Could the penny drop?
While the Chancellor’s first Spring Statement was a largely uneventful affair with no major tax or spending changes, he did announce a number of consultations, which provide an interesting insight into his future plans.
Amongst these was a consultation entitled Cash and digital payments in the new economy, which mooted the abolition of one penny and two pence coins.
According to the Treasury, 60 per cent of one penny and two pence coins are used in a transaction just once in their lifetime. The consultation document suggests that they are more likely to be either saved in jam jars or piggy banks, or thrown away, which it claims happens in eight per cent of cases.
The Treasury said that the Royal Mint produces and issues more than 500 million 1p and 2p coins annually to replace those that fall out of circulation.
It also suggested that the costs to businesses of handling such low denomination coins is as great as higher denomination coins, making them relatively expensive to deal with, leading some firms to opt for pricing rounded to the nearest pound.
However, the suggestion prompted an almost instantaneous backlash, with the charity sector, in particular, arguing against any suggestion of scrapping the coins.
Andrew O’Brien, Director of Policy at the Charity Finance Group, told The Guardian: “It is a concern. On the one hand, we don’t want the charity sector to be accused of being Luddites.
“On the other hand, fundraising conditions are tight, particularly at the lower end for small charities, where people are reliant on bucket collections and spontaneous contributions.
“Charities are coming up with new, innovative ways to fundraise but [traditional collections] are still significant.”
His comments were echoed by Mandy Johnson, Chief Executive of the Small Charities Coalition, who said: “Most small charities rely on donations from individuals for the majority of their fundraising. That’s volunteers asking people to put in their pennies where they can. At the moment, the alternatives to doing it that way are more costly.”
Following the backlash, Downing Street has played down suggestions that the coins will be scrapped.