Calls for care around consultation on cash amid saving and charity concerns
The Charities Aid Foundation said changes could have a profound effect on giving.
A Government consultation on cash – including the future of 1p and 2p coins – has led to calls for consideration of the “profound effects” any changes could have on charities, saving and spending.
The Government has raised the prospect of scrapping 1p and 2p coins in documents released as part of the spring statement, which also suggest that £50 notes could go because they are not used enough.
A consultation on cash is a good opportunity for Government and charities to work together to embrace new technologies and ensure the decline of cash doesn’t get in the way of people’s desire to be generous Sir John Low
Sir John Low, chief executive of the Charities Aid Foundation, said: “The Chancellor’s statement was never expected to announce a raft of new policies, but it does contain details which could have profound effects on charities.
“Cash is still by far the most common way people donate to charity, so the forecast in HM Treasury’s consultation document on cash and digital payments, suggesting that cash transactions will more than halve from 12 billion transactions a year to 5.8 billion between 2016-2026, could have a real impact on charities if people carry less cash to give away.
“A consultation on cash is a good opportunity for Government and charities to work together to embrace new technologies and ensure the decline of cash doesn’t get in the way of people’s desire to be generous.”
Neil Duncan-Jordan, a spokesman for the National Pensioners Convention, told the Press Association there were concerns that if copper coins were ditched, this could be the start of a more dramatic move towards a “cashless society”.
He said there should be more research, more data and more consideration.
He said: “What we are asking for is an understanding about the impact that this may have. What lies behind it might be a drive towards digital transactions which aren’t always suitable for some older people… What we don’t want to see is a move towards just one way of doing things.”
Sarah Coles, a personal finance analyst at Hargreaves Lansdown, said parents might have to find new ways to get their children to save if piling coppers into piggy banks and jars was no longer an option.
She said coppers “play a small but vital role in the nation’s savings habits”.
“Particularly for kids, putting spare change into a money box can help establish a regular savings habit. It’s useful for them to be able to physically see how over time the pennies start to add up.
“As we use cash less – especially if 1ps and 2ps bite the dust – there’s going to be less small change to save. It means parents may need to help their children find other ways to get into savings.”
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% are thrown away.
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.
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?”.
The 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 activities.
“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.