1p and 2p coins could be axed in move towards cashless society

Our wallets could be about to get a whole lot lighter as the Treasury announced it would be reviewing the use of 1p and 2p coins.

Ministers were keen to stress there were no plans in place to get rid of the coins as yet – but they could be dispensed with after a review into their usefulness.

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Among the concerns are the growing cost of handling such coins and the usefulness of currency such as the £50 note.

It comes after discussions about the need for a mix of coins in circulation as consumers move to non-cash payments such as contactless and digital spending.

Non-essential denominations

A document released by the Treasury suggests 60 per cent of UK 1p and 2p coins are only used once before being saved in a jar or discarded.

In one in 12 of these cases, the coins are simply thrown in the bin.

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“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 Treasury consultation document says.

Previously, the Government and the Royal Mint have needed to produce more than 500 million 1p and 2p coins each year to replace those falling out of circulation.

However, the coins are now being used less often and being held in greater numbers by coin processing businesses, as consumers move to non-cash payments.

Spring Statement

In his Spring Statement, the Chancellor Phillip Hammond said the Government would be looking into ways businesses use digital payments, as well as ensuring those who still need to pay with cash can.

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Over the past two years, the Bank of England has been rolling out new polymer £5 and £10 notes to improve the quality of the money.

On top of this, a new polymer £20 note is set to arrive in 2020 – paving the way for a full range of plastic notes if the £50 is dispensed with.

This piece originally appeared on our sister site, iNews