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

Catherine Neilan
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General Election - Documents Stock
Spend a penny: 60 per cent of 1p and 2p coins are only used once (Source: Getty)

The government has hinted that it may ditch the £50 note and 1p and 2p coins as part of a move to make cash fit for purpose.

As part of a tranche of documents released for today's Spring Statement, the Treasury has launched a call for evidence around use of cash and digital payments.

As a result of the rise of contactless and other digital payments, the document says there has been a "much more significant decline in the use of cash for transactions that are less than £5 compared to higher-value transactions".

Evidence points to the fact that 60 per ent of 1p and 2p coins are used in a transaction just once before they "leave the cash cycle" - either being saved in piggy banks or, in eight per cent of cases, thrown away.

However, the cost of producing low denomination coins is the same as higher denomination coins, the same paper says.

"At the other end of the denominational scale the £50 note is believed to be rarely used for routine purchases and is instead held as a store of value," it adds. "There is a significant overseas demand for £50 notes, with the notes used for some transactions, but mainly held as a store of value alongside other currencies such as the dollar and euro.

"There is also a perception among some that £50 notes are used for money laundering, hidden economy activity, and tax evasion."

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". Any loss of that confidence would carry "extremely high" costs.

The call for evidence will remain open for 12 weeks, and close on 5 June 2018.

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