Osborne planned to scrap 1p and 2p coins
No 10 ‘wanted UK to be a cashless society by 2020’
FORMER chancellor George Osborne put forward a radical plan to scrap 1p and 2p pieces, it has emerged.
The scheme was revealed by exDowning Street policy chief Daniel Korski, who said he put forward his own proposal to ditch paper money in the UK by the end of the decade.
Mr Osborne wanted the UK to abandon the coins because they cost more to produce than they were worth.
But he was forced to abandon the idea just weeks before the Tory conference in 2015, after colleagues pointed to a similar scheme in Australia which was scrapped after backlash from charities who could no longer collect small change.
Mr Korski, speaking to the Guardian yesterday, said he wanted to set a deadline to create a cashless society in an effort to crack down on money laundering. Online transactions are much easier to track than bundles of notes.
The former deputy head of Downing Street’s policy unit also believed switching to speedier electronic payments would make the country more productive. ‘The proposal we developed was to move towards a totally cashless society,’ Mr Korski said. ‘If the Government shows a willingness, says why it matters, then it could make Britain the centre for innovation for money in the future.’
The disclosure comes as Britons are embracing electronic payments more than ever.
Households spent almost £4billion using contactless cards in April, almost 150 per cent more than the previous year. These cards allow shoppers to make a ‘tap and go’ payment of up to £30 per transaction.
Around £500million of the total was spent using contactless credit cards, according to figures from the UK Cards Association.
But although the cards are quick and easy to use, they have drawn criticism for encouraging a debt binge, as it is feared customers are more likely to spend money without thinking about it.
Mr Korski nonetheless enthusiastically embraced the end of cash. He said that his aim was ‘to set a hard target – no cash in our society by 2020’, to be achieved by developing alternatives based on mobile phones.
He said there was ‘a hell of a lot of cash in circulation fuelling the criminal economy’ and that other countries including Norway, Denmark and China were leading the way on electronic payments.
However, despite ministers’ strong interest in the plans – which were drawn up ahead of the 2015 Conservative conference – they were ultimately rejected as too radical. ‘It was in the package for discussion until it got taken out by George Osborne,’ Mr Korski revealed. ‘They said, “Look, it is an interesting idea but it will scare people”.’
Mr Korski has since left politics, and is today remembered for his heavyhanded role in the EU referendum campaign last year.
He was at the centre of a row between Downing Street and former British Chambers of Commerce boss John Longworth. It led to a furious phone call from Mr Korski shortly followed by Mr Longworth’s resignation.