Who knew that those unloved copper coins that rattle around in our pockets, piggy banks and collection tins could create such a stir?
Yesterday, along with the Spring Statement, there was a document titled: cash and digital payments in the new economy – call for evidence.
In this 29 page document was a thinly-veiled hint that the future of 1p and 2p coins is at risk, thanks to dwindling use.
2p or not 2p: The future of coppers could be at risk – would you be sad to see them go? It would spell the end of low denomination arcade machines
According to the Treasury, six in 10 are used in a transaction once before they leave the cash cycle, most often into piggy banks and jars at home, or perhaps handed to charity.
Furthermore, eight per cent are thrown away. That’s right – Britons are throwing good money in the bin.
It adds: ‘To meet demand created by such losses from circulation, in previous years the Government and the Royal Mint have needed to produce and issue over 500million 1p and 2p coins each year to replace those falling out of circulation.
‘However, due to an increase in the rate of decline in the use of cash for lower value transactions, there is a reduction in demand for coin from cash processors; they are now holding increasingly large stocks of coin that have returned to them but for which there is declining future demand.
‘The cost of industry processing and distributing low denomination coins is the same as for high denomination coins, making the cost high relative to face value and utility.
PAYING BILLS IN PENNIES
The 1p coin is only legal tender for amounts up to 20p.
This means that paying debts with a sack full of pennies does not have to be accepted.
‘Given the fixed costs of the cash distribution infrastructure these costs are likely to rise as cash usage declines which may have impacts on the supply of coins.’
It is asking for comments on the mix of coins in circulation. It comes as non-cash payments continue to soar.
A number of countries have axed low denomination coins, such as Australia, Brazil, Canada and Sweden.
The last of those our sister title Money Mail visited to see how it is turning entirely cashless.
Millions of pensioners, small businesses and rural communities feel ignored, vulnerable and uncomfortable by the speed of the card-only movement, one critic in Sweden said.
A study by bank ING last year found just one in five of us say we’d be happy to abandon cash compared to a European average of one in three.
But that appears to be where we are heading.
Spend a penny: Some countries have already scrapped small denomination coins
At the other end of the scale, it is also looking at £50 notes.
It said in the document: ‘There is also a perception among some that £50 notes are used for money laundering, hidden economy activity, and tax evasion.’
CASH IN HAND AT RISK
Large cash payments to tradesmen could be banned in a crackdown on the black economy.
Plumbers, builders and even child-minders could be barred from receiving sizable payments to ensure they pay the full tax for the work they carry out.
The proposals, published in the Spring Statement yesterday, are a bid to rake in as much as £3.5billion a year in tax from the UK’s hidden economy.
The move could prove unpopular – and Philip Hammond would be known as the Conservative Chancellor who made it happen.
This is Money has previously mentioned before that despite there being new polymer £5 and £20 notes, and a new £20 for 2020, it doesn’t appear a new £50 is coming.
The report comes at a time in which coin collecting has become popular.
For instance, the Royal Mint has issued 26 new 10p coins covering the A-Z of Britain and another four in its 50p Beatrix Potter set.
But the use of cash for everyday transactions is falling.
Cash has fallen from being 62 per cent of all payments by volume in 2006, to 40 per cent in 2016, and is predicted by industry to fall to 21 per cent by 2026.
Those are huge falls, especially when you consider research that suggests 2.7million people in Britain are entirely reliant on cash.
It means if you are worried about the future of cash, you need to start using it more – otherwise, Britain will be going down the Swedish route.
WHAT DO YOU WITH YOURS?
The idea of binning money, even if they are coppers, is completely mad to me. Do people really do it?
With Easter approaching, there is the famous slogan that comes to mind for Creme Eggs: How do you eat yours? So, in terms of 1p and 2p coins: How do you use yours?
I asked some of my colleagues. Here’s what they said…
One says he collects them in a pot, bags them up and takes them to a charity shop as a donation, which doubles up as a maths lesson for his children.
Another says she spends a long time in corner shops digging them out of her pockets.
She adds: ‘I never throw them away and always try using them up, no matter the glances I get from the shopkeepers or people in line behind me.’
One is not fond of the coins whatsoever.
He says: ‘I have binned the odd 1p coin at times.
‘I can’t remember the last time I used a copper coin to buy something, I hate clutter and barely pay for items with a value of dot.99p with cash, always purchasing these items on card.
‘I rarely carry any change at all these days, so I reckon I must bin a penny once a month. That’s 12p a year. That’s £9.60 a lifetime. I won’t miss it. I should give it to charity, though.’
Another adds: ‘Well I used to collect them in a pot along with all my change, up to and including pound coins.
‘The pound coins would generally get used at the local shop/dry cleaners/ pub at the weekends, but the rest used to accumulate until I got round to taking it to an HSBC where they have those counting machines and it just goes straight into your bank account. There’d be well over £100.
‘But thinking about it – my pot has ceased to overflow, it’s been sitting there more or less full for at least a year.
‘I’m just not collecting change anymore, least of all coppers, because I’m hardly using cash.
‘Getting rid of them would of course give shops an excuse to round everything up.’
Another adds: ‘We chuck all change in a pot by the front door and dip in when we need a few quid.
‘Periodically I’ll take it to the Metro Bank magic money machine.
‘But I’d happily vote to get rid of 1s and 2s.’
Two more responses here: ‘I put them in a biscuit tin and use it to hold the kitchen door open. The last time I took coppers to a bank to cash in, I was five.’
‘I put mine in a special “supersize me” wallet which I would only dip into at fast food restaurants to upgrade my meal to large when I was feeling particularly greedy.’
Lastly, one said: ‘I love 2p arcade machines. Yeah I know there are 10p ones as well, but I’m not that kind of high roller.
‘A handful of coppers and a bag of sweets – I’d be sorry to see that go, at least until inflation shrinks down 10ps to 2p value.’
Me? I collect them, along with 5p and 10p coins, in a couple of piggy banks at home.
I then, once a year, empty them into the Metro Bank magic money machines it has in branch which are free to use – and it is usually enough for at least a nice pub lunch somewhere.
I also like to use a mix of cash, contactless and chip and pin payments. Cash I use for things like lunch or drinks in a pub – I hate the bank having a full record of where I choose to spend some of my cash!
What do you do with yours? Let us know in the comments below…