The danger of a cashless society

The danger of slipping into a cashless society is real. Since Covid, big banks have been closing their branches, leaving empty, dilapidated buildings in towns like Falmouth. This shift has deprived many the access to essential services, creating a growing sense of financial exclusion.

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Empty buildings in Falmouth where banks used to be.

In December, the Treasury Select Committee launched an inquiry into the acceptance of cash in the economy, investigating the need to regulate or mandate the acceptance of physical cash in the UK and the potential costs and benefits to consumers and businesses. The call for evidence can be found here.

This January (2025), we held a roundtable in my Truro office with Truro BID (Business Improvement District), retail businesses and markets, as well as Citizens Advice Cornwall. It was argued that access to cash in the community remains a central part of a fair society. 

Why is cash key?

• Many elderly pensioners still get paid their pension in cash.

• Cash can help workers on low pay to budget better (4 envelopes of cash, one for each week of the month, used as a ‘self-imposed’ pay packet).

• Many young people use cash because they don’t have access to a bank.

• Cash helps people budget and track spending to ensure that they don't go into debt.

• Cash is also vital for businesses. Around 10% of a shop’s takings may be cash, while market traders can see up to 50%.

• For some people, having cash in their wallet, purse, or pocket can help them survive in difficult times. A £5 note can be a lifesaver for many.

There's also a wider economic argument to make here - if cash isn't protected, remote online shopping would increase, and many people would feel excluded from the high street. We must recognise the value of cash in the economy. For example, if you start with £50 cash and spend that in the local economy, it recycles and in simplistic terms, it remains £50 recycling around that local economy. If that £50 is spent elsewhere, it leaves that local economy. 

As access to cash dwindles, we must remember that many people struggle with online banking and feel safer or need face-to-face advice and services (such as paying in cheques). Equally, at a time when those on low pay, still reeling from the cost-of-living crisis, rely on the benefits of cash, it should make us recognise and protect the role cash plays. 

After meeting with Cash Access UK, as well as Falmouth BID and the town council, I have been playing a key role in securing a new banking hub for Falmouth. This hub will guarantee access to banking services and cash. I will continue to work with Falmouth BID and the town council in a bid to get the banking hub in place before Lloyds pulls out of town.

Reducing access to cash may be convenient for banks, but it will be difficult for many people and the local economy.