The digital transition is already happening fast. While in 2008, 60% of UK consumer payments were made in cash, this had fallen to just 28% in 2018. The IPPR report cites forecasts that by 2028 fewer than one in 10 payments will be made in cash.

The digital revolution in finance means a shift to a considerably less cash-based digital economy, but the prospect of a fully cashless UK is not on the horizon, argues IPPR. This shift is expected to boost UK productivity and create opportunities for business and consumers, but there is a significant risk that people and areas reliant on cash may be excluded.

Giant tech firms such as Facebook and Amazon are already starting to offer more personal financial services, alongside traditional banks, but the control they could have over huge amounts of people’s data poses significant risks.

The IPPR report argues that as cash use continues to fall and digital payments break new ground, it is critical that policymakers take action to shape the future of UK payments.

To deliver a future that is both more digital and more just, IPPR recommends:

• Major platforms such as Facebook and Amazon should be required to open up their data upon entry into the personal finance market.
• Democratising dat
• Digital Transition Levy worth billions of pounds a year
• Bridging the digital divide
• Creating a new Post Bank
• Championing digital self-employment.

Rachel Statham, IPPR Economic Analyst and lead report author, said:  “The future will have less cash. But urgent action is needed to set the UK on course towards an economy that is both more digital and more just. By getting ahead now, we can invest the billions needed to get every part of the country ready for a more digital future and protect access to cash where people rely on it.

“This could see the potential benefits brought by a move away from cash invested to narrow rather than widen inequalities, handing control over from Big Tech and banks to people and communities.

“The move away from cash should only happen as fast as people are ready for, and the benefits of doing so should be shared. By setting new digital inclusion targets at the national, regional and local level, and investing to meet these targets, we can make sure bridge the digital divide and protect cash for those rely on it.”