The future of cash is to be protected amid fears that closing bank branches and disappearing ATMs are leaving millions without access to their money.
Chancellor Philip Hammond will today announce he is setting up a Treasury-led group in response to warnings that Britain is ‘sleepwalking towards a cashless society’.
The group will investigate measures to ensure that a national network of cash machines, bank branches and other sources of physical money is maintained. The Government’s decision is a victory for the Daily Mail, which has highlighted the threat to access to cash through the closure of bank branches and ‘hole in the wall’ machines.
Chancellor Philip Hammond will today announce plans to safeguard 3,500 cash machines in remote or rural areas
Special protection is being offered to 3,500 cash machines in remote or rural locations to ensure that – if there is not a Post Office nearby – they stay open. At the same time, the Chancellor will confirm the Government intends to save 1p and 2p coins from being scrapped amid claims they have become obsolete.
Banks are pushing people to switch to debit cards and smartphone apps, such as Apple Pay, rather than real money because it saves them a fortune in terms of handling, security, counting and transport costs.
They have made it increasingly difficult to access cash by closing hundreds of branches across the country, ripping the heart out of many town centres and shopping streets. At the same time, the banks have reduced the fees they pay to third-party cash machine firms to process transactions, which means many have become uneconomic.
As a result, almost 3,000 cash machines disappeared in the six months to December. And just this week, the consumer group Which? revealed that 1,700 cash machines have introduced withdrawal charges this year already, with the threat of another 5,000 following soon.
Mr Hammond will tell industry leaders in London that ‘the future of cash will be protected’.
He will say: ‘Technology has transformed banking for millions of people, making it easier and quicker to carry out financial transactions and pay for services.
‘But it’s also clear that many people still rely on cash and I want the public to have a choice over how they spend their money. I’m also setting up a group which brings together the Treasury, Bank of England and the regulators to safeguard the future of cash and ensure its availability for years to come.’ The Chancellor will also confirm that there will be no changes to coins and notes. As a result, all denominations – from the penny to the £50 note – will stay in circulation.
Almost 3,000 cash machines disappeared in the six months to December, it was revealed (file photo)
The extent of the problem of losing access to real money was revealed in the recent Access to Cash review, led by former Financial Ombudsman Natalie Ceeney.
Miss Ceeney welcomed the Chancellor’s decision, saying: ‘Cash use is falling rapidly, but digital payments don’t yet work for everyone.
‘We need to safeguard the use of cash for those who need it, and at the same time work hard to ensure that everyone can participate in the digital economy.
‘If we sleepwalk into a cashless society, millions of people will be left behind. I’m delighted to see the Government taking a leadership role on this critical issue.’
Research suggests that 25 million Britons view access to notes and coins as a necessity. An estimated 2.2 million are reliant on cash, with the elderly, vulnerable and those in rural communities likely to be hardest hit by a decline.
The Treasury’s new Joint Authorities Cash Strategy Group (JACS) will support the Bank of England’s work to develop a new wholesale distribution system to ensure cash reaches every corner of the country.
Head of campaigns at Which?, David Chaplin, said: ‘Millions of people who rely on cash in their daily lives are at risk of being stripped of their ability to pay for essential goods and services – so the Government’s unprecedented commitment to protecting cash should finally offer them some reassurance.
Chancellor will also confirm the Government intends to save 1p and 2p coins from being scrapped amid claims they have become obsolete
‘This new body must act urgently to address rapid changes to the cash landscape. Its success will be judged by how it ensures people can continue to access their preferred payment method in the face of bank branch and cashpoint closures, intermittent broadband access and regular IT glitches affecting digital payment methods.’
Federation of Small Businesses chairman Mike Cherry said: ‘Millions of small business owners have customers that still want to pay in cash. If shoppers struggle to access notes and coins, that hurts the small firms that make up 99 per cent of all businesses across the UK.
‘We look forward to working with the new strategy group on the measures needed to protect access to cash for all those who want and need it.
‘It is often society’s most vulnerable that bear the brunt of lost bank branches and cashpoints. The Government is right to stand up for these consumers.’
Treasury select committee chairman Nicky Morgan said the Government also needed to look at ways to stop shops and other businesses from refusing cash, as has already happened with cheques.