The chancellor is set to commit to new laws to protect the future of cash in next week’s budget, which comes as bank branches and free-to-use ATMs are disappearing from the high street.
Rishi Sunak’s measures will aim to ensure people who rely on cash, including vulnerable groups and local communities across the UK, can access it as and when they need it.
The Treasury is expected to start talks with the Bank of England, the Financial Conduct Authority and the Payment Systems Regulator about legislation immediately after the budget on 11 March.
One area being looked at is whether to give watchdogs new powers to ensure banks continue to properly support their customers’ cash needs.
Around two million people in the UK still rely on cash for their day-to-day spending – with three in 10 payments still made using notes and coins.
The rapid disappearance of many bank branches and free-to-use cash machines has fuelled concerns about people’s ability to continue accessing hard cash.
50 million adults used cash machines in 2018, with 87% of them using one at least once a week.
The Treasury wants banks to create a new system for moving money around the country, so cash remains accessible for those who use it every day.
International examples which the UK could take inspiration from include Sweden, which legislated to require large banks to provide their customers with facilities for withdrawing cash.
Mr Sunak said: “People across Britain work hard for their money, with millions relying on coins and notes to make their daily payments.
“That’s why, at next week’s budget, I’ll be making sure they can continue to access and spend their earnings in whatever way they want.”
The abolishment of the so-called tampon tax is also set to feature in the Budget, with the chancellor committing to slashing the VAT on women’s sanitary products to zero.
The Treasury estimates the move will save the average woman nearly £40 over her lifetime, with a cut of 7p on a pack of 20 tampons and 5p on 12 pads.
Mr Sunak is planning to announce on Wednesday that the widely-unpopular tax will end with the Brexit transition period at the end of the year.
EU law has so far prevented member states from reducing the rate below 5%, which means tampons and pads are treated as luxury items and not essentials.
But the government plans to introduce the zero rate on 1 January, the first day the laws no longer apply to the UK.
Critics have long criticised the tax for contributing to “period poverty”, where sanitary products are pushed out of reach because of their cost.
The UK currently uses the revenues raised to fund charities which aid vulnerable women, with £62m having been allocated since the scheme was launched in 2015.
Campaigners welcomed the move but raised concerns the Treasury is not planning to replace the Tampon Tax Fund with other investment.
The chief executive of the Women’s Resource Centre charity, Vivienne Hayes, said: “We are over the moon to learn of this news, tampons and sanitary towels were never luxury items and should never have been subject to VAT.
“Congratulations to all the women who campaigned so long for this ridiculous and unfair tax to be removed.
“We are concerned that the Tampon Tax Fund will now be abandoned by the government and we hope to see a replacement fund for women’s health and support charities announced in the near future.”
There has also been speculation that Mr Sunak is set to end the decade-long freeze on fuel duty in next week’s budget amid pressure to encourage motorists to switch to electric cars and other more sustainable methods of transport.