M&S helps the Old Lady reduce national supply of grubby fivers

Marks & Spencer has a new line in nickers. Every day, its stores are taking delivery of crisp boxes of them from an old lady in Threadneedle Street.

No, it isn't the latest attempt to boost M&S's fortunes with a new underwear range. These nickers are £5 notes the retailer has agreed to help to distribute for the Bank of England in the face of a growing shortage caused by high street banks and their automated cash machines.

The Bank has become increasingly concerned about the lack of good-quality fivers in the economy, caused by a reluctance on the part of bank managers to fill cash machines with anything less than £20 or £10 notes.

The banks argue that the machines have to be filled up more often if £5 notes are used, a process that takes time and money. Thus the £5 notes in circulation are becoming fewer, grubbier and damaged in a way that is attracting counterfeiters – who usually prefer high denominations – because they can more easily pass off poor copies.

After failing to persuade the high street banks to stock more £5 notes, the Bank turned to M&S and the Post Office. The Bank admitted it had been in talks with other outlets but would not say whether they were co-operating. It also declined to say how many new notes were now in circulation.

M&S is not taking any more cash than usual – it does not want to put its staff at risk – but it is taking more £5 notes. "It was a win-win situation for us," said Peter Forbes, the manager of store financial operations. "We had a cash management infrastructure in place that let us handle and distribute more fivers than before. We know the Great British public wants fivers rather than pockets full of £1 coins, so we were only too pleased to oblige."

Richard Tyson-Davies, the director of public affairs for the Association for Payment Clearance Services, which represents the high street banks, said his members could not be blamed. "Customers are drawing out £400m a day from automated machines – that's a hell of a lot of notes even in £10s and £20s," he said. "If banks were made to stock £5s in machines, they would have to be filled up twice as often, and that costs money. Some of the busiest machines are already having to be filled twice a day as things stand."

He added: "Customers prefer bigger denominations. The £5 note is already worth less than the old £1 note was when it was phased out. And if you look at the euro, there is also a €5 note which was given out in cash machines at first to get it into circulation. But you won't see it being given out any more. It's too small – one-third less than £5."

Realistically, the Bank's tie-up with the Post Office is probably more useful than the efforts made by M&S, no matter how much those are appreciated. The Post Office serves 28 million people every day, handling £140bn in cash each year, or £1 of every £4 in circulation.

A Post Office spokesman said: "It is a case of them providing us with more new £5 notes. We then pay out many billions to customers through benefits and banking services. We were only too delighted to help the Bank."