Is cash still king for local growth?
Author: Dominic Leigh |
In an opinion piece for the MJ, Localis’s Dominic Leigh considers the importance of cash to local economies and communites. You can read the piece in full here or below.
Cash has been in existence since the seventh century BC when the Lydians used coins made of electrum in what is now modern-day Turkey. It has been a constant in human affairs ever since, but for how much longer?
Some commentators have argued that we should, and will soon, become a ‘cashless society’ that relies solely on non-physical forms of payment.
So it is a good time for Localis to be publishing a new report that examines the importance of cash for local economies and communities, the impact of new technologies and considers what steps could be taken to support access to cash if it is threatened.
Our findings suggest that, for the time being, cash is here to stay with the total value of cash payments likely to remain stable over the next decade.
And a good thing too, as four in five of the more than 100 leading local government stakeholders we surveyed said that cash was important or very important to the economic vitality of their local area. Three quarters of them also suggested local economic growth would suffer if access to cash was reduced.
In addition, there are 1.6m people in the UK who rely heavily on cash, with these people coming disproportionately from disadvantaged backgrounds. Many older people are also reliant on cash and are reluctant or unable to use new technologies.
But in the longer term the increasing use of new forms of payment such as online banking, online shopping and contactless cards could see our access to cash threatened.
The recent surge in bank branch closures has left some towns, like Glastonbury, without a single branch. Our report therefore sets out a number of policy options that national and local politicians should consider if cash accessibility becomes a bigger problem in the future.
For instance, councils could work with the ATM industry to assess how community hubs that have a high footfall, such as leisure centres, libraries, town halls and one-stop shops, could be used as locations for ATMs, providing they are able to achieve a sufficient number of transactions to be commercially viable.
Councils could also use these hubs to help local residents understand how cash can be useful for budgeting, and adapt to making electronic payments for services that have gone ‘cashless’.
We also suggest that banks could, if necessary, work with relevant local partners to leave a ‘cash availability legacy’ when they close branches.
We raise the possibility of using the existing bank levy to support the work that independent ATM operators are currently doing to install cash points where they help to increase the resilience of local communities, in particular in areas that are more isolated.
Countless generations ago coins represented cutting edge innovation and a pretty successful one at that, so no-one should seek to stop technological progress.
But, while we may be inching towards a world where, for some, the pound in their pocket resides in their phone not their wallet, there are many who will continue to rely on cash. As such, we must ensure that a diverse mix of payment methods remains available to all.