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This year, for example, Clydesdale bank has brought out a series of notes that reflect the 2009 year of homecoming, which the Governments in Scotland and here in London support, and the fact that it is 250 years since the birth of Robert Burns. We have seen commemorative notes to celebrate such things as the golden jubilee, the 500th anniversary of the Royal College of Surgeons of Edinburgh, and the contribution of the Royal and Ancient golf club at St. Andrews and Jack Nicklaus to Scotland’s all-important golfing heritage. The existence of these various core and commemorative designs of notes within the overarching sterling system is a vivid example of how Scottish culture can flourish within the United Kingdom.
Mark Pritchard (The Wrekin) (Con): On the question of Scottish culture and Scotsmen, does my hon. Friend agree that one innovation that might bring people closer to Government and improve the transparency of Government would be to introduce pictures of serving Prime Ministers on to banknotes, so that whether people have a lot of banknotes or a shortage of banknotes, they focus very firmly on who is in government?
David Mundell: I am not aware of any requirement that an individual appearing on a banknote should be dead or out of office. Indeed, as far as I am aware, Mr. Jack Nicklaus, who appeared on a commemorative note, is very much still alive—although whether he is pleased that his photograph with Sir Fred Goodwin is repeatedly published will be another matter.
All Members will have seen Scottish banknotes, and some will even have used them daily, but few will have considered all the issues that are being aired today. If they have not had cause to ponder them before, they might believe that the deeper significance of Scottish banknotes does not resonate with the public. However, I would tell them that the existence of Scottish banknotes is one of those things that we see before us every day but take for granted. Only when Governments have conspired to do away with them, either through carelessness or small-mindedness, has the attention of the public and the media flashed on to what they stand for. Only then do we realise the historical, cultural and promotional value that the notes have in addition to their monetary value.
For example, this Government hatched proposals that might have done away with Scottish banknotes by making their issue uneconomical for the banks concerned. Those proposals first appeared in a Treasury consultation of July 2005, of which nothing came, and were revived in another consultation in January 2008 as part of the measures proposed for inclusion in what was then the Banking Bill. The Chancellor saw what a public outcry the proposals had provoked, just as Robert Peel’s Government had incurred the wrath of Scottish public opinion and of luminaries such as Sir Walter Scott when they threatened Scottish notes more than a century earlier. Like the Peel Administration, this Government were forced into an entirely unexpected U-turn and dropped the threat to Scottish banknotes.
Now the Government have accepted that Scottish notes are here to stay, and indeed enshrined them in the Banking Act 2009. That is the first time that there has been new legislation governing their issue since 1845. I therefore cannot see why the Treasury will not take the
final step and ensure that the notes work effectively in all day-to-day transactions, in every part of the United Kingdom.
Mr. Chope: Is there any restriction on the number or value of banknotes that the Scottish banks can issue?
David Mundell: I can advise my hon. Friend that, as far as I am aware, £3 billion of Scottish banknotes are currently in circulation. The Exchequer Secretary might have more precise figures, particularly in the light of the leap into quantitative easing.
Angela Eagle: I will not go down that route given your earlier ruling, Mr. Deputy Speaker, but I can confirm that there are currently £3 billion of Scottish notes in circulation. The answer to the hon. Member for Christchurch (Mr. Chope) is that there is no limit. It is for the issuing banks to answer the demand for money through the provision of banknotes.
David Mundell: When I last spoke to the Exchequer Secretary, she asked me whether there had been any quantitative assessment of exactly how widespread the refusal of Scottish banknotes is. I suppose that such an assessment would take the form of a field test of Scottish notes being offered to a large number of traders of different types throughout England, Wales and Northern Ireland—although, as I said earlier, there must not be a television camera in tow if that is to be objective—or a poll of the public’s experience of using Scottish notes.
I have no difficulty in relying on my constituents and the Scottish public at large. I refer, of course, to the personal experience of almost everyone in Scotland to whom I have spoken about the Bill. They have all been in a shop or taxi somewhere in England, Wales or Northern Ireland and presented Scottish banknotes, which have been treated suspiciously or refused. The House will appreciate that when a person offers a banknote and it is treated with suspicion, it causes embarrassment, as the person who e-mailed me this morning reminded us, particularly if it is held aloft and the shop manager is summoned.
The House will further understand that when a note is actually refused, there can be considerable inconvenience. Examples are legion, and the consequences can be worse than leaving a shop empty-handed. I have received several letters and e-mails from members of the public who were left unable to pay for takeaway food or for dining in restaurants, or stuck in rural petrol stations, with no means to pay for the fuel with which they had already filled their cars.
Mr. Ben Wallace (Lancaster and Wyre) (Con): Does my hon. Friend agree that the Bill will be especially welcome in the north of England, where I am a Member of Parliament, and where businesses and tradesmen in, for example, Penrith and Carlisle, regularly do business across the border? The measure will help efficiency of trade, which is so vital at this time.
David Mundell:
My hon. Friend is right that no cause should be given to any tradesmen or business to feel that they cannot accept a Scots note. The Bill will
provide the reassurance that there is no reason for not accepting such a note. I give way to the hon. Member for Thurrock (Andrew Mackinlay).
Andrew Mackinlay (Thurrock) (Lab): I am sorry, I was not trying to intervene—I was just moving.
David Mundell: I thank the hon. Gentleman for his physical gesture of support.
Hon. Members tell me that they have rarely encountered a problem in central London, but that is because Scots notes are used so widely here and it is therefore only to be expected that retailers tend to be more familiar with them. However, in my recent visits to central London retailers and my discussions with taxi drivers, I have been told that, although they accept the notes from customers, other customers are not keen to receive them in their change. That is a variation on my constituency experience of people wanting to change notes before returning to England.
Perhaps one reason for Londoners’ greater familiarity with the notes is that certain London-based Scots appear to be much freer spending than the national stereotype suggests. One such individual has spent £1.5 trillion during the recession alone. However, enough of the Chancellor’s contribution.
Incidences of Scots notes being refused are a staple of Scottish newspapers. The coverage that the issue gets illustrates the prevalence of the problem and the extent to which the papers’ readerships identify with it. I will give hon. Members one of the more colourful examples. An article recounts the plight of a gentleman who visited no fewer than three McDonald’s outlets in Wales. He was denied service in every one of those restaurants, merely for seeking to pay with a Scottish note. As the headline writer so eloquently put it, “Burger Off with Your Scottish Banknotes”.
Mark Pritchard: Does my hon. Friend agree that that represents a double whammy? Not only is that bad for business in Wales and for McDonald’s, but we have the irony that McDonald is a Scottish name.
David Mundell: It is indeed a Scottish name, and that may have led the gentleman in question to believe that he would be on home turf. Many reasons could be given for not trying to purchase a Big Mac or a double whammy Whopper, but the refusal of currency should not be one.
There have been several reports of other large chains, such as WH Smith, introducing arbitrary restrictions on Scottish notes in certain branches. It is therefore mistaken to believe that the problem is confined to small enterprises, which struggle for the time to put in place proper cash handling procedures or to train their staff. In many cases, the shop management has erected signs stating that Scottish notes are not welcome. It is not always a case of junior members of staff exercising caution when suddenly presented with a note that they do not recognise.
There is something deeper to the problem than the immediate embarrassment and inconvenience caused. As the Leader of the Opposition has said, Scots are proud of their banknotes. It is hard to think of a clearer demonstration of disrespect than treating such notes as if they had come out of a Monopoly box. Despite what
the Scottish National party—[Hon. Members: “Where are they?”] Indeed. Despite what the SNP might try to convince this House of, there are few genuine grievances in Scotland about the Union with England. However, the refusal of Scottish banknotes is one such niggle. In ending that practice, my Bill would contribute, albeit modestly, to strengthening the Union. I am sure that all hon. Members present in the Chamber would regard that as a most welcome by-product of such a Bill.
Mr. Chope: My hon. Friend is making a fascinating speech. What is his estimate of the number of Bank of England notes in circulation in Scotland?
David Mundell: I am afraid that I am not in a position to give my hon. Friend that information, although the Minister may have it to hand. Given the entrepreneurial spirit of the Scots, a Bank of England note is never refused unless there is a genuine reason to suspect forgery. We are always willing to receive the currency of those who wish to trade with us.
Having set out the problem, let me turn in detail to my solution. Legislation could be a catalyst for changes in behaviour. At the heart of the Bill is the concept that Scottish and Bank of England notes are of equal standing and that there is therefore no risk to a business or individual in accepting such a note if they are happy to accept others. If that view became commonplace across the United Kingdom, the issue would be resolved. The Bill would place a UK-wide requirement on providers of goods and services to accept Scottish banknotes if other notes are accepted. I was attracted to that format not only because it would avoid the technical difficulties of giving Scottish banknotes the status of legal tender, but because it would be likely to have much greater practical effect. What matters is being able to use the notes without challenge.
It is surprising to many, as it was to me, to learn that legal tender has no real relevance in day-to-day transactions in shops or with other providers of goods and services. I can advise my hon. Friend the Member for Christchurch (Mr. Chope) that the Royal Mint helpfully explains “legal tender” as follows:
“Legal tender has a very narrow and technical meaning in the settlement of debts. It means that a debtor cannot successfully be sued for non-payment if he pays into court in legal tender. It does not mean that any ordinary transaction has to take place in legal tender or only within the amount denominated by the legislation. Both parties are free...to accept any form of payment whether legal tender or otherwise according to their wishes.”
The position is made even clearer when one realises that paying with more than the “right money”, as it might be characterised, is contrary to the rules of legal tender, even if one does not expect any change.
Furthermore, no banknotes whatever are legal tender in Scotland, yet that fact has no adverse effect on the acceptance of Scottish notes, as I have explained, or Bank of England notes. Bank of England notes are legal tender only in England and Wales, yet they are accepted in Scotland with alacrity, because retailers and other businesses in Scotland know what they are and what they are worth. I want to achieve the same for Scottish notes in England. For the sake of completeness, I should also clarify that Scottish banknotes are not legal tender anywhere outside Scotland either. Indeed, although they are allowed to circulate freely in other
parts of the United Kingdom, they cannot be disbursed by any bank outside Scotland. The Clydesdale bank, the Bank of Scotland and the Royal Bank of Scotland cannot issue their own notes from their branches in London or elsewhere in England and Wales.
Even if we accept that changing the definition of legal tender would have less practical effect than what I propose in my Bill, it is not the only argument against doing so. The definition that I have read out clearly implies that, for any symbolic effect that giving Scottish banknotes legal tender status would have, in terms of their acceptance, there would be far greater unintended consequences, which would strike at the processes for resolving disputes between debtors and creditors. I should say, however, that some people feel that this area of law would benefit from some reform, but that is a debate for another day. Before leaving this issue, I want to point out that the Law Society of Scotland argues that additional safeguards given to holders of Scottish banknotes in the Banking Act 2009 warrant the notes being granted the status of legal tender, but that is simply the society’s view.
Angela Eagle: The hon. Gentleman has quite rightly taken the House through the narrow definition of legal tender, and he has come to the right conclusion about why that is not the answer to the problem that he seeks to solve. Does he also agree that many goods are paid for in non-legal tender—including debit cards, credit cards, PayPal and travellers cheques—as a matter of routine with no problems of acceptance? Clearly, the area of legal tender is not the place to look for a solution to the problem that he has outlined.
David Mundell: On this occasion, I am in complete agreement with the Minister. “Legal tender” is a phrase that is often bandied about in the press or in discussion, but its meaning is quite different from what people think it is. They think that, if a note or piece of currency is legal tender, there is an obligation to accept it, but that is simply not the case. Many businesses decline to take notes of a certain size or certain cards; they can also decline to take cheques.
The Bill will require all providers of goods and services in the United Kingdom that accept Bank of England notes to accept Scottish banknotes on an equal basis. I believe that that clear, simple requirement would do all that those wishing to make purchases with Scottish notes want it to do. However, it would not do any more than that. In framing the Bill, I have been careful not to make unreasonable demands on any vendor. The way in which the requirement is worded would not, for example, require sellers who currently accept only cheques and card payments to start handling cash, even when presented with a Scottish banknote. Similarly, I recognise that some sellers consider changing a £50 Bank of England note too much of an inconvenience, and they would not be required to accept large-denomination Scottish notes either.
As I have said, I am aware of the regulatory difficulties that small businesses, in particular, face. I appreciate that the current recession is putting extra pressure on those businesses. I have therefore been careful not to open the door to disproportionate sanctions such as court action. Instead, I have chosen to give the Office of Fair Trading the power to investigate complaints of non-compliance with the requirement to accept Scottish
notes. The OFT may investigate complaints as it considers necessary, and notify a business of its obligations. If the OFT finds that a vendor has breached the requirement to accept Scottish banknotes more than twice in one year, it has the option to require the business to display notices about the availability of banknotes. These notice-giving provisions have precedent in section 38 of the Consumer Credit Act 2006 and section 33A of the Consumer Credit Act 1974.
These provisions reflect two things. The first is my belief that any regulation should be as minimal as possible. The second is my belief that the vast majority of those sellers who mistreat Scottish banknotes are doing so not through bloody-mindedness but simply through ignorance. Having legislation that makes it clear that Scottish banknotes are equally valid—and of equal value—and ought to be accepted will do much to ensure that sellers accept the notes. Threatening them with draconian penalties is unnecessary.
The House will also see that my Bill allows the suspicion that a note is a forgery to be used as a defence. However, that must be a reasonable suspicion. With the right awareness training, I do not believe that it is unfair to expect sellers outside Scotland to make their staff familiar with the existence of Scottish banknotes.
Angela Eagle: Will the hon. Gentleman explain—this seems a reasonable juncture to explore it further—what he means by “reasonable suspicion” in this case?
David Mundell: I would say that a reasonable suspicion would be that the note failed the pen test I mentioned earlier or that it did not appear to be substantially as depicted on the excellent poster and handout of the Committee of Scottish Clearing Bankers, which shows the design and security features of all current Scottish banknotes.
Mr. Heath: Is the hon. Gentleman suggesting that in my constituency in deepest Somerset, where I have to say we see very few Scottish banknotes, every retail outlet would have to put up a poster showing the design of the 22 different Scottish banknotes for the benefit of the odd passing Scottish tourist?
David Mundell: Indeed not, but I am sure that Scottish tourists would be encouraged to visit the hon. Gentleman’s constituency more often if they felt that they would be able to use their banknotes without having them unduly scrutinised. It is a relatively simple process to access the guide on banknotes. It can be done easily on the internet and it is readily available. I find it difficult to understand, particularly in these difficult times, why any retailer would not want to accept all the currencies being offered or would not want to take steps to ensure that people working in their premises knew which currencies should or should not be accepted. The hon. Gentleman will have heard my earlier point that, surprisingly, some of the most unsatisfactory examples of non-acceptance have not come from the small retail sector that he refers to, but in large chain stores or takeaway outlets. In my view, they have absolutely no excuse in that regard.
I hope that the Minister will refer in her summing up to the excellent poster and information guide produced by the Scottish clearing banks; they worked extremely hard to give people the level of detail necessary to identify whether a note is valid and to provide a potted history of the figures or buildings that appear on the notes. I refer hon. Members to the Committee of Scottish Clearing Bankers website.
I do not accept that lack of familiarity with a Scottish banknote is a proper basis for deeming such a note to be a forgery. Many Members will have seen the detector pens in use. They are common, as many businesses routinely use them, and they are perfectly reliable. There is no great expense involved in making a simple check before venturing any suggestion of forgery to the person proffering a note.
I hope that I have provided a summary both of the historical aspects of the Scottish banknote and of the current position and the genuine need to address this issue. The Leader of the Opposition said in Glasgow in September 2006:
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