THE POST Office has revealed record amounts of cash withdrawals and deposits against a backdrop of ongoing bank branch closures and the cost of living crisis.

There were £236.8m money transactions at its branches in August - 14.6% (£32.3m) more than last year with the mail network saying that it felt increasing numbers were turning back to cash to keep control of their spending.

The amounts of cash being dealt with is £20.6 million higher than in July with the Post Office saying: "Cash remains king".

The Post Office is at the centre of a "new model for high street banking" to boost access to cash which is being trialled in Scotland and is to he rolled out to communities hit by bank closures around the UK.

Funded by the banking industry, it comes in the form of brand new five-banks-in-one hub hosted by the Post Office that has been tested in pilot locations in Cambuslang and Rochford in Essex.

The two hubs have already had approaching 60,000 customer visits and transactions worth £16 million have taken place since they opened last year Scotland is now to benefit as a wave of 13 hubs are brought in - bringing the total to 25, according to ATM network Link and the Cash Action Group, which includes banking industry representatives and others.

The schemes fronted by Community Access to Cash Pilots Board chairman Natalie Ceeney offered access to basic banking and cash withdrawals and deposits through a counter operated by the Post Office, which is meant to support the customers of all major retail banks.

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Some 13 new hubs will be in locations including Brechin in Angus, Forres in Moray, Carluke in Lanarkshire and Kirkcudbright in Dumfries and Galloway as well as Axminster in Devon, Barton-upon-Humber in Lincolnshire, Lutterworth in Leicestershire, Royal Wootton Bassett in Wiltshire, Cheadle in Staffordshire, Belper in Derbyshire, Maryport in Cumbria and Hornsea in Yorkshire.

The Post Office, which has 1300 branches in Scotland, thought the increase in interest in cash use may be partly because the result of the publicity surrounding its involvement with the new Access to Cash hubs.

Analysis revealed that nearly half (47%) of the over 1000 bank branches which were open in Scotland seven years ago will have shut by the end of 2021.

"We can say we believe people come to withdraw and deposit cash because they want to budget. It is certainly our belief people are relying on cash to budget and are able to keep a better handling on their spending."

The Post Office said it expected the trend of handling higher levels of cash to continue during the cost of living crisis as many people find it easier to manage budgets, and monitor spending, using notes and coins rather than making electronic transactions.

"More and more banks are closing and those branches that are open are only open a few hours and we are open long hours," said a Post Office spokesman.

"People are using contactless. But what we are seeing is that Post Offices have become home for transactions such as energy rebates and other schemes, school meal vouchers, all done in cash. It is a cash-friendly place."

The spokesman said there was a need for more of the bank hubs in Scotland In Cambuslang, the pilot BankHUB operates in a post office. It is a new form of joint bank branch which sees each of the five banks take it in turns to provide services on weekdays.

It is based in an empty retail outlet and comes after locals found that the existing post office was difficult to do transactional banking services because people were queuing and using wider services such as posting a parcel.

The Lanarkshire town of 25,000 people, found itself at the forefront of the fight for better access to cash four years ago.

It went from having three bank branches to having none in the space of 18 months from 2016. At the same time the number of cash machines dropped from four to two.

Access to money concerns continue to surface as it emerged cash machine use in Scotland slumped by nearly half in two years and is not returning to pre-pandemic levels.

Data showed that there were 93m withdrawals in 2021 while there were 175.7m in 2019, before Covid hit the nation.

Data indicated that the average Scot was withdrawing £1,578 per year in 2021 compared to £2553 before the pandemic - a nearly 40% decline.

The UK Government has said it will legislate to protect the future of cash, although it has not yet done so and various industry efforts to maintain access are gathering pace, such as being able to request cashback without making a purchase in shops.

Myron Jobson, senior personal finance analyst at interactive investor, said: “While digital innovation has transformed how we spend our money, cash remains king for some people as a budgeting tool amid the escalating cost-of-living crisis.

"While contactless payments are easy and frictionless, the worry for some is they could encourage reckless spending which could lead to debt issues at a time when many are feeling the cost-of-living squeeze on their finances. This is made worse by the fact that many have gotten into the habit of not taking a receipt – especially after using self-service checkouts – so it is harder to keep track of spending.

“There are some sections of society who are comfortable with the transition to a cashless society, but it is important to cater for the millions who use notes and coins in their daily lives - particularly elderly people and those on low incomes who are cash dependent. But finding an ATM to withdraw cash can be tricky as bank branches have been dropping like flies amid the shift to online and mobile banking, while cashpoints are few and far between in some areas - especially those who don’t live close to town centres.

“There is also something to be said about the value of physical cash when it comes to teaching young children about money to help them develop good financial habits from an early age. Teaching young children about the value of savings isn’t quite the same if they aren’t able to see or touch the money they’ve been given.”