Future of 1p and 2p coins questioned by Treasury

Liam Fox

GETTYLiam Fox remains optimistic about UK trade links

The main problem is that copper coins nearly never get used more than a handful of times, with 60 per cent only getting used once before they end up being stored in the family change tin or the bin.

He said: "We will call for evidence... on how to encourage cashless and digital payments, while ensuring cash remains available to those who need it".

"They are either saved, or in 8% of cases are thrown away".

Asked about the plans, Theresa May's spokesman said: "There are no proposals to scrap 1p or 2p coins in the consultation that HMT [Her Majesty's Treasury] issued yesterday".

The government paper - Cash and Digital Payments in the New Economy - questions whether the current mix of eight coins and four banknotes meets modern needs. Cash has fallen from being 62 percent of all payments by volume in 2006, to 40 percent in 2016, and is predicted by industry to fall to 21 percent by 2026.

The Treasury document states the UK's highest-value note is "believed to be rarely used for routine purchases".

"There is also a perception among some that £50 notes are used for money laundering, hidden economy activity, and tax evasion", it says.

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It adds that from an economic perspective, having large numbers of denominations that are not in demand, saved by the public, or in long-term storage at cash processors rather than used in circulation "does not contribute to an efficient or cost-effective cash cycle". They just want to stop something, even though people still use it.

Sarah Coles, personal finance analyst at financial provider Hargreaves Lansdown, comments: "The writing looks to be on the wall for 1ps and 2ps".

The charity sector had warned that scrapping the coins would damage smaller organisations that rely on bucket collections for the majority of their funding.

"On the other hand, fundraising conditions are tight, particularly at the lower end for smaller charities, where people are reliant on bucket collections and spontaneous contributions".

A year ago a bill was introduced in the US Congress which would have abolished the one cent coin.

Coppers are not legal tender if used in batches worth more than 20p - if you try to use them to pay 21p or more in a single transaction, you break the 1971 Coinage Act.

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