David Cameron vetoed plan to remove 1p and 2p coins from circulation amid fears that symbolism would be too risky for Tories

George Osborne came within weeks of announcing plans to take 1p and 2p pieces out of circulation but was stopped by David Cameron who feared the symbolism of the Conservative party scrapping the penny, the Guardian has been told.

Senior figures said the previous chancellor wanted to make the change in late 2015, after winning the general election, because copper coins cost more to produce than they were worth and people tended not to like them.

The Treasury assessed what had happened when one- and two-cent coins were stopped in Australia, discovering that the shift was popular but triggered a backlash from charities who had benefited from people handing over their spare change.



Osborne believed it would be a “modernising change”, according to insiders, but Cameron ruled that it was too risky for the party.

And the Guardian can reveal that it was not the only controversial idea the pair considered when they were at the helm of government. In a separate move, the Downing Street policy unit submitted a proposal to lay down an ambition to end all cash transactions by 2020, as a way to drive up productivity and disrupt some forms of criminal activity.

The plans for a cashless society were drawn up by Daniel Korski, who was deputy head of the unit, and submitted as part of the package for the Conservative party conference in autumn 2015. “The proposal we developed to move towards a totally cashless society,” Korski said, arguing officials had agreed that was the direction of travel anyway.

“I said: ‘Let us force that pace.’ If government shows a willingness, says why it matters, then it could make Britain the centre for innovation for money in the future.”

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Korski also argued that there was a “hell of a lot of cash in circulation fuelling the criminal economy”. He said that some countries, including Norway and Denmark and to some extent China, were already much further down the road than Britain.



The main recommendation was to “set a hard target – no cash in our society by 2020”, while a series of identity-based and mobile alternatives were further developed.

“It was in the package for discussion until it got taken out by George Osborne. They said: ‘Look, it is an interesting idea but it will scare people,’” Korski said, but insisted that there was great excitement about the eventual shift.

Korski continued to focus on technology as a means of improving people’s lives after leaving government at the same time as Cameron, and set up a company called Public to showcase the work of startups hoping to transform public services.

On Friday he will return to Downing Street to present the ideas of 10 chosen companies that aim to make things more efficient for people in healthcare, transport, education and so on.

Among the startups are Ask the Midwife, an app which connects pregnant women directly to advice on prenatal issues, Calipsa, which uses artificial intelligence to improve CCTV footage of traffic, and Eyn, aiming to place passport information on mobile phones. Another technology being shown to new advisers in No 10 is called RotaGeek, which was set up by an emergency doctor in the NHS and helps employee scheduling.

Korski’s company, which he co-founded with venture investor Alexander de Carvalho, has published a report that claims the so-called GovTech industry will be worth £20bn by 2025 with the UK expected to play a major part in what is being branded the “smartphone state” of the future. “I left government convinced that technology was going to transform everything that we do,” Korski said.

Asked if there were challenges for some older or more vulnerable people if public services became more dependent on technology or Britain became cashless, he admitted that there were. But he argued that things could change quickly - pointing to the wide use of technologies such as Google Maps.

The aim of his company is to take 10 projects and put them through a six-month scheme in which they will explore which public services to target and build up contacts in the relevant areas. Korski will also launch a “Public 100” list of companies in the field.