Long reads

The Westminster Series: Back cash and stop exclusion

Chris Holmes

Chris Holmes

Peer, House of Lords

Cash is having a bit of a time of it, already in sharp decline, the Covid lockdown has further impacted its currency.  ATM withdrawals are down 80% in London, and though significant, this decline is not, and must not be allowed to become a terminal inevitability.

Cash retains a vital role in our communities, it remains essential for millions and, whilst I am a huge advocate for fintech and excited about the opportunities provided by open banking and open finance, it is critical that we ensure no-one is left behind in a transition to digital payments.

Bank branches are shutting at a rapid rate with five hundred closed in the past year. ATMs are following fast and cash appears to be facing an existential crisis. The truth is though, cash still matters and it matters materially to millions.

Take it away, kill it off or let it die and those millions - five million by Financial Conduct Authority (FCA) estimates - are put in a very difficult place. A place of exclusion, financial and digital, the two all too often walking hideously hand in hand.

So, cash must be supported. Sustainably supported for those individuals, for our High Streets and for our communities. Covid has done so much devastation, but it has taught us much more. Not least being what lovely local can look like, and financial fluidity is critical if this is to continue and thrive. An extensive Access to Cash Review for the Government made a series of recommendations for keeping cash viable and several Community Access for Cash Pilots are now underway. The consumer organisation ‘Which?’ has also launched a cash-friendly pledge for retailers to help reassure customers who rely on cash.

As was pointed out in the review, once infrastructure is gone, or communities have been harmed, rebuilding is very hard, but, if we act now we can take practical steps to retain access to cash. To this end, I was delighted that Lord True, for the Government, accepted my amendment to the Financial Services Bill which enables customers to obtain cash without the need for a purchase. This can only assist financial inclusion, our shops, cafes, our local communities, and economies. It’s a good step but I know it is just one step.

It is essential that the Government build on this through legislating to enable the cash network to be protected as critical national infrastructure. Similarly, it is time for a universal service obligation when it comes to cash provision. We cannot, and arguably should not, expect commercial players to fix this without legislation. This is a role for Government to lead on.

Further, it seems not just sensible but absolutely essential to commission a review into access to digital payments. I put forward an amendment to this effect to the aforementioned Financial Services Bill, although, on this occasion, sadly, the Government did not accept the amendment. The future is digital but how we transition together to that future is critical. We do it together, with care, in an inclusive manner or we don’t do anything which can be considered worthwhile. Cashback is an important stepping-stone in our transition.

Until we have true financial and digital inclusion we must also firmly commit to back cash and very likely beyond. True financial and digital inclusion is multifaceted. An individual may well be confident and capable when it comes to their digital skills but if she or he lives in an area with shaky or no useful connectivity, that financial payment isn’t getting made. Similarly, someone without the digital skills may be given the best banking app out there but again, the right tool in the unenabled hands can still mean that payment isn’t being made. 

Cross Government action is required as with, well, pretty much everything. For example, we need to be able to effectively, in real time, link Department for Work and Pensions (DWP) and Her Majesty’s Revenue and Customs (HMRC). We need to have local authority, credit union, fintech start-ups, communities and corporates coming together to crack this. We are not short on solutions, we know a deal of what works, and we can, at pace, learn a whole lot more. Banks have an essential part to play, as does our Post Office. 

The Post Office is taking part in the Community Cash Pilots, running in eight locations across the UK until October 2021. In an effort to facilitate faster and easier cash deposits, Post Office branches in pilot areas are being refurbished, or set up, to give small businesses better access to these services as well as introducing a new ‘bag drop’ service over the counter to enable faster deposits. All these services are free for small businesses. The Post Office is a brand with over five hundred years of history on our High Streets, it must be more than post, we desperately need its presence, its future. There are also fintech companies involved in the pilots allowing customers to order cash through an app or facilitating a digital platform that allows businesses to issue change electronically to their customers.

Digitally include, financially include, and we all benefit, and the benefits are not merely economic but social, and psychological. It’s a challenge, a mission for us all. Let’s play our part and transition together, building back better, enabling, empowering, unleashing potential.  

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