The government has pledged to keep 1p and 2p coins in circulation despite declining levels of cash usage in the UK.
Chancellor Philip Hammond on Friday announced plans to set up a new group that will safeguard access to cash for Brits. At the same time he vowed to keep all current cash denominations — from the penny to the £50 note — in circulation.
“Technology has transformed banking for millions of people, making it easier and quicker to carry out financial transactions and pay for services,” Hammond said.
“But it’s also clear that many people still rely on cash and I want the public to have choice over how they spend their money.”
The announcement comes after speculation that the Chancellor was set to abolish one and two penny coins. Hammond last year called the coins “obsolete” and a Treasury report found that just 60% of the coins are used in transactions before either being saved or thrown away. The Bank of England also said last year that axing the coins would not affect inflation.
The commitment to cash comes amid warnings that the UK’s cash infrastructure is on the brink of collapse.
The “Access to Cash” report published in March warned the “dramatic collapse” in cash usage could lead to the collapse in the cash network within two years.
Earlier this week, consumer group Which? said the number of free cash machines in the UK declined by 1,700 in the first three months of the year. Part of the reason is the high fixed cost of ATMs — operators now have to earn more money from fewer transactions by charging customers for withdrawals.
“Cash use is falling rapidly, but digital payments don’t yet work for everyone. We need to safeguard the use of cash for those who need it, and at the same time work hard to ensure that everyone can participate in the digital economy,” Natalie Ceeney CBE, chair of the Access to Cash review, said on Friday.
The Treasury estimates that 2.2 million people are still reliant on cash in the UK, with the elderly, poor, and rural dwellers the most reliant.
The Treasury’s new Joint Authorities Cash Strategy Group — the new group safeguarding cash access — will include representatives from the Bank of England, the Payment Systems Regulator, and the Financial Conduct Authority. The Treasury will chair the group.