The Cash and Digital Payments in the New Economy consultation released by the Government questions whether the mix of eight coins and four banknotes meets modern needs and, if not, “how should it change?”.

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

However, local market traders and shoppers in Blackburn had mixed feelings about the plans.

Malcolm Marsden of Whittakers Butchers, said: “It does not bother me about the 1p of 2p being got rid off as prices will move in business. It is going to be the charities who use them. God forbid they should suffer and it would not be good news for them.

“Any charity nationally, everybody will suffer if people are not putting their change in the money pots. I would think they get more money from the collection pots than subscription.”

Peter Fielding, 74, from Blackburn said: “I don’t think the 1p has any value more or less. I remember decimalisation in the 1970s when we had 240p in the pound. But I can see some charities being affected as some people put their money in there.”

Sheila Chapelhow, 77, from Blackburn said: “They are a bit useless and I don’t think they have any value apart from the charity box. When they say £4.99 I don’t know why they don’t just charge £5.”

Aleighsha Greenway, 24, said: “They are good to collect for the kids and put them in money boxes.”