Penny coins could be scrapped amid rise in contactless payments

Pennies and £50 notes could be scrapped because they are not used enough.

Pennies and £50 notes could be scrapped because they are not used enough. Picture: PA

Around six in 10 1p and 2p coins are believed to be used only once before they are put into savings jars - and around 8 per cent are thrown away.

The rise of contactless payments is behind the reduction in use of coins and notes, with cash transactions falling to less than 40 per cent, down from two-thirds in 2006 and expected to drop to around 20 per cent by 2026.

The use of £50 notes in routine purchases is rare and people perceive them to be used mainly in criminal activities, according to the Government.

It has raised the prospect of scrapping the denominations in documents released as part of the spring statement.

Conservative former chancellor George Osborne was reported to have been weeks from scrapping pennies in 2015, but was stopped by then prime minister David Cameron.

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?”.

Royal Mint needs to produce more than 500 million 1p and 2p coins each year to replace those that fall out of circulation.

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

It also says that while there is “significant” overseas demand for £50 notes, there is a perception they are used for money laundering, tax evasion and other criminal actives.

“From an economic perspective, having large numbers of denominations that are not in demand, saved by the public, or in long term storage at cash processors rather than used in circulation does not contribute to an efficient or cost effective cash cycle,” the document states.