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

6 Recommendations

19 Conclusions

1 Report

1 Oral session

4 Letters

1 Event

Activity timeline 7 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

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

4 results

7 Conclusion Acknowledged

Thirtieth Report - The production …

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

When asked who would pay for the increasing cost of maintaining the cash system the FCA acknowledged that the economics of the cash system is changing. It suggested that further thought will need to be given to how to support … Read more

Government Response

The government agrees with the Committee's observation regarding the changing economics of the cash system and the political nature of cost allocation, but provides no specific commitments.

HM Treasury

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8 Conclusion Acknowledged

Thirtieth Report - The production …

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

The Treasury informed us that a lot of work had been commissioned, from both government and outside government, to understand how rapid changes in the cash system were impacting on those still reliant on cash. This work indicated that 2 … Read more

Government Response

The government agrees with the Committee's observation regarding ongoing research into cash reliance and SME access to services, but offers no specific commitments or new actions.

HM Treasury

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9 Conclusion Acknowledged

Thirtieth Report - The production …

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

The FCA and PSR are working with the University of Bristol to provide a map of access to cash across the country and the different ways in which cash can be accessed, including bank branches, post offices, cash machines and … Read more

Government Response

The government agrees with the Committee's observation regarding the ongoing work by FCA and PSR to map access to cash but provides no specific actions or commitments to accelerate the work.

HM Treasury

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11 Conclusion Acknowledged

Thirtieth Report - The production …

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

The FCA and PSR acknowledged that there is not likely to be one solution to meeting the cash access needs of local communities. Both organisations recognised that creative solutions will be needed that are community-based, reflecting the make-up of the … Read more

Government Response

The government acknowledges the committee's observation regarding the need for flexible, community-based solutions for cash access. It reiterates its commitment to protecting cash access and will outline its next steps after considering responses to a Call for Evidence.

HM Treasury

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Government Response AI assessment · 24 of 6 classified

Accepted 12

Acknowledged 4

Deferred 4

Not Addressed 4

Total 6 recs + 19 conclusions

Correspondence 4 letters

27 Apr 2021 Correspondence from Tom Scholar, Permanent Secretary, HM Treasury, re The production and distribution of cash cashback without purchase, dated 20 April 2021

Parliament page

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

Parliament page

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

Parliament page

1 Feb 2021 Correspondence from Tom Scholar, Permanent Secretary, HM Treasury & Chris Hemsley, Managing Director, Payment Systems Regulator, re Thirtieth Report of Session 2019–21: ‘The production and distribution of cash’, dated 28 January 2021

Parliament page