The charity said similar obligations already exist for services such as water, electricity and the post.
Age UK warned that being cut off from cash and banking services is tantamount to being excluded from society.
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Caroline Abrahams charity director at Age UK, said: “It’s time for the Government to recognise how important banknotes and coins are to all our lives and treat the cash system as the essential piece of infrastructure it is – just like utilities, post and broadband.”
The charity pointed to figures from the Financial Conduct Authority’s financial lives survey showing that around 2.4 million people aged 65 and over in the UK relied on cash to a great extent in their day-to-day life – representing around a fifth (21%) of older people.
Cash use has plunged during the coronavirus pandemic – but Age UK said it would be a mistake to assume that everyone is willing or able to make all their financial transactions digitally.
Many people with health conditions, disabilities and dexterity issues find paying in cash much easier than with a bank card or a phone, the charity said.
A YouGov survey in January 2021 found more than half of people aged 65-plus across Britain had used cash within the previous week.
Many older and disabled people have relied on family, neighbours, and volunteers to do shopping and make bill payments for them during the national lockdowns, the charity pointed out.
Eileen, 72, told Age UK: “The ATM in our village is nearly always empty. All these little things that we take for granted suddenly become huge problems.”
Age UK’s report was published in the same week that a new £50 Bank of England banknote celebrating Bletchley Park codebreaker Alan Turing entered circulation.
The UK Government has said that it intends to legislate to protect future access to cash.
John Howells, CEO of ATM network Link, said: “Cash remains vital for millions and even more so for older people who may not be confident or have access to digital payments, for example through smartphones.
“The pandemic has turbocharged the shift away from cash, but around £1.5 billion is still withdrawn from ATMs every week and it’s vital that we effectively manage the wider cash infrastructure to make sure no one is left behind.”
Natalie Ceeney, chair of the Access to Cash Review and who is now leading the industry Access to Cash Access Group, said: “Since the pandemic, many more consumers are comfortable shopping online or using contactless or digital payments.
“However, today’s report reiterates the fact that there are still millions of people, often quite vulnerable, who rely and have no alternative to cash.
“We’re expecting a consultation from Government very soon on protecting cash, but it’s vital we also look at making sure people have an ability to spend it as well.”
Lord Holmes of Richmond, vice-chair of the all-party parliamentary group on fintech (financial technology), said: “We’ve seen a real shift in consumer habits throughout Covid with millions now far more comfortable using contactless payments or digital wallets.
“However, not everyone is able to embrace digital and it’s important that the banking industry and Government continue to work together to make sure customers continue to have an option pay in cash, but also support their ability to use digital too.”