Chancellor Rishi Sunak is under pressure to legally enshrine free access to cash in rural areas, after more than a fifth of ATMs closed in one north-east constituency.

A change in the law was first raised in the March 2020 budget but was delayed by the Covid-19 pandemic.

Now, Conservative MP Andrew Bowie is calling for the Chancellor to push this to the top of the agenda at the state opening of parliament on May 10.

His West Aberdeenshire and Kincardine constituency saw 22% of its free-to-use ATMs close between August 2018 and December 2021.

The proposals would introduce new laws to make sure people only need to travel a “reasonable distance” to pay in or take out cash.

The MP has been contacted by hundreds of constituents calling for the legislation to be introduced as part of the government’s next programme.

It comes after the Banchory branch of Virgin Money closed earlier this year – one of 12 closed across Scotland.

People are taking out more money when they visit ATMs, with the average amount climbing more than £10 to just under £80 in the last two years.

But they’re using cash machines 40% less than before and withdrawing £44 a month less.

Withdrawals are now nearly £100m less a day than in 2019, said cash machine network Link.

“Covid has turbocharged the switch to digital,” said Nick Quin, head of financial inclusion at the network.

Before the pandemic, each adult in the UK visited a cash machine on average three times a month, taking out on average £66.99. That amount has climbed to £78.54.

However, 18 months after the coronavirus crisis started, visits are now less than twice a month.

That means the total average amount each month withdrawn per person has fallen £44, from £200.97 to £157.08.

People living in rural areas are having to travel further to find somewhere to withdraw and deposit cash free of charge, says the City regulator.

Almost every urban resident has access to a bank, building society, post office or ATM within 2km of home, the Financial Conduct Authority (FCA) said.

This drops to three-quarters of the UK rural population, its research found.

While longer distances are expected for rural residents, campaigners fear vulnerable people face difficulties.

In rural areas of the UK, fewer than half (45%) of residents have a bank branch within 5km of their home.

The FCA said it was considering stronger requirements of the sector to ensure five million people who rely on notes and coins are able to have access to it.

Visa has launched an industry-wide ‘access to cash’ scheme with its partner banks to encourage retailers to offer cashback.

The new initiative specifically targets areas in the UK where consumers currently struggle to access cash, such as remote and rural locations. Additionally, it will incentivise shops and businesses to offer cashback to consumers using their Visa debit cards.

Jeni Mundy, Visa Managing Director, UK & Ireland, said: “The popularity of digital payments continues to surge across the UK, however we know that cash still plays a vital part in the lives of many.

“This is why we want to help increase the number of options that people have to gain access to cash, helping to extend financial inclusion by enabling customers to choose how they pay – be that by cash, cards, mobile devices or other means. We also hope our scheme will encourage people in the target areas to visit their local shops at a challenging time for retailers.”

The scheme aims to increase the number of locations where cashback is offered. Cashback has been available in the UK since 1990, however, Visa has seen transaction volume declining in recent years.

Consumers and community groups have made more than 100 requests for free-to-use ATMs in their area, directly from operator Link in the month following the launch of a new fund.

The Community Access to Cash Delivery Fund is taking requests for free-to-use ATMs in places with poor access, and is part of measures aimed at tackling the concern that it is becoming harder for people to take out cash.

The requests so far have come from every corner of the country, with isolated rural communities, deprived urban areas and small towns all getting in touch, Link said.

If an application meets the criteria and there is a suitable location, Link will fund the new ATM directly.

There is £1m in the pot so far, but more money could be released when needed.

Up to 30,000 free-to-use cash machines – 45% of the UK total – are on course to disappear over the next five years amid cuts in fees received by operators, it is being claimed.

According to the ATM Industry Association (ATMIA), changes to the so-called interchange fees – charges paid to operators by banks per withdrawal – being imposed by the LINK network will cut access to cash at a time when banks are shutting more branches.

LINK has previously argued that the cost of running its network is unsustainable at a time when more people are banking online and using contactless card payments.

It announced on Tuesday that it was bringing forward a series of measures that it said would safeguard access to free cash.

It said a new fee structure would “shift incentives from deploying ATMs in city centres to rural and less-affluent communities” to secure free-to-use machines for the whole of the country.

According to LINK, the changes would mean free ATMs that are more than 1,000m from the next free machine are exempt from cuts to fees – and those in rural communities would get an enhanced subsidy to incentivise continued provision.

The majority of machines – mostly in major towns and cities – would see a phased reduction in the interchange fee.