Charities could find their income falling if plans to remove 1p and 2p coins from circulation go ahead, the government has been warned.
Philip Hammond, Chancellor of the Exchequer, announced in his Spring Statement yesterday a consultation on the role of cash and digital payments in the UK’s economy.
The consultation, which closes on 5 June, focuses on how the transition from a cash economy to one reliant on digital payments would affect different sectors, regions and demographics. It also wants opinions on ways support people using both forms of payment.
Among the areas for debate are whether the eight coins and four notes used in UK currency should be retained, with 1p and 2p coins and the £50 note at most risk of being removed from circulation due to lack of use.
Cash payments have fallen from 62 per cent of all payments by volume in 2006 to 40 per cent in 2016, and the consultation says that it is likely to fall to 21 per cent by 2026.
But there are concerns that abandoning cash payments would lead to a reduction in charitable donations, because coins are a popular way of donating to charities, particularly through bucket collections.
Sir John Low, chief executive of the Charities Aid Foundation, said: "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 and 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."
Steve Reed, the shadow minister for civil society, called on the government to retain 1p and 2p coins.
"Cash is the most popular way for people to donate to charities, and much of that comes in small change like 1p and 2p coins," he said.
"If the government goes ahead with this, it will directly hit the vulnerable people who rely on charities to feed, clothe, house and care for them. The government must think again."
Daniel Fluskey, head of policy and external affairs at the Institute of Fundraising, said that although many charities were implementing contactless methods in response to donor preferences, "there is likely to be an important and ongoing role for cash payments for a range of fundraising activities".
Fluskey said that charities and donors "benefit from being able to use a diverse range of payment methods" and the IoF would consult with its members on its response to the consultation.