Written evidence submitted by Unite the
This evidence is submitted by Unite the union.
Unite is the UK's largest trade union with over 1.5 million
members across the private and public sectors. The union's members
work in a range of industries including manufacturing, financial
services, print, energy, construction, transport, local government,
education, health and not for profit sectors.
Within this membership Unite organises companies
specialising in cheque handling such as HP and Unisys iPSL and
logistic companies which would be adversely affected by the ending
of cheques as a means of transferring money.
Unite has serious reservations about
the ending of cheques and the impact that this would have on those
employed in cheque handling, logistics and printing industries.
Unite is concerned about the implications
that this move might have on international money transfer and
the ability of the major players to have in place within the timescale
suggested a full range of alternative mechanisms.
Unite is concerned about the impact on
the elderly and that many families continue to use cheques for
social purposes such as gifts.
Unite is opposed to the setting of any
target date for such removal until such time as suitable alternatives
have been found for all users.
1.1 At its meeting on 16 December 2009,
the Board of the Payments Council agreed to set a target end date
of 31 October 2018 for cheque clearings in Great Britain
and Northern Ireland. The first cheque was written 350 years
ago but the council said there should be "no scenario"
for using cheques by 2018. A final review will come in 2016.
1.2 According to the Payments Council, the
initial target of 2014 is to ensure that alternatives to
cheques are either available or in the pipeline. By 2016 acceptable
alternatives to cheques must be available and widely used: they
will need to be well publicised and acceptable to customers, including
small businesses and sole tradesmen. One early task for the Payments
Council is to define the detailed targets that will be needed,
so that any final decision is properly backed by hard evidence
of progress. The final "go" decision for a 2018 end
date will be taken in 2016 only if all these targets are
1.3 The key facts
driving this initiative in the UK are:
1.3.1 Compared with a peak of 11 million
cheques written per day in 1990, by 2008 there were just
3.8 million a day. Cheque use has fallen by 40% over the
past five years.
1.3.2 In 2000, cheques represented less than
a quarter of all non-cash transactions. By 2008 they accounted
for only one in 12.
1.3.3 In 2008 each adult wrote 1.2 cheques
per month on average and received just five per year.
1.3.4 Only 54% of adults wrote a cheque and only
48% of adults received a cheque payment in the last year.
1.3.5 Cheques were used for less than three per
cent of non-cash retail transactions in 2008.
1.3.6 Business cheque use peaked in 1997. Business-to-business
cheques have been in marked decline as businesses increasingly
move to the use of electronic payments for their trade suppliers.
1.3.7 The average value of a business-to-business
cheque stands at £2,200, much higher than that for business-to-individual
cheques (£374) and for cheques written by individuals (£267).
1.3.8 On average, UK users wrote 14 cheques
each during 2008, compared with 31 in 2002.
2. Unite interest
2.1 Between them HP and iPSL have responsibility
for clearing all of the cheques of the major UK based banks. Unite
represents the workforces of HP, who do the cheque clearing for
RBS, and iPSL a joint venture between Unisys, Barclays and Lloyds
TSB formed in 2000 with HSBC who joined as a shareholder
in 2001. HP presently employs approximately 800 staff (including
agency) on the RBS account, these cover a full time equivalent
of 600 positions. Together with iPSL's 2,500 full time
equivalent staff the total employment figure exceeds 3,000 jobs.
2.2 Unite estimates that over 1,500 of
these jobs would be affected by the ending of cheque clearing,
including not just those who carry out the operational processes
but other ancillary activities such as collecting and transporting
cheques. iPSL has its two main centres for cheque clearance in
Northampton and Liverpool where these losses would have a huge
impact on the local economy.
2.3 Additionally the physical transfer of
cheques is carried out for RBS by TNT logistics company. TNT employs
13 staff located at the various HP sites to co-ordinate a
team of approximately 1,000 drivers. Unite members are also
employed in the printing industry which is responsible for printing
the cheques. The report from the Payments Council makes no reference
to the impact on jobs of its proposal and Unite believes that
this is a serious omission demonstrating a disregard for employees
as well as sections of the community who will suffer as a result
of this proposal.
2.4 The UK Payments Council Board is dominated
by representatives of the big banks who would see a cost benefit
of ending the system. Unite believes that it is unacceptable that
banks which have recently been bailed out by the taxpayer are
now planning to cause their customers massive inconvenience by
scrapping the cheque.
2.5 The move will clearly benefit the profits
of the banks estimated to be by as much as £1 billion.
Unite notes that of the Board members voting for this decision
the four independent members of the boardwho are not from
the banking industryvoted against setting the target date.
3. Why cheques are neededwho needs
3.1 Older people
3.1.1 As well as causing unnecessary disruption
for many businesses, bankers would be dealing a huge blow to hundreds
of thousands of people, many of them elderly, who rely on cheques
3.1.2 The decision if carried through could
well lead to the most vulnerable might deciding to withdraw large
amounts of cash from the bank if cheques were unavailable. The
Committee's attention is drawn to the National Pensioners Convention
(NPC) which has condemned the decision as a selfish decision,
made by people who are clearly out of touch with the way millions
of older pensioners manage their affairs.
3.1.3 The NPC has said; "Chip and pin
is simply not suitable for a large number of pensioners and this
announcement provides no guarantees that cheques will be replaced
with anything that meets the needs of older consumers."
3.1.4 Online transfers were not appropriate
either as 6.4 million over-65s have never used the internet.
3.2 Small business people and traders
3.2.1 The cheque is important to small businesses,
to charities, to subscription-based companies, to the voluntary
sector and to schools, and it appears to Unite that the UK Payments
Council is encouraging the demise of the cheque without any regard
for the interests of such groups.
3.2.2 There is the added concern that having
been given the green light for this process, banks and retailers
will start to phase them out even sooner.
3.2.3 Larger traders during the second half
of the last decade have already removed the facility of paying
by cheques from customers. From Shell's initial removal in 2005 the
trend has been followed by major supermarkets such as ASDA and
Morrisons and high street stores such as John Lewis and Marks
3.3 Office of Fair Trading
3.3.1 The Office of Fair Trading, in its
submission to the Council's consultation, noted that "there
remains a question as to whether a decision by the Payments Council
to plan an end to cheque clearing could infringe competition law,
and we strongly suggest that appropriate legal advice is sought
before any decision is taken".
3.3.2 Following the publication of the Council's
decision to end cheque clearing in 2018, the OFT commented "when
details for ending cheques were produced, it would scrutinise
them to see if they were anti-competitive". Whilst the Payments
Council has sought its own legal advice on this matter and not
surprisingly, believes that it is not acting as a monopoly, Unite
would welcome a more independent scrutiny of this issue at this
stage rather than further down the line when banks may have already
reached a point of no return.
3.3.3 Unite rejects the proposition that
the Council has put forward that individual banks might create
a smaller cheque-clearing service among themselves if they wished.
It is the current public confidence in the central cheque clearing
process that sustains the trust for many people in the cheque
system and a smaller individual operation would be unlikely to
secure a similar level of trust and the costs involved would be
likely to eventually be passed to the customer.
3.4 Early Day Motion
3.4.1 Unite would remind the Committee that
Mark Hunter's early day motion tabled on the 26 November
2009 challenges the decision of the Payments Council and
has attracted 123 signatures across all parties. The text
of the EDM 258 is set out below:
That this House notes with concern that high
street banks are planning to stop accepting cheques despite protest
from consumer groups and businesses; further notes that nearly
four million cheques are still being written each day and that
many people still prefer to pay for goods and services in this
way; is concerned that the Payments Council which represents the
major banks will vote in December 2009 on whether or not
to scrap the cheque as a method of payment; believes many people,
particularly the elderly, would be inconvenienced as a result;
calls upon the Government to remind the banks that they exist
to serve customers and not the other way round; and urges the
banks to reconsider their proposals to abolish the cheque.
3.4.2 Unite believes that this sums up the
issues which need to be considered and the responsibilities of
banks to the customer.
4. What is happening in other countries
4.1 Cheque use is falling everywhere in
the western world, but the popularity of cheques seems to be different
depending on where you are. The Payment Council in Annex A of
its document "The Future of Cheques in the UK" refers
to its own research in selected countries around the world to
demonstrate the alternatives that have been developed in many
of the countries and in most the decline of the use of cheques,
although did not identify any where the usage had disappeared
4.2 Unite accepts that usage of cheques
is in decline and that there are a number of alternatives. However
that in itself is not an argument for abolition. It is notable
that there is no reference in the opposition to the changes planned
elsewhere in the world in the document and yet it is unlikely
that such proposals are proceeding unchallenged.
4.3 Clearly, the cessation of the CGCS will
hasten the demise of cheque usage. It has been observed that in
Austria, for example, the elimination of the bank guarantee function
effectively made cheques a less secure method of payment, and
therefore an undesirable one from the merchant's point of view.
4.4 Unite would argue that a more independent
study, in those countries where similar policies advocating the
ending of cheques, should be undertaken before automatically accepting
the conclusions reached by the Payments Council.
5. Conclusions and recommendations
5.1 Unite concludes that the proposals contained
in the Payments Council document have been arrived at without
adequate consultation and have been determined by a small vested
interest group of bankers.
5.2 Unite believes that the process and
timetable laid down in the document will result in a pre-determined
outcome by virtue of banks and retailers reducing the usage of
cheques and phasing out their use even earlier than that proposed.
5.3 Unite further asserts that little or
no consideration has been given to those in our society who would
be most adversely affected by the removal of cheques and that
these are probably the most vulnerable in society.
5.4 Unite is concerned that this proposal
will lead to significant job losses in the cheque clearing industry
and that there is no mention made of this and therefore it can
be assumed that no consideration has been given to this fact by
the Payments Council.
5.5 Unite calls for the Select Committee
An independent investigation into the
impact of the ending of cheques on society and its impact on jobs
in the UK.
The removal of any fixed timescale for
the ending of cheques until such time as every alternative has
been examined and where appropriate introduced.
That the OFT institute its own enquiry
into this proposal and that its findings forms part of the decision
1 Source: UK Payments Council Back