Philip Hammond has ditched plans to scrap 1p and 2p coins and created a new panel to ensure people have access to cash machines across the country as part of plans to stop the UK going cashless.
The chancellor had called the copper denominations "obsolete" and suggested they were no longer required, leading to protests including from former Treasury permanent secretary Lord Macpherson, who said at the time that the "campaign to retain the 1p coin starts now".
However, Hammond has now announced that Treasury officials will work with the Bank of England and banking regulators to ensure that consumers can still use cash – including copper coins – for "years to come".
RELATED CONTENT
The chancellor has announced a new Joint Authorities Cash Strategy Group – to be led by the Treasury – will work up a strategy to safeguard access across the country for the millions who rely on it.
Announcing a consultation on replacing 1p and 2p pieces at last year's Spring Statement, Hammond said: "Having large numbers of denominations that are not in demand, saved by the public, or in long-term storage at cash processors rather than used in circulation does not contribute to an efficient or cost-effective cash cycle."
But speaking later today, he will say: "Technology has transformed banking for millions of people, making it easier and quicker to carry out financial transactions and pay for services.
“But it’s also clear that many people still rely on cash and I want the public to have choice over how they spend their money.
“I’m also setting up a group which brings together the Treasury, Bank of England and the regulators to safeguard the future of cash and ensure its availability for years to come.”
The announcement follows a series of recommendations made in the Access to Cash review, which revealed that around 2.2 million Brits are reliant on notes and coins for payment.
Hammond will also outline proposals for a new cash distribution system to ensure it is distributed fairly across the country, given rural communities would likely be hardest hit by a decline.
And the group will look at a new coin-checking and validation framework to oust counterfeits coins from circulation.
Chair of the Access to Cash review, Natalie Ceeney CBE, said: “Cash use is falling rapidly, but digital payments don’t yet work for everyone.
“We need to safeguard the use of cash for those who need it, and at the same time work hard to ensure that everyone can participate in the digital economy.
“If we sleepwalk into a cashless society, millions of people will be left behind.
“I’m delighted to see the government taking a leadership role on this critical issue - and look forward to seeing action as a result.”
The pledge comes as LINK – the UK's largest cash machine network - committed to replacing closed cash machines in rural or remote areas when there is no free ATM or Post Office branch within one kilometre.
Treasury Committee chair Nicky Morgan said the Government must ensure that the new group follows the recommendations of the review.
“As we’ve seen this week, free-to-use cash machines are disappearing at an alarming rate, which could hit the most vulnerable in our society the hardest.
“On top of this, some firms’ insistence on the use of non-cash forms of payment may act as a social barrier.
“Any significant reduction in access to cash is unacceptable. The new JACS Group is a welcome step, but the government must ensure that it implements the Access to Cash Review’s recommendations urgently, and in full, to protect access to cash."