Government backs away from idea of scrapping 1p and 2p coins

Some in the sector had warned that the move, put forward in a consultation on published on Tuesday, might have a negative effect on charitable giving

The government appears to have quickly abandoned the idea of removing 1p and 2p coins from circulation, after receiving objections that it could hit charitable giving.

On Tuesday, Philip Hammond, the Chancellor of the Exchequer, announced in his Spring Statement a consultation on the role of cash and digital payments in the UK economy.

Abolishing 1p and 2p coins was among the suggestions due to be debated until 5 June.

But an immediate backlash by organisations concerned about the impact on giving appears to have put paid to the idea.

A Treasury spokeswoman said in a statement today: "We have sought views on whether 'the current denominational mix of coins meet your needs' – from some of the early reaction it looks as if they do!"

But the spokeswoman added that the Treasury welcomed further contributions to the debate.

Andrew O'Brien, director of policy and engagement at the Charity Finance Group, said the apparent U-turn would be beneficial to charity income in the short-term but not necessarily in the long-term.

He said the government could make more of a difference by helping small charities make the transition towards contactless digital payments rather than by preserving 1p and 2p coins.

"It would be a shame to call off this debate before we've even had it," O'Brien told Third Sector.

He said ministers were "kicking the can down the road" on the issue when they should be assessing the sector's ability to transition towards digital payments and then offering solutions.

"The issue isn't going away and arguably it's better to have the debate sooner rather than later," he said.

Mandy Johnson, chief executive of the Small Charities Coalition, said it would welcome the retention of 1p and 2p coins.

"Small charities get about 60 per cent of their income from individual donations, and a lot of that comes from people giving their pennies," she said.

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