Spring Statement: Government hints at dropping £50 note, 1p and 2p coins

Liam Fox

GETTYLiam Fox remains optimistic about UK trade links

The Government has signalled 1p and 2p coins won't be scrapped - a day after the Treasury announced a consultation on their use.

Asked about the future of the £50 note, which has also be called into doubt by the consultation exercise, the spokesman said that the process was on-going.

But it says the cost of industry processing and distributing low denomination coins to make up for those taken out of circulation is the same as for high denomination coins, making the cost high, relative to face value and utility.

"One thing the Treasury were seeking views on was whether the current denominational mix of coins meets the public's needs".

A whopping 500 million 1p and 2p coins have to be produced by the Government and the Royal Mint each year to replace those that fall out of circulation, and when you think about it: that's a bit silly, that is.

However, the consultation goes on to question whether the current denominational mix of eight coins and four banknotes meets consumers' and businesses' current and future needs.

The cost of issuing coppers is the same as for higher denominations and the document stated that the costs are "likely to rise as usage declines".

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"The £50 note is believed to be rarely used for routine purchases and is instead held as a store of value", according to the Treasury.

"The Government welcomes all contributions to the debate and will respond fully after the call for evidence closes on June 5".

Having excess numbers of both types of cash "does not contribute to an efficient or cost effective cash cycle", the paper adds, also pointing to the need to keep "confidence in the currency".

It is not the first time the government has considered scraping pennies, in 2015 then-Chancellor George Osborne proposed the measure only to be blocked at the last minute by former PM David Cameron.

A furore ensued when charities and amusement arcades said small copper coins were vital to their survival. Backers of the proposal also cite a common perception that the notes are often used for illegal activities.

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

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