Recommendations & Conclusions
25 items
2
Recommendation
Thirtieth Report - The production and d…
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 areas, where poor broadband and mobile coverage limits the viability …
Government response. 2. 1 The government agrees with the Committee’s recommendation. Target implementation date: Spring 2021 2.2 As highlighted by the Committee, in recent years, the ongoing trend in payments in the UK has been away from cash and towards card payments …
HM Treasury
3
Conclusion
Thirtieth Report - The production and d…
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 relating to different aspects of how cash is produced and …
Government response. 3.1 The government agrees with the Committee’s recommendation. Target implementation date: Spring 2021 3.2 The government aims to ensure that the authorities have the appropriate powers and responsibilities to oversee the cash system efficiently and effectively. The Bank of England, …
HM Treasury
4
Conclusion
Thirtieth Report - The production and d…
The Bank of England seems to lack curiosity about the huge volume of notes not used or held for day-to-day transactions. The Bank estimates that 20%-24% of issued notes are used or held for cash transactions. This leaves about £50 billion worth of issued bank notes whose whereabouts or use …
Government response. 4.1 The Bank of England agrees with the Committee’s recommendation. Target implementation date: December 2021 4.2 As the Bank of England stated when the Committee’s report was released, the Bank of England’s responsibility is to meet the public’s demand for …
HM Treasury
5
Conclusion
Thirtieth Report - The production and d…
The Bank of England’s stock of notes seems high and it is not clear to us how the Bank decides upon what is an appropriate stock level. The Bank holds stocks of notes well above its own policies for minimum levels of stocks. For example, at the end of July …
Government response. 5.1 The Bank of England agrees with the Committee’s recommendation. Target implementation date: December 2021 5.2 The Bank of England needs to hold sizable stocks of printed notes, ready to be issued, to ensure there are sufficient banknotes available to …
HM Treasury
6
Recommendation
Thirtieth Report - The production and d…
The continued reduction of coin use, possibly accelerated by Covid, is likely to put further pressure on the Royal Mint’s ability to deliver a profit on its UK coin manufacturing operations. Coin use has declined over recent years, and the Mint’s UK coin production has fallen by around 65% in …
Government response. 2020. HM Treasury, the Department for Business, Energy & Industrial Strategy (the department) and the British Business Bank (the Bank), based on a limited evidence of the underlying challenges for businesses, developed the Bounce Back Loan Scheme (the Scheme). The …
HM Treasury
1
Conclusion
Thirtieth Report - The production and d…
On the basis of a report by the Comptroller and Auditor General, we took evidence from HM Treasury, the Bank of England, the Financial Conduct Authority, the Payment Systems Regulator and the Royal Mint, about the production and distribution of cash.1
Government response. 2020. This sought views on the key considerations associated with cash access, including deposit and withdrawal facilities, cash acceptance, and regulatory oversight. The government is considering the responses and will seek to set out its next steps in due course. …
HM Treasury
7
Conclusion
Thirtieth Report - The production and d…
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 those consumers who might otherwise be digitally excluded.17 It believed …
Government response. The government agrees with the Committee’s recommendation.
HM Treasury
8
Conclusion
Thirtieth Report - The production and d…
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 million people are mostly using cash for their payment needs …
Government response. The government agrees with the Committee’s recommendation.
HM Treasury
9
Conclusion
Thirtieth Report - The production and d…
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 cash back from shops.22 This is being used during the …
Government response. The government agrees with the Committee’s recommendation.
HM Treasury
10
Conclusion
Thirtieth Report - The production and d…
We asked the witnesses what they are doing to meet differing needs for cash within rural areas, for example where people might want privacy when withdrawing money and where others, on a budget, might not wish to be tempted to make a purchase if having to visit a shop for …
HM Treasury
11
Conclusion
Thirtieth Report - The production and d…
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 local area.31 Responsibility for the cash system
HM Treasury
12
Conclusion
Thirtieth Report - The production and d…
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 57 25 Q 64 26 Qq 63–64 27 HM Treasury, …
HM Treasury
13
Conclusion
Thirtieth Report - The production and d…
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 that it is responsible for the oversight of the LINK …
HM Treasury
14
Conclusion
Thirtieth Report - The production and d…
Coins are produced for the whole of the UK by The Royal Mint (the Mint) under a contract with the Treasury, which also acts as the Mint’s sole shareholder. The Bank of England (the Bank) is responsible for producing notes for use throughout the UK, and it sub-contracts the printing …
HM Treasury
15
Conclusion
Thirtieth Report - The production and d…
The demand for notes has increased in each of the past 25 years. According to Bank figures, in July 2020 the number of notes in circulation reached a record high of 4.4 billion, with a monetary value of £76.5 billion.40 Notes are increasingly being used as a store of value …
HM Treasury
16
Conclusion
Thirtieth Report - The production and d…
During the Covid-19 pandemic, between March and July 2020, there was a significant increase in the value of notes in circulation.42 The Bank told us this is probably explained by people hoarding cash, and because less cash than usual was being deposited at banks for example by sole traders, window …
HM Treasury
17
Conclusion
Thirtieth Report - The production and d…
The Bank estimates that 20%-24% of notes in circulation are used or held for day-to- day transactions. In 2018 it estimated that up to a further 5%, or between £1 billion and £3.5 billion, was held by UK households as savings. This leaves about £50 billion worth of issued bank …
HM Treasury
18
Conclusion
Thirtieth Report - The production and d…
Once printed, the Bank holds contingency stocks of all notes at its premises to avoid shortages. The Bank sets its minimum contingency stock level by considering potential supply and demand shocks, and benchmarks itself against the practice of other major central banks.45 During 2020 the Bank’s stocks of notes have …
HM Treasury
19
Conclusion
Thirtieth Report - The production and d…
According to the Bank, it is not unusual for it to maintain high stocks. It told us that it is more efficient to have long print runs of each note denomination—often lasting up to a year—as short print runs require machine down time, and costly changeovers of printing plates and …
HM Treasury
20
Conclusion
Thirtieth Report - The production and d…
The NAO found, however, that it was not clear from the documentation shown to them what process the Bank operated to decide upon adequate stock levels, and how the cost implications of doing so were taken into account when building up stocks.48 When pressed by us, the Bank accepted that …
HM Treasury
21
Conclusion
Thirtieth Report - The production and d…
The Mint’s UK coin production has reduced by 65% over the last ten years, from about 1.1 billion coins made in 2010–11 to 383 million in 2019–20. This reflects the overall fall in production demand over the period, although production volumes increased in some years, for example between 2012 and …
HM Treasury
22
Conclusion
Thirtieth Report - The production and d…
The decline in demand has been particularly rapid in recent years. This has been in part due to the emergence of contactless payment methods affecting small cash transactions in particular.51 But also, in 2017–18, a Mint-run exercise to recall the old £1 coin, as an increasing counterfeit risk, led to …
HM Treasury
23
Conclusion
Thirtieth Report - The production and d…
Since 2017 coin stocks have continued to rise. At the end of March 2020, they significantly exceeded the target buffer stocks, which the Treasury set for the Mint to avoid shortages and be prepared for any uncertainties, in all denominations. Holdings of £2 coins were 26 times the target, and …
HM Treasury
24
Conclusion
Thirtieth Report - The production and d…
Since March, the disruption caused by Covid-19 has, we were told, led to increases in demand, as many businesses and consumers hoarded coins in the early months of the 46 Qq 84, 85; C&AG’s Report, para 3.30 47 Q 88–90 48 C&AG’s Report, para 3.30 49 Qq 91, 99 50 …
HM Treasury
25
Conclusion
Thirtieth Report - The production and d…
This could bring further financial pressure to bear on the Mint’s UK coin operations. The Mint has worked hard in recent years to make coin-making more profitable. It has undertaken a series of actions to reduce costs and increase efficiency, including, for example, mothballing two of its six coin-making lines …
Government response. The government agrees with the Committee’s recommendation. Target implementation date: December 2021 HM Treasury and The Royal Mint (TRM) recognise the pressures that the reduction in transactional cash use and COVID-19 have placed on the profitability of UK coin manufacture. …
HM Treasury