1p and 2p coins could be scrapped under new Government plans

Phillip Hammond coins

GETTYPhillip Hammond's Spring statement has also revealed potential business tax cuts

Chancellor Philip Hammond announced a review into the use of cash in today's Spring Statement.

At the other end of the denominational scale, the government says the £50 note is believed to be rarely used for routine purchases and is instead held as a store of value. It added: "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".

It is not the first time the idea of scrapping copper coins has been floated in the UK.

But the consultation hints at the growing cost of handling these coins. "The writing looks to be on the wall for 1ps and 2ps". When it costs more to produce and distribute a coin than the coin itself is worth, governments tend to decide it's a spent force - and we're rapidly heading in that direction for coppers. Cash was used for 7.2 billion transactions of under £1 in 2006.

Some businesses price products to avoid using the low value coins, according to the document.

However, with research suggesting that there are 2.7 million people across the United Kingdom who are entirely reliant on cash, the government is keen to stress that it will support the payment method through ATM access. More than half of those people live in households with total incomes of less than £15,000 a year.

The Cash and Digital Payments in the New Economy consultation released by the government questions whether the current mix of eight coins and four banknotes meets modern needs, and if not "how should it change?".

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