UK (Parliament Politics Magazine) – MPs urge Treasury to back cash reserves as digital networks face threats from blackouts, cyber strikes, and potential banking system breakdowns.
As reported by The Telegraph, MPs urged the Treasury to advise on cash savings in preparation for potential blackouts, similar to those experienced in Spain and Portugal.
What did the Treasury committee say about cash in emergency preparedness?
MPs have called on the Government to recognise “the value of physical cash in emergency preparedness” if cyber attacks or outages disable payment systems.
The Commons Treasury Committee raised concerns that more businesses going card-only could mean losing a payment system with “broader resilience.”
In its report, the committee highlighted potential threats such as system failures at major retail banks, damage to “critical financial market infrastructure” and a “cyber attack by a state actor”.
It wrote,
“In discharging its responsibility for national security and resilience, HM Treasury must consider the value of physical cash in emergency preparedness. This may include recommending that cash is held by individuals in case of emergency, and considering what role cash distribution might play in a severe payment systems outage.”
According to the report, a Barclays outage in January froze account transfers for three days, including on the final day for self-assessment submissions.
The committee revealed that between January 2023 and February 2024, banks suffered at least 158 IT system failures.
The report suggested that the Treasury consider legislation to mandate cash acceptance if declining cash usage continues.
How did major UK banks endure over 33 days of IT failures?
In the past two years, nine major banks and building societies faced 803 hours of technology outages, equivalent to 33 days.
A recent cyber attack on Marks & Spencer over the weekend stopped online orders and triggered the failure of contactless payment systems.
What did the Treasury spokesman say about ensuring cash access for millions?
A Treasury spokesman stated,
“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.”
He added,
“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.”
What did Dame Meg Hillier say about the risks of a “two-tier society” and the decline of cash?
MPs raised concerns over the lack of laws ensuring the acceptance of cash, highlighting that UK businesses are not legally bound to do so.
Dame Meg Hillier, leading the Treasury Committee, warned that this trend could result in a “two-tier society” that would harm vulnerable and elderly populations.
She added,
“A sizeable minority depend on being able to use cash, and they must not be forgotten by Whitehall. As a society, we must avoid sleepwalking into a situation where cash is no longer widely accepted.”
What did Professor Alan Woodward say about the M&S cyberattack?
Prof Woodward stated,
“I suspect one of reasons it’s taking so long to do all of this is an abundance of caution being exercised – and what they’re doing is they are turning over every rock and making sure there’s nobody still in there.”
He said,
“Because one of the worst things is if a hacker has got in, let the ransomware go, and they can persist on the network, then you might clear it – you might get out of it [the attack] – but they’ll just pop back up again.”
Mr Woodward added,
“M&S find themselves in a very difficult place. They know they’re losing money hand over fist, but at the same time they don’t want to put the systems back on prematurely until they can be absolutely sure that they’re safe to use. These systems take a long, long time to build so you can imagine they take a long, long time to analyse as well.”
UK cyberattacks statistics
- In 2023, 32% of UK businesses reported experiencing a cyberattack or breach (UK Government survey).
- Around 59% of medium-sized firms and 38% of small businesses faced cyber incidents in 2023.
- 84% of reported attacks involved phishing attempts (2023 data).
- 11% of businesses were hit by ransomware, with 5% paying the ransom.
- The NHS reported over 1,000 cyber incidents in 2022-23, with several major disruptions.
- 27% of breaches stemmed from vulnerabilities in third-party suppliers.
- Just 30% of businesses report cyber incidents to authorities (NCSC).
- Over 50% of UK firms expect AI to increase cyber risks in 2024.