For the first time in decades the Royal Mint last year produced no new 1p or 2p coins. This is the first time since 1972 that no new 1p coins have been struck and since 1982 that no new 2p coins were made.
The future of these copper coins, a staple of very many public fundraising collections over the years, has been the subject of debate for some time, given the cost of producing them, their diminished purchasing power, and the rise in contactless and non-cash payments.
The Treasury requests the Royal Mint to produce particular coins in certain volumes. A Treasury spokesman stated that its decision was based on lack of need for the coins, rather than any plan to stop producing them permanently. For example, it also made no request last year for any more £2 coins to be produced, and that denomination has not featured in any debates about the phasing out of any coins.
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The Treasury spokesman told The Guardian:
“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.”
Scrapping small coins
Last year the Treasury consulted on scrapping 1p and 2p coins but within 24 hours the Chancellor had confirmed that the coins would not be scrapped following negative media coverage.
According to the BBC, “six in 10 of UK 1p and 2p coins are only used once before being put in a jar or discarded, while one in 12 is thrown into a bin”. The coins have little purchasing power these days: indeed, “the 1p coin is now worth less than the halfpenny when it was abolished in 1984″ according to the same BBC article.
Accountancy body the Association of Accounting Technicians (AAT) has been calling for the coins to be scrapped, responding in that manner to the Government consultation.
Phil Hall, AAT Head of Public Affairs & Public Policy, said:
“Last year AAT made clear in its consultation response to the Treasury that there is a compelling and rational case to stop producing 1p and 2p coins.
“The majority of these coins are used in a 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.”
The Association, which has over 140,000 members including 4,250 licensed accountants, does however acknowledge that the charity sector makes a strong argument for the retention of the coins.
It rejects this, arguing that with no 1p or 2p coins to give, “members of the public may well give 5p coins instead – potentially increasing charitable giving rather than decreasing it”.
Comprehensive piece from @SteveLittle147 from @Moneywiseonline on why the 1p & 2p coins days are numbered, includes @YourAAT views as expressed in our consultation response last year. Read more here: https://t.co/5qkjmbdDPx
— PhilHallAAT (@PhilHallAAT) August 8, 2019
More on pennies
- Charities should stop relying on the pennies and grasp the opportunities of digital to look after the pounds (11 April 2018)
- Four charities rounding up the old pound coins (7 September 2017)
- 30 million dodgy pound coins (22 September 2008)
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