Cash usage has grown for the first time in a decade as households look to balance their budgets amid the cost-of-living squeeze.
Across the UK, coins and banknotes accounted for nearly a fifth (19%) of transactions in 2022, according to the British Retail Consortium (BRC) annual Payments Survey.
Its report said: “This year’s Payments Survey shows an increase in cash usage for the first time in a decade, up from 15% (in 2021) to just under 19% of transactions (in 2022).
“Faced with rising living costs, cash was a useful tool for some people to manage their finances and track their day-to-day spending.”
The increase also reflects a natural return to cash following the contactless switch during the COVID pandemic, the report said.
The BRC said it is the first time since its reports started in 2013 that year-on-year cash usage has increased.
“However, the recovery in cash use in retail is fairly minimal, with only a relatively small increase as a share of total sales by value, up from 8.2% in 2021 to 11% in 2022,” the report stated.
“It appears that whilst a small percentage of people have returned to pre-pandemic habits, for a large portion of the population, the pandemic has had a lasting impact on how much we transact in cash.”
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Card payments were used for 76% of transactions in 2022, with debit cards accounting for around four in five of these transactions.
Retailers spent £1.26bn on card processing fees in 2022, the BRC said.
Alternative payment methods, such as buy now, pay later, increased in popularity in 2022, from 2% of transactions in 2021 to 5% in 2022.
People have also been making smaller but more frequent payments as they manage their budgets.
The number of transactions increased from 17.2 billion in 2021 (47.2 million per day) to 19.6 billion in 2022 (53.7 million per day) and the average transaction value fell from £24.49 to £22.43, as consumers shopped around.
University graduates across the UK want to see higher starting salaries for first jobs amidst the cost of living crisis.
New research by careers platform Bright Network, shared with Sky News, reveals students expect starting salaries to be over £30,000 – 25% more than the current national average starting salary.
Due to the impact and stress because of the rising cost of living, the undergraduate students surveyed expressed “genuine concerns around the economic climate, their careers and future working life”.
The financial challenges are forcing young people to find ways to supplement their main source of income. Almost eight in 10 of the students surveyed said they’d consider taking up a personal ‘side hustle’ to bring in extra cash.
Like tens of thousands of university students Alex Johnson is back on campus for his final year and life in a working world is becoming very real for him. But with the financial future looking bleak, finding a job which pays enough is proving difficult.
He told Sky News: “A lot of them just say the salary is competitive and it’s hard to get a good grasp on what that actually means. But the ones I do see, they range between 20k to 30k, which is alright, but as a student in the cost of living crisis, I’m really looking to get more than that and get paid for what I’m worth.”
So to help him during his final year and when he enters the world of work he’s taken on a side hustle which is already bringing in additional funds. From his accommodation at the University of Leeds, Alex runs a blog about Lego. His passion for building Lego means he can use it to earn extra money which helps him now as a student and will top-up his graduate job salary.
Image: Alex runs a blog about Lego
He said: “It supports me and allows me to do other things. I was able to go on a holiday this summer which as a student, when money is tight, I might not have been able to do otherwise. It will just help me boost that income since unfortunately it’s a struggle to find those good salaries out there.”
Image: Working part-time in a marketing job doesn’t provide enough money for Natasha Birk
Working part-time in a marketing job doesn’t provide enough money for Natasha Birk who graduated from the University of Bath. She’s back living at home with her parents as her salary doesn’t allow her to be fully independent and self-sufficient. But the success from her eco-eyelashes business, on the side, means she can get there quicker.
Speaking to Sky News, she said: “When you’re doing that job search you find jobs that really appeal to you and the criteria will be really exciting but then you look at the salary and it can be a bit deflating. You have to be realistic though and think how would I actually be able to afford to live off that wage, even though it’s a job I love doing.”
Image: Natasha runs an eco-eyelashes business
But for businesses, boosting salaries by thousands of pounds is not a viable option, says Alison Edgar MBE, who advises small and big businesses on how to become successful.
She told Sky News: “If you look at the national living wage people are getting out of bed for a lot less than £30,000. A degree may give you an academic background, but it doesn’t actually give you the skills that you might need in that role. So if graduates want to have a side hustle to bring in that money, that’s great, but they should not be expecting an employer to pay that salary because they’d lose out on margins.”
She added: “25% on top of current salaries doesn’t fit into the current economics. A lot of graduates are new to the workplace, so they’ll need training and understand the business side of things. If they get that increase you’d have to increase the salaries of all the employees that were and that is not going to work for businesses economically. It’s not a sustainable model.”
When the Queen died, fortunes passed down the line of succession along with titles.
Her death made her eldest son a hugely rich man as well as King, while his heir secured a guaranteed income of more than £20m a year along with the title Prince of Wales.
The Royal Family is funded by a rackety collection of assets with roots in the Middle Ages, refined over time in deals with parliament, the most recent in 2012.
Nearly five-mile queue to see Queen – follow latest updates
Negotiated by George Osbourne, it guaranteed revenue streams for the monarch, their heir and the wider family, while leaving the question of tax largely voluntary.
The principal source of the King’s funding is the Sovereign Grant, calculated as 25% of the profits of the Crown Estate, a £15bn portfolio of commercial and residential property, agricultural and marine land owned by the Crown, not the individual monarch.
In 2021-22 it was worth £86.3m, of which £52m covered official travel, the cost of employing almost 500 members of the Royal Household, and maintenance of the Occupied Royal Palaces; Buckingham Palace, Windsor Castle, Clarence House, St James’s Palace, Kensington Palace, Marlborough House Mews and Hampton Court Mews.
The remaining £34m was allocated to an ongoing “re-servicing” of Buckingham Palace. The Sovereign Grant was increased from 15% of revenue to 25% in 2018 to cover the total cost of £369m over 10 years.
Handily for the monarch, the value of the Sovereign Grant cannot go down even if revenue falls, though that may be unlikely given its ownership of much of the UK seabed, on which lies hugely lucrative licences for offshore wind turbines will be granted in coming years.
Image: The Sovereign’s Grant, that King Charles will inherit, pays for staff and maintenance at palaces including Windsor
No inheritance tax
King Charles will also draw income from the Privy Purse, made up primarily of the net revenue of the Duchy of Lancaster, a £600m portfolio of land and property assets worth £22.3m in 2020-21.
The Queen used this to cover the cost of expenses incurred by other members of the Royal Family including his siblings Prince Andrew, Princess Anne and Prince Edward, but not his heir.
The Queen also enjoyed private wealth estimated at more than £350m, including ownership of Balmoral and Sandringham. If, as presumed, the bulk of her wealth passes to King Charles, he uniquely will not have to pay inheritance tax on his new fortune.
Gifts from monarch to monarch are exempt from death duties, though bequests to her other children, or any other individuals or entities, will be taxable.
Image: Kensington Palace
No probate for this will
We will never know the details, however, because the sovereign’s will remains sealed, the only will in the kingdom that does not have to pass into probate.
The Sovereign Grant is not taxed, but since 1993 the Queen has voluntarily paid income tax on revenue from the Duchy of Lancaster not used for official purposes. King Charles is yet to confirm he will do similarly.
As heir to the throne, Prince William, his wife and children will now benefit from the Duchy of Cornwall, a £1bn portfolio of agricultural land, property and investments that includes the Oval Cricket Ground & the Isles of Scilly.
Voluntary income tax
The estate paid the now-King £23m in the past financial year, earnings that are exempt from corporation and capital gains tax, and only subject to voluntary income tax on the net surplus after unspecified deductions.
Having decided to leave the working royal stable, the Duke and Duchess of Sussex now rely on trading off their talents and residual titles, with income from various media deals including a £20m book contract.
In a profound irony, Harry and Meghan have signed a reported $100m deal with Netflix, which owes much of its dominance in the streaming market to The Crown, a dramatisation that has done for the Windsors what Shakespeare did for the Plantagenets, and costs more to produce per-series than the annual Sovereign Grant.
None of these income streams cover the cost of royal security, widely estimated at more than £100m a year and borne by the taxpayer, or the price of royal visits often funded by local authorities.
Nor does the Royal Family pay for its own celebrations. The Treasury set aside an additional £28m to fund the recent Platinum Jubilee, the majority of which was spent on four-days of pageantry in central London.
Even with a conservative annual bill of £250m, the monarchy’s advocates argue they more than pay their way.
Does tourism foot the bill?
Tourism is routinely cited as their greatest benefit, yet revenue from the five royal palaces open to the public was just £9.4m last year, and only just exceeded £20m pre-COVID, and none are in the top 20 most visited popular attractions in Britain. With 1.5 million visitors, Windsor Castle ranked only 23rd, behind Chester Zoo, Stonehenge and Tate Modern.
Compare that with the appeal of Versailles, the palace of the long-gone French monarchy, which attracts almost 10 million visitors a year, and it suggests the UK’s palaces underperform.
Less quantifiable, but almost certainly more precious, is the brand value the Windsors bring to the UK. They lend Britain’s diplomats soft power and its businesses a unique selling point.
Image: Paris’s Chateau de Versailles beats Britain’s palaces in the tourism numbers game
‘Don’t mess with the monarchy’
One FTSE 100 executive, recently returned from an investor tour of the US, remarked: “Don’t mess with the monarchy. After Brexit, and with all the dysfunctional politics, it’s about the only thing the rest of the world thinks still works in Britain.”
That lustre may even be enhanced by the Queen’s passing and the sustained display of pageantry and proclamation the past week has brought.
Weddings, divorces, defections and disgrace
She has been mourned around the world, with messages of goodwill from Beijing to Paris, and her funeral will take its place in the dramatic arc of weddings, divorces, defections and disgrace that have captured global attention throughout her reign.
King Charles, ascending at the height of a cost-of-living crisis and without the depth of goodwill enjoyed by his mother, will face greater scrutiny of his household and expenditure, not least how he will use at least eight palaces and private homes now available to him, and how many of the family will benefit.
Every CEO will tell you stability is the greatest asset of any business, and the Queen’s passing cannot but bring uncertainty, but The Firm’s income under Charles III is at least guaranteed.
And as the Elizabethan era ends with the first full state funeral of the colour TV age, the world will still be watching.
Whether the King can maintain the value of the Windsor stock, and public consent for the financial settlement, will be more a question of politics and philosophy than economics.
