How on earth could the Bank of England lose track of £50 billion of our money?

Specimen £20 note – where have they all gone? Pic credit: James Oxley Bank of England

Bizarre story about the missing money

Today a report from MPs revealed the extraordinary fact that the Bank of England doesn’t know where £50 billion of its bank notes are.

It also revealed that since the Covid 19 lockdown the number of notes issued by the Bank of England is at an all time record. Yet this is at time when contactless payments by credit and debit cards are also at an all time high and many shops do not want to accept any cash at all.

Already a year before the Covid 19 led to lockdowns and smashed the economy some 7.4 million people – mainly in the 18-34 year age group were estimated to have virtually stopped using cash altogether.

So what is happening? We both can’t have a growing number of people no longer using cash yet record numbers of banks notes in circulation. There is something strange going on and the Bank of England seems remarkably complacent about it.

As Meg Hillier, Labour chair of the Commons Public Accounts Committee, which produced the report says:

” £50 billion of sterling notes – or about three quarters of this precious and dwindling supply – is stashed somewhere but the Bank of England doesn’t know where, who by or what for – and doesn’t seem very curious. It needs to be more concerned about where the missing £50 billion is. Depending where it is and what it’s being used for, that amount of money could have material implications for public policy and the public purse.  The Bank needs to get a better handle on the national currency it controls.”

There is some curious speculation in the report. They wonder whether the people who traditionally like payments in cash – window cleaners, gardeners, the odd job man or woman are salting away the money. Or is it because – as I have reported before – that Rishi Sunak, the Chancellor, is offering such appalling interest rates for savers – that they are keeping the cash under the mattress?

Are criminals sorting away the cash?

Or is it something darker like criminals using the cash for nefarious purposes -or has the money been salted away in tax havens or are the Russians or Chinese siphoning off the cash hoping the British economy implodes?

The MPs are demanding the Bank of England investigates so we should have an answer early next year.

The same report also highlighted quite a different problem – that people in poor and rural areas have difficulty accessing this huge amount of cash in the system.

In September, the National Audit Office said that the Treasury, Bank of England, Royal Mint, the Financial Conduct Authority and Payments Systems Regulator need to coordinate more effectively so that people have access to cash.

But the number of cash machines are declining and the Post Office is not open all hours. so people can’t always access cash.

The Royal Mint is losing money striking coins as well.

The report said: “The Mint’s UK coin production has reduced by 65% over the last ten years, from about 1.1 billion coins made in 2010–11 to 383 million in 2019–20. This reflects the overall fall in production demand over the period, although production volumes increased in some years, for example between 2012 and 2016 with the issue of new 5p, 10p and £1 coins replacing stock already in circulation.”

Mass dumping of coins

It revealed that people have also been dumping coins in massive amounts. The report said:

“A Mint-run exercise to recall the old £1 coin, as an increasing counterfeit risk, led to an unexpectedly huge return of coins of all denominations as households and businesses emptied their stocks of coins. This led to a large increase in coin stocks and a consequent reduction in the number of coins that needed to be produced.”

But there still is some demand for coins.

The report said: “It now expects the Treasury to ask it to manufacture new 2p coins in the next 6 months and more £2 coins within the next 3 years. Nevertheless, the Mint expects the increase in demand to be temporary, and that the long-term impact of the pandemic will be to exacerbate the decline in coin use.”

Meanwhile it has lost millions of pounds for the last three years in minting new coins as it coins as it costs more than their face value to produce them.

BackTo60 take to the London streets to project their case to get their pension money back

While MPs were enjoying drinks and snacks in parties and receptions across London last week – I admit I was at one in the gardens of Westminster Abbey – a team of intrepid campaigners from BackTo60 took to the streets with the support Media Gang Guerrilla Marketing.

They stopped outside the Bank of England, The Law Courts in the Strand and opposite the House of Parliament to project images backing the 50s bornwomen campaign. One of my blogs was projected on the Bank of England and the Backto60 logo appeared on the side of Parliament overlooking the Thames.

Certainly if nothing else this campaign is creative – equal to some of the stunts of the younger generation. They should be proud that people never give up campaigning.