Government mulls plan to scrap 1p and 2p copper coins and £50 notes

Most copper coins are thought to be used in a single transaction before they are horded Credit: PA

Copper coins and £50 notes could be scrapped as people's cash habits change.

There has been a sharp decline in the use of 1p and 2p coins, a change noted in a government's consultation paper released as part of the Chancellor's spring statement.

Six in 10 copper coins are believed to be used in just one transaction before they are either saved or thrown away.

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

Meanwhile, some businesses price products to avoid using the low value coins, according to the consultation paper.

The £50 note may also come out of commission Credit: PA

The £50 is likewise under-used, the paper says, and while there is "significant" demand for the notes from overseas, the perception among the public is that they are used mainly in money laundering and other criminal activities.

There have been indications that the note could come out of circulation - while there are plans for new polymer £20 notes to join the revamped £5 and £10 notes, there appear to be no plans for a new £50 note.

The government paper - Cash and Digital Payments in the New Economy - questions whether the current mix of eight coins and four banknotes meets modern needs.

"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 says.