Most coins are used only once before they are saved or discarded.
No new 1p or 2p coins were made last year by the Royal Mint.
For the first time since 1972, the Royal Mint did not produce any 1p coins last year, while no 2p coins were produced for the first time since 1984.
Critics of the copper coins are calling for them to be scrapped as people use them only once, or throw them away.
Phil Hall, head of public affairs and public policy at accountancy body the Association of Accounting Technicians (AAT), says: “The majority of these coins are used in only a single transaction before they leave the cash cycle, having been saved in jars or thrown away.
"The Royal Mint ordinarily need to produce and issue around 500 million 1p and 2p coins each year to replace those falling out of circulation.
“The cost of production is the same as for higher denomination coins, meaning it is costing more to make and distribute the coin than it is worth. This simply doesn’t add up, which is why government should seriously consider getting rid of these coins.”
The Treasury launched a consultation on cash and digital payment in 2018 that said that consumers no longer regularly use 1p and 2p coins.
After a media campaign against the possible move and concerns raised by charities, the government announced that there were no plans to axe the coins.
Chancellor Philip Hammond confirmed in a speech earlier this year that the copper coins would not be abolished despite a Treasury consultation that said 60% of copper coins were used once before being put in a jar or thrown away.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, comments: “There were no 1ps and 2ps minted last year. There’s talk of this being a sign of a covert plan to drop the penny, but there won’t be any penny pinching in the immediate future.
“First and foremost there’s no political will for it. Dropping the penny is an unpopular idea among millions of people who have grown attached to their coppers.
“The Treasury issued a discussion paper outlining all the reasons why the coins should be axed last year, and the backlash meant that Philip Hammond started distancing himself from it within 24 hours. Politicians would be forgiven for thinking that now is not the time to get into an unpopular row about coins.”
There are an estimated 10.5 billion 1p coins and around 6.3 billion 2p coins currently in use. With the rise in inflation, the 1p coin is now worth less than the halfpenny, which was abolished in 1984.
Some experts have warned that if the coins were taken out of circulation, retailers could round up prices to the nearest 5p, raising fears that this could lead to a rise in inflation.
However, research from the Bank of England has found that scrapping 1p and 2p coins would not cause inflation.
A Treasury spokesman says: “We didn’t ask the mint to issue any £2 or 1p/2p coins this past year because there are already enough of these in circulation.
“Our coins are of the highest quality and the amount we ask the Royal Mint to produce every year depends on demand from banks and Post Offices.”
In recent years, the use of cash has decreased while the use of contactless payments has surged dramatically.
While the reduced demand for coins means that not as many need to be produced, cash is still a necessity for more than two million people who still use it for all their day-to-day transactions.
There are fears that moving to a completely cashless society too quickly could lead to millions of people being excluded and put at risk of financial exploitation.
The elderly and disabled could lose their independence, rural communities could be threatened, while debt could also increase.
This article was first written and published by our sister magazine Moneywise.
Keep the penny as a method of pricing, but drop the 1p and 2p coins from our currency. Then legally declare that prices of entire basket or single item should be rounded either up or down to nearest 5 pence. I.e. £1.02 becomes £1.00 but £1.03 becomes £1.05