AOC0532

Written evidence submitted by GMB

GMB represents thousands of workers in the cash industry, covering distribution, processing and security.

We believe that the industry represents a key national infrastructure network, supporting both communities through stable and reasonable terms and conditions of employment, but also as a key element of a functioning society via a physical network of secure facilities that are strategically placed across the UK.

We support the retention and support for cash usage due to it’s social and security importance; socially we know it’s benefits and it’s worth noting that the single largest group of GMB members are school support staff, who are overwhelming women and in receipt of lower wages; and as a Union that represents workers in key industries such as energy, networks, water and nuclear, we know that there are issues of national security bound up in access to cash.

Call for Evidence

Evidence submitted to the Committee should seek to answer one or more of the following questions:

What is the current state of, and recent trends in, physical cash acceptance in the UK?

These trends on cash usage are already in the public domain, and suggest that without intervention the usage will continue to decline.

This represents a worrying development in what is essentially a public service, one which is difficult to quantify in monetary terms, therefore we would urge that the temptation to view this service through such a lens is resisted.

Any forecasts on physical cash acceptance would be welcome.

As per above that without intervention the usage will continue to decline.

1.              Are there groups in society which disproportionately rely on businesses and public services accepting physical cash?

a.              What challenges do they face?

GMB is aware of multiple pieces of research that shows that lower income communities/members are far more likely to rely on the use of cash on a day to day basis. Within this demographic the elderly, migrants and those presenting with mental health concerns, are overrepresented and are therefore particularly reliant on the ongoing provision of cash.

Digital channels are not necessarily simplistic for all, and there are complications that can impact on their usage, as witnessed with system outages. In these circumstances those communities/members referenced above are even further marginalised, and access to day to day necessities can be severely limited.

System outages are only likely to increase, particularly as we enter a period of enhanced national security awareness, and similar to critical national infrastructure, the impact on the country and these communities/members as a whole should be a matter for concern.

The cost of living crisis further revealed that cash usage is central to assisting these same communities/members budget effectively, and therefore was a key element in coping mechanisms during the crisis.

The provision of and access to cash services is essentially a community service, and is therefore difficult to quantify in monetary terms, so the temptation to do so must be balanced by this awareness.

2.              Should the Government require parts of the economy to always accept physical cash?

a.              Are there individual sectors of the economy where physical cash acceptance is particularly important, and should be protected?

The Government – or devolved Authorities if they sought the appropriate powers – should ensure universal access to cash.

Distinguishing between sectors, will inadvertently result in the exclusion of those affected most by the withdrawal cash, form certain sectors of our society. This would essentially create a two tier society, resulting in an increasing divide around digital services.

As per above, with the increasing likelihood of future system outages, either accidental or malicious, leaving some sectors entirely reliant on a digital channel. It is likely that this would be in areas of innovation, technology and newly emerging, and having these sectors effectively off-line would potentially be disproportionately impactful to the wider economy.

3.              What are the practical challenges that businesses might face from having to always accept physical cash?

This question presupposes that the use of cash is a new service; whereas the reality is that the move to digital is the new direction and the practicalities of using cash has always been a business function.

Businesses would previously have factored in all of the service requirements relating to cash such as holding, processing and cash/CIT services.

If there are ‘challenges’ with using cash it may actually reflect more on businesses that wish to rely solely on digital channels.

4.              How do these challenges differ between large and small businesses?

Digital channels are likely to be as costly as cash services, and in SME’s is likely to provide a greater physical resource challenge than for larger companies who are likely to have IT departments, the capacity to negotiate lower transaction rates and procurement departments to continually source new/updated provision.

Also the cost of digital channels are frequently a fixed cost and represent a significant and permanent cost of each transaction, whereas cash transactions are cost free at point of use.

5.              What would the costs to private firms and the public sector be from any imposed requirements to always accept physical cash?

There is a strong likelihood that the requirement to accept cash would represent the same level of cost that businesses previously experienced when they offered hybrid payment channels.

The savings experienced – if at all – by businesses shifting solely to digital channels is significantly outweighed by the impact that this is causing.

The presence of a safety net for communities/members in the event of an outage is also a key saving, though hidden in a direct sense, and also represents a key community service, the likes of which are difficult to quantify.

6.              How might any requirement for certain firms and public services to always accept physical cash affect financial services firms, especially those related to the provision of physical cash?

It would ensure that there is a safety net for communities/members in the event of system outages, particularly financial firms, and ensure that the widespread employment of workers within the cash circulation are not undermined.

If the service were correctly characterised as one akin to critical national infrastructure, then it is arguable that there would be a responsibility on the cash distributors to act responsibly, and not with a purely market mindset.

Are there any other areas or particular sectors where a decline in cash acceptance would cause problems?                        

None that haven’t already been covered above, other than the extinction of cash would represent no further physical representation of the Crown/Monarchy in the day to day lives of everyone in the UK.

January 2025