As the use of cash payments falls to an all-time low during the COVID-19 pandemic, Anneliese Dodds, Shadow Chancellor of the Exchequer and Labour MP for Oxford East, has called for an end to its “uncontrolled retreat”.
In the context of the pandemic, the Shadow Chancellor has argued that the increasing number of shops which only accept card has made the issue “more urgent”. Dodds raised such concerns in a letter to the Chancellor of the Exchequer, Rishi Sunak, in which she warned of “no one really having a grip” on the consequences of the rapid decline in cash usage. She particularly emphasised the “unequal effects of this on different parts of the community”.
The use of cash payments was already clearly in decline before the coronavirus pandemic; in the last quarter of 2017 payments made by debit card became more frequent than cash payments for the first time, according to UK Finance. However, the restrictions on businesses due to lockdowns as part of the government’s response to the coronavirus pandemic has had the impact of drastically reducing the use of cash even further. At the height of the lockdown in March of last year, ATM withdrawals fell about 60% compared to 2019, and withdrawals remain down considerably.
At the same time, according to Which?, bank branches have been shutting at an average rate of 55 per month over the last five years, making it increasingly difficult to perform banking in person. This has prompted the shadow chancellor to call for the government to fulfil its “promise of legislation” to curb the loss of cash infrastructure. Sweden could provide a model for this, as there banks are being legally obliged to “provide cash to customers in all parts of the country”, according to The Times.
The abandonment of cash by many young adults is significant, with polling by YouGov finding that 57% of 18 to 24 year-olds only use cash if they “have to”. Meanwhile, only 3% of that generation relies solely on cash payments, and a striking 41% have not handled cash in the last month. Lockdown restrictions have further decreased the use of cash infrastructure amongst young adults, with the proportion of them performing banking in a branch decreasing by over two-thirds.
Despite the infrequent use of cash by most young adults, another YouGov poll on cash found that nearly half of Britons thought a cashless society would be a negative thing, suggesting that many are sympathetic to the concerns raised by Dodds on the issue.
UK adults who are in the generally lower income C2DE social groups, and the over 50s, remain significantly more likely to have made recent use of cash. Indeed, Natalie Ceeney, chairwoman of Innovate Finance fintech trade body, has calculated that 8 million Britons remain reliant on cash, per The Times‘ article above.
The continued use of cash by some demographics supports the fears of the shadow chancellor that the decline of support for cash risks marginalising “different parts of the community”. Given the rapid loss of cash infrastructure in the wake of the pandemic, Dodds says that legislative action must be taken to protect cash before “time runs out”.
Anneliese Dodds has been contacted for comment.
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