David Ruffley MP questions Richard North on the future of cheques

Wednesday, 15 June, 2011

On the 15th of June 2011 David Ruffley MP questioned Richard North on the future of cheques.
The text of Mr Ruffley's interview can be found below, and the full text of the proceedings can be found here

Q84 Mr Ruffley: I inhabit the real world, Mr North. I don't know what world you and the rest of the Payments Council inhabit, but the statement that cheques will be phased out by October 2018-and that was announced by the Payments Council in December 2009-has scared the pants off middle England; not just vulnerable groups but small traders, sole traders and ordinary citizens. Will you now apologise for the rank incompetence of the handling of this issue? Will you make a general apology to the people I have just listed?
Richard North: What I have said is-
Mr Ruffley: I am asking for an apology. Now, do you want to do that?
Richard North: What I am saying is that I regret we have not gotten our message across. I deeply regret that we have not gotten our message across.
Q85 Mr Ruffley: Are you apologising to all the people you have scared the pants off? Not just old people but small traders, people in my constituency in Suffolk. Are you going to apologise?
Richard North: I am sorry that they have not received the message; that we have not-
Mr Ruffley: I am going to take that as an apology.
Richard North: I am sorry that they believe that-
Q86 Mr Ruffley: It is their fault, is it?
Richard North: No, it's not.
Q87 Mr Ruffley: It is your fault.
Richard North: I am sorry that they have not gotten the message, which is our responsibility, I accept.
Q88 Mr Ruffley: Yes. Let's move on. You have repeated several times the 70% figure for decline of cheques and the 42% figure in the five years to 2010. Can you tell me how many cheques were written in 2010?
Sandra Quinn: I can.
Mr Ruffley: No, no. I want the chairman to answer.
Richard North: I have-
Mr Ruffley: No, listen. You are chairman of the Payments Council. How many cheques were written in 2010?
Richard North: I am chairman of the Payments Council, I accept.
Mr Ruffley: Answer the question, as chairman of the Payments Council.
Richard North: I have the detail here.
Mr Ruffley: Fire away.
Richard North: I don't carry it in my head. I apologise if I don't carry it in my head. There are a lot of statistics I don't carry in my head.
Mr Ruffley: How many people signed cheques?
Richard North: The exact number of cheques that were signed in 2010: I am sorry; I don't carry that in my head.
Q89 Mr Ruffley: Why don't you know? I know, and the Financial Secretary knows, because I have it in front of me and it was in the letter that we all have in front of us. So what is the answer?
Richard North: The answer is that I have it here; I just do not have it in my head.
Q90 Mr Ruffley: Tell me what it is.
Richard North: Where is the number?
Mr Ruffley: Oh dear, oh dear. You are the man responsible for cheques-
Richard North: It is 1.1 billion.
Q91 Mr Ruffley: And what was it at its peak?
Richard North: Four billion.
Q92 Mr Ruffley: Right. You are doing well today. The reality is that there are lies, damned lies and statistics aren't there? Y ou kept on repeating in your evidence that there were these big falls-Mr Love questioned you on that-70%, 42%. The fact remains that today there are 1.1 billion cheques signed in 2010. W hat proportion of those, Mr North, were personal cheques? You are not very well briefed , are you?
Richard North: It is in the submission that we have made.
Mr Ruffley: Tell us what it is.
Richard North: You say I am not very well briefed. I think it is unreasonable to expect me to carry all these numbers in my head.
Mr Ruffley: These are rather basic facts. You are head of an organisation that indicated to the great British public that cheques would be phased out by October 2018, and you do not even know the basic numbers on how many cheques are written.
Richard North: 620 million.
Mr Ruffley: Million. Personal cheques? Yes?
Richard North: Yes.
Q93 Mr Ruffley: Good, because that is what we have in front of us here. If you had read the Financial Secretary, he is terribly well-briefed. You have come to this Committee without knowing basic facts, Mr North, and I think we have all noticed that.
Now , the next question. I am interested in the 2016 deadline when you say that you will be getting around to doing a cost- benefit analysis. Is that correct?
Richard North: We will do a cost-benefit analysis to support a decision. If there is an affirmative decision to close the cheque clearing system, then we will have done-
Q94 Mr Ruffley: When will you be doing a cost-benefit analysis?
Richard North: It will need both tests. The whole point about a cost-benefit analysis is-
Q95 Mr Ruffley: When will you be doing it? I know what a cost-benefit analysis is. What I do not know is when you propose to do it and on what basis you will be doing it. Will you be doing it around 2016? Next year? The year after? When will this important piece of work happen?
Richard North: Our plan is to do it as near to 2016 as possible in order to determine at that point whether it supports a decision to close the cheque clearing system.
Mr Ruffley: All right. As near 2016 as possible.
Richard North: If you want to ask me if it is possible to do it earlier, the earlier you do it-because you are projecting what the position is going to be like in 2016-the more uncertainties are introduced.
Q96 Mr Ruffley: Of course. We all understand that. What I want to ask you is: what is the magic number, what is magical about the year 2016 and why, on what basis, was the date of phasing out by October 2018 arrived at? Why not 2028? Why 2018?
Richard North: The decision was that we had to have some framework, and forgive me, because I was not a party to this decision-
Q97 Mr Ruffley: You are the chairman and you are responsible for the organisation now. What we want to understand is why it is 2018. Why not 2022 or 2028?
Richard North: You are asking me what the considerations were that were made at the time.
Mr Ruffley: And what is the answer?
Richard North: As I understand it, they looked to see what would make sense in terms of a timetable that was not too remote so that it was irrelevant but equally it was not too fast such that it became unrealistic.
Q98 Mr Ruffley: It seems to me on the basis of what you have just said that 2018 is quite an arbitrary figure, isn't it?
Richard North: It was a judgement as to whether that made sense in terms of the right length for a programme.
Mr Ruffley: 2018 is arbitrary, isn't it?
Richard North: As I say, it was a judgement. Any figure, you can argue, is arbitrary; whatever date you take you can argue is arbitrary.
Q99 Mr Ruffley: Do you think 2018 is a date you are minded as chairman of this organisation to stick with?
Richard North: What I said earlier was that the timetable is not set in stone.
Q100 Mr Ruffley: So you might move 2018?
Richard North: If it looks unrealistic in terms of seeing that we have acceptable alternatives in place, yes, we will move it.
Q101 Mr Ruffley: Good. You have used the words "paper-based solution" at least twice during this evidence to this Committee, to my colleagues. Now can you just say it to us in layman's language and describe what a "paper-based solution" that is not a cheque might be? Why not just keep cheques?
Richard North: A paper-based solution will probably look very similar to a cheque.
Mr Ruffley: Will it? A-ha. I see.
Richard North: But it won't act like a cheque. That is the point. The point is that in the way it is processed-
Q102 Mr Ruffley: We are through the looking glass now into Alice in Wonderland. It will be paper-based, so it is not paperless. I think most people could understand if the change was going to be online or paperless, but you are talking in this testimony today about paper-based solutions; it will be like a cheque but not a cheque. What on earth will it be?
Richard North: The trick is that for users, they feel it is as like a cheque as possible such that they will feel comforted. It will be just as convenient and just as flexible as a cheque, but in terms of how it is processed through the system it will be more efficient. It will be quicker and lower cost.
Q103 Mr Ruffley: Explain how that might happen. If it is a bit of paper and it is going through a system-
Richard North: I can give you an example as to how I think it might work but I don't know how it will work because we have the work going on at the moment and a presentation will be made to our board at the end of December as to what the best option in terms of a paper-based solution will look like. I do not want to give an example and it turns out the example we think is the best solution looks different.
Q104 Mr Ruffley: Okay. You have retail experience. I notice you were a chairman of Woolworths, but let's move swiftly on from that.
My final question is this , and it relates to the impression that various banks have got , and Barclays is one example : c an you tell us whether there are any other banks that you are aware of who have this impression that cheques will be phased out by October 2018?
Richard North: I know that the senior management of all the major banks are absolutely committed that we will not close the cheque clearing system unless the tests that I have said-more often than I need, I guess-are met in 2016. The senior management are absolutely on board on that. I cannot guarantee that there are people in other parts of the banks who have a different impression. I cannot guarantee that. Before I knew I was coming to this Select Committee, I wrote to the chief executives of all the major banks to make sure that that message was that we have not agreed to the closure of the clearing system; to make sure that they were absolutely signed on to the tests, and that the tests needed to be supported by a cost-benefit analysis. I have affirmative responses from them all. But I cannot guarantee that there are not people within those banks who maybe do think the decision has been taken. I cannot guarantee that.
Q105 Mr Ruffley: My very final question, Chair: it is a very short one. I just want to quote from the letter that, judging from your earlier answers , you had not bothered to read, from the Financial Secretary to the Treasury.
Richard North: I have read it.
Mr Ruffley: The letter is dated 4 June. Well, you had not read it, but let me just read out what I think is an important sentence. It is from Mr Mark Hoban, the Financial Secretary, and I quote. It is the third paragraph: "Regrettably, the announcement was made without an assessment of the costs and benefits, or a plan or timetable for managing the process, or an indication of what alternative payment instruments might need to be created. These things are only now being developed."
That is the Minister criticising what the Payments Council has been doing on your watch. Have you ever considered your position, and don't you think you should resign?
Richard North: Well, actually it wasn't on my-
Q106 Mr Ruffley: Why are you laughing?
Richard North: Because it wasn't on my watch. This decision was taken and the announcement made before I became chairman. I have been chairman for just 14 months.
Mr Ruffley: It is on your watch inasmuch as you are chairman of this organisation.
Richard North: I am chairman, but you are pointing to when the decision was made. You are quoting the Minister saying the announcement was made. I was not chairman when the announcement was made.
Q107 Mr Ruffley: It is extant now. I have news for you. A lot of people out there in Britain still think that this is a deadline of October 2018 for cheques to be phased out, and it seems to me, Mr North, that you have done precious little except try to shuffle off responsibility to other people, and have not taken responsibility for what in my view has been rank incompetence by the organisation of which you are chairman. I simply ask you the question-and you can do a yes or a no-have you considered your position?
Richard North: No.
Mr Ruffley: Thank you.
Richard North: No, I haven't.