UK Inquiry Tracker

The production and distribution of cash

Public Accounts Committee Closed Inquiry

Opened: 22 Sep 2020 Closed: 25 Mar 2021 Parliament page

Ten years ago, cash was used in six out of every ten transactions - but by last year this was down to less than three in 10. The outbreak of COVID-19 may have accelerated this trend, with market demand for notes and coins declining by 71% between early March and … Read more Ten years ago, cash was used in six out of every ten transactions - but by last year this was down to less than three in 10. The outbreak of COVID-19 may have accelerated this trend, with market demand for notes and coins declining by 71% between early March and mid-April this year during the lockdown - although demand has since been recovering. Evidence shows older people and those on a low income are more likely to make cash transactions, but in just two years to December 2019, there was a 17% reduction in free-to-use ATMs. While there are still more free-to-use ATMs in more deprived areas, the proportion of free-to-use ATMs in those areas has declined faster. The government has a stated goal of safeguarding access to cash - but the commercial operators that make and distribute cash rely on high demand for it to stay profitable, with large fixed costs in maintaining bank branches and ATMs. A recent report by the NAO found that HM Treasury and the other public bodies involved in the cash system need to work better together to prevent vulnerable people who rely on cash for transactions from being excluded. It says that the Treasury should be clearer about the outcomes it wants the cash system to deliver for consumers and small businesses, and how this should be balanced against costs. Despite fewer people using cash for transactions, the demand for notes has continued to increase. In 2020, the number of notes in circulation reached a record high of 4.4 billion, with a value of £76.5 billion. In 2018, the Bank of England estimated that only 20%–24% of the value of notes in circulation were being used or held for cash transactions, with UK households holding a further 5% as savings in cash. Little is known about the remainder, which is worth approximately £50 billion. Possible explanations include holdings in cash overseas for transactions or savings; unreported cash savings in UK households; or for use in the shadow economy. The Bank and other government bodies have little reliable information to quantify how much is likely to be held where. Recent anti-counterfeiting work by both the Bank and the Mint is delivering improvements, however. Indications so far are that £5 and £10 polymer notes, with new security technology, have reduced the incidence of counterfeiting compared to equivalent paper notes. If you have evidence on the issues raised in this inquiry, please submit it here by Monday 12 October. Show less

2 Recommendations

23 Conclusions

1 Report

1 Oral session

4 Letters

1 Event

Activity timeline 8 events

27 Apr
2021

Correspondence

Correspondence from Tom Scholar, Permanent Secretary, HM Treasury, re The production and distribution of cash cashback without purchase, da…

20 Apr
2021

Correspondence

Correspondence from Tom Scholar, Permanent Secretary, HM Treasury, re The production and distribution of cash, dated 9 April 2021

16 Apr
2021

Correspondence

Correspondence from Public Accounts Committee Chair Meg Hillier, re The production and distribution of cash, dated 25 March 2021

25 Mar
2021

Report published

Treasury minutes: Government response to the Committee of Public Accounts on the Thirtieth report from Session 2019-21

1 Feb
2021

Correspondence

Correspondence from Tom Scholar, Permanent Secretary, HM Treasury & Chris Hemsley, Managing Director, Payment Systems Regulator, re Thirtie…

4 Dec
2020

Report published

Thirtieth Report - The production and distribution of cash

19 Oct
2020

Oral evidence

Production and distribution of cash

19 Oct
2020

Formal meeting (oral evidence session) · The Boothroyd Room, Portcullis House

Production and distribution of cash

Oral evidence sessions 1 session

19 Oct 2020

View on parliament.uk

Production and distribution of cash

Anne Jessop · Royal Mint Chris Hemsley · Payment Systems Regulator Dr Ben Broadbent · Bank of England Nikhil Rathi · Financial Conduct Authority Sarah John · Bank of England Sir Tom Scholar · HM Treasury

Reports 1 report · click to expand

Title	HC No.	Published	Items	Response
Thirtieth Report - The production and distribution of cash	HC 654	4 Dec 2020	25	Responded

Recommendations & Conclusions

25 results

2 Recommendation

Thirtieth Report - The production …

We are not convinced that the public bodies understand how declining access and acceptance of...

We are not convinced that the public bodies understand how declining access and acceptance of cash can adversely affect many people’s lives. Some consumers prefer to use or rely on cash—particularly the elderly and lower income groups; those in rural … Read more

HM Treasury

The production and distribution of cash

Activity timeline 8 events

Oral evidence sessions 1 session

Reports 1 report · click to expand

Recommendations & Conclusions

We are not convinced that the public bodies understand how declining access and acceptance of...

No one is in overall charge of making sure that people and businesses have access...

The Bank of England seems to lack curiosity about the huge volume of notes not...

The Bank of England’s stock of notes seems high and it is not clear to...

The continued reduction of coin use, possibly accelerated by Covid, is likely to put further...

On the basis of a report by the Comptroller and Auditor General, we took evidence...

When asked who would pay for the increasing cost of maintaining the cash system the...

The Treasury informed us that a lot of work had been commissioned, from both government...

The FCA and PSR are working with the University of Bristol to provide a map...

We asked the witnesses what they are doing to meet differing needs for cash within...

The FCA and PSR acknowledged that there is not likely to be one solution to...

We challenged the Treasury on who is responsible for the performance of the cash system.

There are gaps in the current distribution of powers and responsibilities.

Coins are produced for the whole of the UK by The Royal Mint (the Mint)...

The demand for notes has increased in each of the past 25 years.

During the Covid-19 pandemic, between March and July 2020, there was a significant increase in...

The Bank estimates that 20%-24% of notes in circulation are used or held for day-to-...

Once printed, the Bank holds contingency stocks of all notes at its premises to avoid...

According to the Bank, it is not unusual for it to maintain high stocks.

The NAO found, however, that it was not clear from the documentation shown to them...

The Mint’s UK coin production has reduced by 65% over the last ten years, from...

The decline in demand has been particularly rapid in recent years.

Since 2017 coin stocks have continued to rise.

Since March, the disruption caused by Covid-19 has, we were told, led to increases in...

This could bring further financial pressure to bear on the Mint’s UK coin operations.

Correspondence 4 letters