Plea to banks over £5 note shortage

Mr King said he is seeking ways to end a shortage of £5 notes in circulation and pointed the finger at banks for failing to stock them in cash machines.

He said the average lifetime of the notes has doubled in a decade, meaning more are now "soiled and scruffy".

"ATMs account for more than 60% of all cash obtained by the public; few issue £5 notes. It is more economical for banks to stock ATMs with £10 and £20 notes," he said.

"The problem is not at the production end; we have an ample supply of new £5 notes waiting to be used. We want to see them in circulation.

"There is a need for an adequate supply of low denomination notes that can be used for small transactions where cash is the predominant means of payment.

"Such mutual convenience is a public good, and may not correspond to the private interest of commercial banks.

"We must not let this situation continue any longer; the public need £5 notes."

He said incentives for banks to obtain fivers from the Bank of England, new arrangements to increase their availability to retailers and more durable notes would be looked at.

Speaking at the Mansion House after the Prime Minister-in-waiting made his final annual address there as Chancellor, Mr King also paid tribute to Gordon Brown's contribution to a "remarkable decade for the British economy", adding that he hoped he would be "equally bold" in his new role.