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

2 Recommendation Deferred

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

Government Response

The government agrees with the recommendation to set out how it will incorporate community needs into its plan for cash access, but defers specific action. It states it is considering responses to a Call for Evidence and will outline next steps in due course.

HM Treasury

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3 Recommendation Deferred

Thirtieth Report - The production …

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

No one is in overall charge of making sure that people and businesses have access to cash. The responsibilities and accountabilities of the different bodies for the functioning of the cash system are not clear. Five public authorities have responsibilities … Read more

Government Response

The government agrees with the recommendation to assign overall responsibility for the cash system to a single body, noting the FCA may be well-positioned. However, it is currently considering responses to its Call for Evidence and will set out next steps in due course, deferring a concrete commitment.

HM Treasury

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12 Conclusion Deferred

Thirtieth Report - The production …

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

We challenged the Treasury on who is responsible for the performance of the cash system. It accepted that it was ultimately responsible for proposing legislation to 20 Qq 39–40 21 Q 40 22 Q 41 23 Q 43 24 Q … Read more

Government Response

The government agrees with the implied recommendation (based on its own proposal) to clarify responsibility for the cash system. It states it is considering responses to its Call for Evidence regarding giving a single authority, such as the FCA, overall responsibility and will set out next steps in due course.

HM Treasury

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13 Conclusion Deferred

Thirtieth Report - The production …

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

There are gaps in the current distribution of powers and responsibilities. We asked, for example, who is responsible for monitoring the resilience of the cash machine network and for taking action should part of it fail. The PSR told us … Read more

Government Response

The government agrees with the implicit recommendation to address the lack of a single organisation responsible for monitoring the cash system. It reiterates its proposal from the Call for Evidence to give a single authority, potentially the FCA, overall responsibility, but defers action to set out next steps after considering responses.

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