Britain’s cash system ‘in danger of collapse’ as digital takes over

THE FRACTURED cash system in the UK is in danger of collapsing and market forces alone cannot be relied upon to ensure that people can continue to access coins and notes, a major review has warned.

The findings published today were made by the Access to Cash Review, which said “cracks in the system are showing” – and bank branch and ATM closures are just the “tip of the iceberg”.

The report’s authors described the cash system as “on the verge of collapse”, and the review has published final recommendations urging the Government, regulators and banks to act now.

Natalie Ceeney, the independent chairwoman of the Access to Cash Review, said the dangers of “sleepwalking into a cashless society” mean millions of people could potentially be left out of the economy, and face increased risks of isolation, exploitation, debt and rising costs.

She said: “There are worrying signs that our cash system is falling apart. ATM and bank branch closures are just the tip of the iceberg, underneath there is a huge infrastructure which is becoming increasingly unviable as cash use declines.”

She added: “If we sleepwalk into a cashless society, millions will be left behind. We need to guarantee people’s right to access cash and ensure that they can still spend it.”

The study recommends that a “guarantee of cash access” should be introduced, with those providing essential services required to allow consumers to pay by cash. Cash should be seen as a core part of the UK’s infrastructure and not just a commercial issue, it added.

The report said: “For consumers, we believe that it is both sensible and commercially viable for the banks and regulators to offer a ‘guarantee’ of cash access.

“In part, they can do this by encouraging innovative ways of accessing cash, rather than just protecting increasingly unviable ATMs or, worse, charging consumers for access.”

The review is funded by cash machine network Link, but is independent from it. Fears over access to cash have been heightened amid bank branch and ATM closures – leading to worries that people’s access to physical money, particularly in rural areas, is disappearing.

But the report said the issue is not just about people being able to withdraw money – it is also about whether purchases can be made at places accepting cash payments.

The Yorkshire Post revealed in January as many as four in 10 bank branches have been lost in the region in less than a decade.

Cash is now only used for three in every 10 transactions, down from six in 10 a decade ago and is forecast to fall as low as one in 10 transactions in the next 15 years.

The report said the shift away from cash to digital payments is placing “significant strain” on the UK’s cash infrastructure, which costs £5bn a year to run.

Nicky Morgan, who chairs the Treasury Select Committee, said: “The complexity of this issue cannot be overstated, but the simple truth is that leaving the future of cash to be determined by market forces will not work.”

The Economic Secretary to the Treasury, John Glen, stressed the Government is committed to maintaining access to cash, while supporting digital payments.

He added: “That’s why we’re working closely with regulators and the banking industry to ensure that people continue to have real choice over how they spend their money.

“This review will help inform our ongoing work to ensure cash remains accessible for those who need to use it.”

Leaving the future of cash to... market forces will not work. Nicky Morgan, who chairs the Treasury Select Committee.