UK 'missing' £50bn in cash, MPs warn

In this photo illustration, a collection of British ten and twenty pound sterling banknotes are displayed. (Photo by Dinendra Haria / SOPA Images/Sipa USA)
A collection of British ten and twenty pound sterling banknotes. The public accounts committee said as much as £50bn in notes in unaccounted for. Photo: Dinendra Haria / SOPA Images/Sipa USA

The Bank of England has been urged to track down Britain’s missing bank notes after a report concluded that as many as three quarters were “missing”.

The public accounts committee said in a report published on Friday that oversight of the UK’s cash system was lax, leaving officials unaware of how and why people were using cash.

The Bank of England estimates that just 20% to 24% of all cash in circulation is used for transactions or held in savings, the report said. That leaves and estimated £50bn ($67bn) in notes unaccounted for.

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“£50bn of sterling notes — or about three quarters of this precious and dwindling supply — is stashed somewhere but the Bank of England doesn’t know where, who by or what for — and doesn’t seem very curious,” said Meg Hillier MP, chair of the public accounts committee. “It needs to be more concerned about where the missing £50bn is.”

The report said the missing notes “may be being used overseas for transactions or savings, or held in the UK as unreported household savings or for use in the shadow economy”.

“Depending where it is and what it’s being used for, that amount of money could have material implications for public policy and the public purse,” Hillier said. “The Bank needs to get a better handle on the national currency it controls.”

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A spokesperson for the Bank of England disputed the verdict, saying: “Members of the public do not have to explain to the Bank why they wish to hold banknotes. This means that banknotes are not missing.”

The call for closer monitoring of the cash system came as Hillier and her colleagues warned that it was getting harder and harder for Brits to access cash. The public accounts committee said “fragmented” responsibility for maintaining the UK’s cash network had left the system failing to support those most in need.

“In many areas where you can use cash you’d be hard pressed to find it, at least without paying an ATM fee that may be a substantial percentage of a small withdrawal — yet making frequent, small withdrawals can be a key budgeting tool for those on low incomes, and least able to afford those fees,” Hillier said.

A private sector report published last year warned that the UK’s cash system was at risk of collapse without urgent intervention from the government. The rise in digital and card payments means operating the UK’s cash network has become unprofitable, leading to the closure of ATMs or the introduction of fees.

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The government has vowed to protect access to cash and last year set up a task force to oversee reform. Earlier this year it floated the idea of turning shops into virtual cash machines to help address the issue.

Hillier and her colleagues said the cash network was still failing the public, particularly people living in rural areas. The public accounts committee urged the government to set up a single body with decision making powers to oversee the cash system, rather than the current system of dividing up responsibilities and coordinating through a task force.

“It is the responsibility of the Bank of England to meet public demand for banknotes,” a spokesperson for the Bank of England said. “The Bank has always met that demand and will continue to do so.”

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