coin system to digital-only should take that up immediately with the council or whoever is administering that parking space on behalf of the local council.

My Lords, there is another problem. Because so many banks are closing their branches, one of the shopkeepers in my part of east Devon says that he cannot accept cash because he has to go seven or eight miles to the bank and cannot get there because his shop is open until six in the evening. Could the Minister look at the issue of bank branch closures set beside the question of cash?

Since 2019, the Government have chaired the Financial Inclusion Policy Forum, bringing together the financial services industry, consumer groups, the regulator and the third sector. We have also published an annual report on the Government’s work on financial inclusion. The most recent report was published in December 2021. Since 2019, the Government have allocated £100 million of funding from dormant assets towards financial inclusion.

My Lords, I too congratulate my noble friend on his first appearance at the Dispatch Box, and I assure the House that he is also an excellent Whip. I served on the House’s Select Committee on post-Covid recovery. We received evidence on this from retailers and individuals. The substantive point is that, if you do not have a bank account, you are excluded from shops cand cafes that you have visited for many years. You are forced to go into other shops where the choice is not as great. What happens is a very strange and unusual piece of social exclusion in which you find yourself paying more for less choice. What discussions has my noble friend had with the banking industry to increase the availability of accounts for people who do not have them? Will he give us his best estimate of the number of households that do not have a single bank account?

My noble friend makes an excellent point that, to be fully included in society, a working bank account is essential. I will certainly take that back to the department to ensure that the Treasury communicates with the banking and financial services sector to make the opening of a bank account as easy and accessible as possible. I will try to write to him on the number of households which do not currently have a bank account.