Britain’s new chancellor Rishi Sunak has been urged to include legislation in next month’s Budget to protect access to cash for millions of consumers who still rely on it.
A year ago, the Access to Cash Review declared that the UK’s cash system was on “the verge of collapse” as digital, contactless and card payments soared and bank branches closed.
Now the independent panel which produced the report has warned that cash use has reached a “tipping-point” as the rate of decline accelerates, and “will collapse without legislation” as UK regulators do not have enough legal powers to protect it.
Last year’s report predicted that the UK would become “virtually cashless” by 2035, but banking trade body UK Finance now believes this will happen within the next decade. Currently, around three in ten transactions are made in cash, but this is predicted to drop to one in ten within ten years.
The panel noted that a quarter of all ATMs now charge customers to withdraw their money, up from 7 per cent a year ago, resulting in charges to consumers rising by £29m in 2019 alone.
Rural banking services are closing, an increasing number of businesses are “going cashless” and Barclays’ threat to end cash withdrawal services via the Post Office network was only averted by public pressure, the panel said.
It acknowledged that regulators and the industry had taken these issues “seriously” but argued that as initiatives to protect access to cash are voluntary, they could not be relied on.
“To rely on commercial companies to maintain universal cash access when they face pressures from shareholders to cut costs would be naive,” the panel said. “We believe the only way to manage the cash system is for the government to legislate.”
Suggested legislation would obligate banks to provide suitable cash access for customers, including allowing consumers to obtain free cashback without having to make a purchase at a wide range of pubs and retailers.
Natalie Ceeney, independent chair of the Access to Cash Review, said she wanted to see the UK follow the example of Sweden, which recently introduced legislation forcing all major banks to offer cash services, with sanctions for those that did not comply.
“Regulators currently don’t have the tools that they need to ensure that everyone who needs cash can get it,” Ms Ceeney said. “Now is the time for the government to protect cash and allow us to look ahead to how we can prepare for a digital future which includes everyone.”
The Treasury said: “Technology has transformed banking for millions of people, but we know that many still rely on cash. That’s why we’ve invested £2bn to ensure everyday banking services are available at 11,500 Post Office branches across the UK.
“We’re also working closely with industry and regulators to ensure everyone who needs cash can access it.”
Published in February last year, the Access to Cash Review looked at the shift towards digital payments and concluded that the UK was set to “sleepwalk into a cashless society”.
The report found that 17 per cent of the population would struggle to cope in a cashless society and it would mean a loss of independence and rising debt for vulnerable people who need cash to budget effectively.
It suggested a series of recommendations on how regulators, government and industry could manage the shift and ensure digital payments and a viable cash infrastructure were available for all.
This fresh call to save cash comes a day before the UK’s new polymer £20 note is set to come into circulation.