Government offers reassurance that pennies are here to stay

Lloyd Doyle
March 15, 2018

The UK government is considering phasing out 1p and 2p coins, as well as £50 notes, in a bid to tackle tax evasion, money laundering and waste.

Treasury documents published alongside the Chancellor's Spring Statement yesterday raised questions about the future of the coins, pointing out they are increasingly "falling out of circulation".

It also suggests, however, there is demand from overseas for these notes, where they are saved alongside dollars and euros.

However the suggestion was met with outrage over fears that it could hurt charities, small businesses and arcades, who rely on people spending their spare change.

This means there is a high cost to keeping 1p and 2p coins in circulation relative to their face value and continuing usage, the paper adds.

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 was used for 7.2 billion transactions of under £1 in 2006.

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

"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", the document says.

And people perceive them to be used mainly in criminal activities, according to the Government.

Sarah Coles, personal finance analyst at investment management firm Hargreaves Lansdown, said: "The writing looks to be on the wall for 1ps and 2ps". In many cases people collect their small change at the end of the week and add it to their savings jar.

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

Before 1992, copper coins were made from 97 per cent copper.

Once you have amassed 21 or more 1p pieces, your coins contravene the Coinage Act 1971, even if used in a single transaction.

The 1p coin is legal tender for amounts up to 20p, so it is not permitted to pay debts with a sack full of pennies.

Other reports by Iphone Fresh

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