Access to Cash in Scotland Contents

2Role of Cash in Society

3.In response to concerns about ATM and bank branch closures, as well as broader concerns about the decline in cash usage and challenges accessing cash, the Access to Cash Review was launched in July 2018. This review was funded by, but independent from, LINK, the organisation that runs the UK’s largest ATM network. The final report was published in March 2019. The review found that cash transactions were declining, from six out of ten transactions being made using cash 10 years ago to just three in ten transactions in 2018.6 The review also found that ATM usage, which is a proxy for cash use, is declining across the UK but has declined less in Scotland (down 3.3%) compared to other regions such as London (8.5%) and the South East (7.7%).7

4.The review also found that cash remained an important payment method for a significant section of the UK’s population and that its forecast to remain the second most common payment method for the foreseeable future. Eight million adults, 17% of the UK population told the review that they would struggle to cope in a cashless society.8 Cash remains particularly important for: rural communities, which often have poor digital infrastructure; older consumers; consumers with physical or mental health issues; those on lower incomes, and those with debt problems. For these groups, the review argued, ‘using cash isn’t a choice but a necessity’ and they were disproportionately impacted by reduced access to cash.9

5.Scotland has a slightly higher proportion of groups that are more reliant on cash. For example, the Financial Conduct Authority has shown that 30% of adults in Scotland have been identified as less able to access financial services compared with 28% across the UK, as shown in the graph below:10

Scotland also has higher proportion of those who are retired, unemployed, don’t use the internet, or have one or more long-term physical or mental health conditions, compared to the rest of the UK. Scotland’s larger rural landmass also poses a challenge as people from rural communities told us that distance and a lack of public transport make it difficult from them to get to alternative bank branches and ATMs when local options are removed.

6.Another reason given for Scotland’s greater reliance on cash and lower uptake of online banking services is lower quality of connectivity. The consumer group Which? told us that a significant amount of people in Scotland are either not online or do not have a reliable broadband connection, with areas of Scotland having some of the UK’s slowest average connection speeds including the Orkney and Shetland Islands, Argyll and Bute, and Moray.11 Which? also found that the Highlands (8.9Mbps), Borders (9.3Mbps), Aberdeenshire (10.1Mbps), Perth and Kinross (10.1Mbps) and Na h-Eilean Siar (11.5Mbps) had poor broadband speeds.12 The latest Ofcom figures found that fewer premises in Scotland receive Ofcom’s “decent download speed” of 10Mbps. Only 79% of rural areas in Scotland compared with 88% across the UK can access this speed which makes the use of digital payments and online banking unreliable at best and impossible at worst.13

7.While the Access to Cash Review identified many advantages from increased online payments, it also emphasised the risk of leaving groups behind if that transition was not managed properly. For example, while Sweden is one of the most cashless societies in the world, with use of cash at just 15%, this rapid decline in cash usage had caused problems for regulators and groups that weren’t ready to go cashless. The Access to Cash Review warned that Sweden:

outlines the dangers of sleepwalking into a cashless society: millions of people could potentially be left out of the economy and face increased risks of isolation, exploitation, dept and rising costs.14

James Daley, who worked on the Access to Cash Review, told us that Swedish policy makers wished they were at the point the UK is at now, so they had the chance to prevent market forces leading to infrastructure failing and consumers being left without choice.15

8.To prevent this kind of disruption and negative social impact, the Access to Cash Review made several proposals to the Government, including:

Guarantee access to cash: The UK Government to guarantee access to cash for consumers and small businesses
Make digital payments an option for everyone: the UK Government should make digital payment options accessible to all and this should be a priority for financial service regulators
Ensure joined-up oversight and regulation of cash: The Treasury should determine what the right regulatory mechanism is for oversight of the cash system and there should be a UK Government policy on cash.16

These proposals have been endorsed by the Treasury Select Committee, who have also encouraged the UK Government to commit to bringing forward the necessary legislation to enforce the proposals.17

9.In response to the Access to Cash Review, the Government has said that it is committed to supporting digital payments whilst safeguarding access to cash for those who need it.18 It has also established the Joint Authorities Cash Strategy Group (JACS) which is chaired by the Treasury and is to bring together financial regulators and the Bank of England to provide a comprehensive oversight of the UK’s cash system.19 However, the Government has not yet set out a clear policy guaranteeing access to cash as the Review called for.

10.John Glen MP, Economic Secretary to the Treasury, agreed with us that cash is still important and that there needs to be better solutions in place to keep it accessible, especially in rural areas of which there are many in Scotland.20 He told us that the Government wants to ensure the infrastructure supporting the availability of cash is improved. He also expressed his support for several initiatives the market was developing to improve access to cash such as deposit-taking ATMs, improved cashback facilities and banking hubs, saying:

I want them to be scrutinised, I want them to be more readily available in different circumstances and I want that to be done as quickly as possible.21

11.We believe that there will continue to be a need for cash for the foreseeable future and welcome the Minister’s agreement about its continued importance for society, particularly in Scotland. While we welcome a number of the individual initiatives that the Minister mentioned, which we will explore later in this Report, we believe there is a need for an overarching strategy to guarantee consumers access to cash. This is especially important in Scotland given the physical and digital connectivity challenges it faces. We endorse the recommendations in the Access to Cash Review and recommend that the Government publish a strategy outlining the steps it will take to ensure Scottish consumers’ continued access to cash.

6 Access to Cash Review, Final Report, March 2019

7 Access to Cash Review, Final Report, March 2019

8 Access to Cash Review, Final Report, March 2019

9 Access to Cash Review, Final Report, March 2019

10 Financial Conduct Authority, The financial lives of consumers across the UK, 20 June 2018

11 AFS 37

12 Press and Journal, Huge swathes of the north and north-east are lagging behind in the UK’s broadband slow lane, 22 January 2019

13 Ofcom, Connected Nations 2018 Scotland report, December 2018

14 Access to Cash Review, Final Report, March 2019

15 Q13

16 Access to Cash Review, Final Report, March 2019

17 Correspondence between Treasury Committee and Chancellor