Britain’s treasure trove of 1p and 2p coins could soon be consigned to history.
The Treasury has launched a consultation on the future of cash – and coppers could be scrapped.
With consumers turning increasingly to instant payments through mobile phone apps and “tap and go” card payments, the future for all coinage looks uncertain.
While ministers say there are no current plans to phase out the smallest coinage, the consultation casts serious doubt on how long they will be around.
Why they should go:
The Treasury consultation paper points out that back in 2006, 7.2 billion transactions were under £1.
By 2026, that’s expected to fall to 1.3 billion, so it’s a very real, significant drop in the number of these coins being used.
The other key factor that’s behind the consultation is the fact that most shoppers see 1p and 2p coins as an inconvenience, something that just weighs down their pockets. Who hasn’t got a change jar or bottle half-filled with coppers?
Treasury officials suggests 60% of UK 1p and 2p coins are used once only before being saved in a jar or discarded.
In one in 12 of these cases, the coins are simply thrown away.
Also, the cost of producing these coins is going up while their real value is heading the other way.
“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 Treasury consultation document says.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, says: “The problem is then, the fixed costs of making and making and distributing coins is roughly the same… you’re spreading out that cost over far fewer coins which means each coin costs more to produce and it gets to the point where it is not economically viable to be running these 1ps and 2ps.”
Why keep them:
The document asks directly if the current mix of eight coins and four notes meets people’s needs – and “if not, how should it change?”
There are concerns that should 1p and 2p coins be scrapped the prices could rise. Will retailers round up or round down?
The likelihood is that your favourite £5.99 bottle of red will be rounded up; that the £3.98 box of breakfast cereal will cost £4 should coppers vanish.
A lot of charities benefit from loose change – either through street collections when delving into your pocket for a few coppers or from a change jar being donated to your local hospice shop.
Peter Kyle, Labour MP for Hove, said: “We need to get this right otherwise charities and sectors that rely on the loose change people carry with them could be affected.”
The 1/2p was withdrawn at the end of 1984 and inflation rose 0.5% the following year, although the 1/2p wasn’t mentioned as a reason behind it.
Sarah Coles added: “At the time, the supermarkets pledged to round prices down as a sort of competitive advantage. So while there will be a certain amount of rounding up when eventually these coins do go, I think it’s not going to be the dramatic impact people are necessarily expecting.”
How much is 1p worth anyway?
Research suggests that 2.7 million people in the UK are entirely reliant on cash.
The Royal Mint says copper coins are only legal tender “for any amount not exceeding 20p”.
But what costs less than 20p nowadays? Even a Freddo chocolate bar costs 25p. For 5p and 10p coins, the limit is £5. For 20p and 50p coins, it rises to £10.
There are thought to be more than 11 billion 1p coins in circulation – how many have you got stashed in a jar or on a bedside table doing nothing but gathering dust?