Britain’s 1p and 2p coins and £50 notes are no longer under threat after the government committed indefinitely to not changing the types of cash in use.
Ministers had been considering scrapping the lesser-used 1p and 2p coins, together with £50 notes, but Philip Hammond confirmed on Friday that he has backed down after a backlash against the proposal when it was floated a year ago.
The Treasury had argued retaining large numbers of the smallest denomination coins was inefficient and expensive in light of steeply falling demand.
The chancellor had also questioned whether £50 notes should be scrapped because they are used widely by criminals for money laundering. A consultation to consider ditching them was unveiled in the spring statement in 2018.
A brief and noisy campaign from small businesses, charities and groups representing older and vulnerable people prompted No 10 to deny there were proposals to scrap the coins and notes but the consultation went ahead.
It has concluded that about 2.2 million people in the UK are still reliant on cash.
Natalie Ceeney, the chair of the access to cash review, said: “Cash use is falling rapidly, but digital payments don’t yet work for everyone. If we sleepwalk into a cashless society, millions of people will be left behind.”
The proportion of transactions using cash has fallen sharply in the past decade, from 61% in 2007 to one-third in 2017, according to UK Finance data.
Mike Cherry, the national chairman of the Federation of Small Businesses, said the withdrawal of the lowest-value coins would have damaged smaller retailers.
“Keeping 1p and 2p coins in circulation is the right call,” he said. “The freedom to use pennies is still important to a lot of small firms. For many, being able to charge prices that end in 99p rather than a round pound figure can be enough to tip intrigue into a sale, particularly where lower-value items are concerned.”
Nicky Morgan, the Conservative MP who chairs the Treasury select committee, said the removal of options including free-to-use cash machinescould affect more vulnerable people most. “Any significant reduction in access to cash is unacceptable,” she said.
The U-turn is only the latest close shave for Britain’s coinage. Hammond’s predecessor, George Osborne, was talked out of scrapping the 1p in 2015 by the then prime minister, David Cameron, who feared the symbolism of the act.
Countries including Australia, Brazil and Canada have successfully removed their lower-denomination coins. The UK removed the halfpenny coin from circulation in 1984 when it became more expensive than its face value to produce.
The continued issuing of £50 notes has been criticised due to their use by criminals. Alongside other large denominations such as the $100 bill in the US and the €500 note in the eurozone, £50 notes are thought to make untraceable cash transactions much easier for criminals.
Hammond said: “Technology has transformed banking for millions of people, making it easier and quicker to carry out financial transactions and pay for services. But it’s also clear that many people still rely on cash, and I want the public to have choice over how they spend their money.”
The Guardian
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