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Britain must not “sleepwalk” into a cashless society in which the poorest citizens are plunged deeper into poverty, Rachel Reeves has been warned. Campaigners say the elderly, domestic abuse victims and people with learning disabilities are in danger of being left worse off if businesses stop accepting banknotes and coins.

In a major report published today, Westminster’s Treasury committee warns the Government may need to force businesses to continue to take cash. Dame Meg Hillier, who chairs Westminster’s Treasury committee, warned Britain must “avoid sleepwalking into a situation where cash is no longer widely accepted”.

She said the Government is “in the dark on how widely cash is being accepted and that is completely unsustainable”. It is feared shops and services which still accept cash will push up prices so people who are already struggling to make ends meet will “face a poverty premium”.

At present, the MPs warn, there is no legal duty to accept cash for goods and services. They describe how the country could end up with a “two-tier system” where vulnerable groups end up excluded from leisure centres, theatres and public transport.

Shadow Chancellor Mel Stride said: “If the Government doesn’t act, we risk shutting vulnerable people out of everyday life. Cash still matters to millions – and ministers must ensure it’s protected.”

Caroline Abrahams of Age UK said: “It’s vitally important that older people have free access to cash within their local communities, especially in rural areas and towns where there are no local banks or ATMs, or only very limited provision.”

There are concerns that if cash vanishes the UK could be more vulnerable to a cyber-attack or a massive technology failure.

Cash was used for more than half (51%) of all payments in 2013 but this had fallen to just 12% by 2023.

Reform UK MP Lee Anderson said cash is “represents freedom” and is the “most secure method of transaction”.

He said: “This Government must protect and safeguard the use of cash at all costs. Many of Britain’s most vulnerable rely on cash payments for essential goods and services.

“Yet, as it stands, the Government has no plans to mandate cash acceptance — meaning it could soon become obscure or disappear altogether.”

Protecting traditional banknotes is part of the Daily Express’s Save Our High Street Banks crusade.

Later Life Ambitions, which represents more than 250,000 pensioners, warned that “a fifth of all older people” are estimated to rely on cash for everyday spending.

The charity Mencap also insisted the freedom to pay in cash must be preserved.

“People with a learning disability disproportionately rely on the acceptance of cash,” it told the MPs. “Refusing to accept cash payments risks permanently excluding people with a learning disability from having the independence, control, and choice to pay for goods and services themselves.”

The group Surviving Economic Abuse stressed the importance of cash so abusers cannot keep track of their victims’ financial activities. In its evidence to the committee it stated that “4.1 million UK women experienced a partner or ex-partner controlling their access to money and economic resources” in the last year.

The closure of high street banks has made it harder for shops to get a supply of change to provide to customers who want to pay in cash.

The British Independent Retailers Association told the committee it is “increasingly difficult for small retailers to access cash”.

According to the Federation of Small Businesses, the “handling of cash can be a prohibitively expensive undertaking” for many small enterprises.

The Treasury committee report published today states: “The Government must act to manage the decline in cash acceptance.”

Committee chairwoman Dame Meg said: “We are at risk of a two-tier society where the most vulnerable bear the brunt and this needs to be a wake-up call.”

Joanna Elson of Independent Age said: “Losing access to cash risks excluding millions from everyday essentials, such as paying for a food shop.”

A Treasury spokesperson said: “Cash continues to be used by millions of people across the UK and we are working with the banks to roll out 350 hubs by the end of this Parliament so that people and businesses in areas that have lost local bank branches still have access to it. We welcome businesses who do want to continue accepting cash and new rules introduced by the Financial Conduct Authority support this by helping them to make deposits.”