Shining a Light on the UK Government’s Disingenuous Role in Trying to Kill Cash

It should perhaps come as little surprise that when it comes to protecting the right to pay in cash, the UK government prioritises freedom of choice for businesses (to reject cash) over freedom of choice for citizens (to use it).

Almost half of British people have recently been in a place that has not accepted or has discouraged the use of cash as payment. That’s according to a YouGov survey commissioned by the ATM network provider Link. Some 45% of the survey’s more than 2,100 respondents said they had been somewhere in the previous eight weeks where cash was declined or discouraged. Locations include shops, bars, restaurants and car parks.

Residents of London were particularly likely to have experienced this while people in Northern Ireland were least likely. One in five respondents said they found the experience “fairly or very inconvenient.” When asked how they use cash to manage their finances, a fifth of respondents said they put spare change in jars or piggy banks — . Crucially, most of the people surveyed (71%) said they had used cash at least once in the previous two weeks.

The Partial Return of Cash

This chimes with the findings of an October 2022 report published by the Bank of England titled “Knocked Down During Lockdown: The Return of Cash”:

[T]he value of banknotes in circulation remains elevated even two years on from the pandemic, at close to a historic high. This reflects people – up to 60% of the population – holding more cash as a store of value, which is a fundamental role of money…*

While the future trajectory remains uncertain, both in terms of the speed and extent of future decline, what is certain is there remains a significant group of people, with varied characteristics, who value cash…

Prior to the pandemic, the UK had experienced a marked decline in the use of cash to pay for goods and services. Only 23% of payments in 2019 were made in cash, down from around 60% a decade ago. In 2020 when the pandemic was in its early stages, this figure dropped by 35% compared to 2019, with cash accounting for 17% of all payments. Since 2017 cash use had been declining by around 15% each year, so 2020 represented an acceleration of this decline.

There has since been a sustained, if partial, recovery in cash use, and more recently, signs of stabilisation in cash use trends. In 2021, there was a reduction in the rate of decline in cash use, with cash accounting for 15% of all payments in the UK. Moreover, an estimated 73% of consumers said they used cash in January 2022, a notable increase from only around half of consumers in mid-2020.

While British citizens are, as a whole, using a lot less cash than before, survey after survey reveals that most of them do not want to live in a fully cashless economy. And cash remains the preferred choice of payment for millions of people. A poll by Accenture late last year found that 63% of Brits are using cash at least five times a month, second only to debit cards, which are used over five times a month by three-quarters of Brits.

Yet it seems to be getting more, rather than less, difficult to use cash in many retail settings, according to the YouGov survey. British friends and family of mine have reported similar experiences. It would be interesting to hear what UK-based NC readers can add to the picture.

All of this is possible because legal tender traditionally has a very narrow definition in the UK, and strictly applies to money used by a debtor to settle a court-awarded debt when offered (‘tendered’) in the exact amount that is owed to a creditor. In other words, if a debtor is offering to settle a debt in court with legal tender such as cash, the creditor is not allowed to refuse it. Shops and hospitality businesses, by contrast, are.

As I noted in my Aug 16 2022 piece, Is Cold, Hard Cash Making a Comeback?, many retailers, particularly in the more salubrious parts of towns and cities, are taking full advantage of this loophole, despite the discriminatory effects it has on the millions of people who still depend on cash, including the roughly 1.3 million who are unbanked.

Ignoring the Vulnerable

Last Summer, two petitions were organized by cash advocates. The first called on the government to ban shops from refusing cash payments. The second proposed requiring all businesses and public services to accept cash. Between them, the petitions attracted 55,000 signatures, an admittedly underwhelming number. The government’s response was emphatic:

The government does not plan to mandate cash acceptance. While the government recognises the ability to transact in cash remains important to millions of people across the UK, particularly those in vulnerable groups, it remains the choice of individual businesses as to whether to accept or decline any form of payment, including cash or card. This may be based on factors such as customer preference and cost.

It should perhaps come as little surprise that this UK government prioritises freedom of choice for businesses (to reject cash) over freedom of choice for citizens (to use it). This is a government that has always and will always place the interests of private sector businesses over public interest…

Read the full article on Naked Capitalism

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