Theresa May has scrapped a controversial plan to ditch 1p and 2p coins just 24 hours after it was proposed, following a media backlash.
Following chancellor Phillip Hammond’s announcement in this week’s Spring Statement, newspapers raised concerns about the impact on charities and the elderly. The move was also expected to have major ramifications for retailers, particularly around pricing, and for consumers through potential inflation.
A No 10 spokesman said “there were no proposals to scrap the one or two pence coins”, and that the call for evidence was “simply intended to enable the government to better understand the role of cash and digital payment”.
A Treasury consultation document revealed that six in 10 1p and 2p coins were used only once before they fall out of circulation, and are either saved or thrown away. The Royal Mint produces and issues over 500 million 1p and 2p coins annually to compensate for those going out of circulation, but the declining use of cash for smaller transactions has triggered a fall in demand.
“Having large numbers of denominations that are not in demand, saved by the public, or in long-term storage rather than used in circulation does not contribute to an efficient or cost-effective cash cycle,” said the Treasury document published on Wednesday this week.
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