Chancellor set to protect future of cash in next week’s Budget

Chancellor Rishi Sunak is poised to commit to new laws protecting the future of cash in next week’s Budget.

The moves will aim to ensure that people who rely on cash, including vulnerable groups and local communities across the UK, can access it as and when they need it.

The Treasury is expected to start talks with the industry and regulators – the Bank of England, Financial Conduct Authority and Payment Systems Regulator – around legislation immediately after the March 11 Budget.

One area being looked at is whether to give watchdogs new powers that ensure that banks continue to properly support their customers’ cash needs.

The Treasury also wants the banks to create a new system for moving money around the country, so cash remains accessible for those who use it every day.

International examples which the UK could take inspiration from include Sweden, which legislated to require large banks to provide their customers with facilities for withdrawing cash.

The rapid disappearance of many bank branches and free-to-use ATMs has fuelled concerns about people’s ability to continuing accessing coins and notes.

Mr Sunak said: “People across Britain work hard for their money, with millions relying on coins and notes to make their daily payments.

“That’s why, at next week’s Budget, I’ll be making sure they can continue to access and spend their earnings in whatever way they want.”

The finance industry has set up various schemes to help fill gaps in cash access, but many have argued that legislation is needed to protect the long-term future of cash.

ATM network Link has committed to replacing protected cash dispensers where there is no free machine or Post Office counter within one kilometre.

It also recently set up a “request an ATM” service, allowing communities to directly ask for a machine to be installed in their area.

Around two million people in the UK still rely on cash for their day-to-day spending – with three in 10 payments still made using notes and coins.

In 2018, 50 million adults used cash machines, with 87% of them using one at least once a month.

The commitment to legislation builds on government efforts to protect cash, including investing £2 billion since 2010 to ensure everyday banking services, including the ability to deposit and withdraw cash, are available at the Post Office’s 11,500 branches across the UK.

Consumer group Which? recently wrote to Mr Sunak calling for legislation that protects cash for as long as it is needed.

The letter read: “In the past two years, 9,000 free cash machines and 1,200 bank branches have vanished.

“We’re even being charged a fee to access our own money at 25% of the cash machines that remain…

“If things carry on as they are, cash as we know it will cease to exist in just two years.”

Similar calls have come from the business sector, with the Association of Convenience Stores, the British Retail Consortium (BRC) and the Federation of Small Businesses (FSB) urging the Chancellor to secure long-term access to cash across the UK.

BRC head of payments policy Andrew Cregan said earlier this week: “Cash accounts for almost 40% of retail transactions and is important to many vulnerable people, especially as a tool for budgeting and control.”

FSB national chairman Mike Cherry said: “We’d be open to measures which make it easier for small firms to offer cashback as part of Wednesday’s Budget, provided the financial incentives are in place to make doing so worthwhile for businesses.

“What we can’t have is a situation where small firms are left to foot the bill for the loss of ATMs because they’re expected to provide cash without the right support.

“More generally we need to see innovation in this space. Small firms say bank branches are vital to the health of their high streets – and they’re more vital still if they serve as community hubs – providing meeting spaces, event venues and cafes, as well as in-person financial support.”

John Howells, chief executive of Link, said: “Cash use is declining quicker than expected. Weekly ATM volumes are already 20% lower than last year and there’s a risk that the cash system could collapse within the next couple of years.

“This Government support will provide stability and resilience to the cash infrastructure, allowing Link and the banks to continue supporting local communities. Though the UK is moving towards a digital economy, it is vital that we protect free cash access as long as people need it.”

Natalie Ceeney, independent chairwoman of the Access to Cash Review, said: “A guaranteed future for cash will be extremely welcome.

“Digital payments work well for many, but not for everyone, and there is a serious risk that, without legislation, this shift will leave millions behind.

“We need the proposed legislation to be introduced quickly, so that we can maintain a viable cash system in the UK while so many people need it.”

Anabel Hoult, chief executive of Which?, said: “Which? urged the Chancellor to protect cash in this Budget, so we are delighted that he has listened to consumers and is ready to legislate to help millions of people who have been hit hard by bank branch and cash machine closures.

“We know that the cash system faces irreversible damage within the next two years, so we look forward to working with the Government, regulators and industry to ensure this commitment is swiftly turned into action that protects cash for as long as it is needed.”

Chief executive of UK Finance Stephen Jones said: “The banking and finance industry recognises the importance of ensuring cash remains free and widely available in an increasingly digital society, and we look forward to engaging with the Government and regulators on the proposed legislation.”

Read Full Story

FROM OUR PARTNERS