Keeping the pennies

In 2018, the government consulted on whether to scrap 1p and 2p coins. In May 2019, it decided not to. This is clearly the correct decision.

The two arguments are that:

  • coins are now much less used, with only 22% of retail transactions in cash
  • 60% of these coins are only used once before being stashed in jars or thrown away.

The latter argument is questionable. What happens to jars of coins? They are usually changed for vouchers or higher value coins, perhaps using a coin machine. Alternatively they may be donated to charity which does a similar thing.

I do not know of anyone who throws away coins. Once when I accidentally found I had an excess of copper coins, I walked round the street putting them on walls. Within two days, they had all gone.

The Eurozone and the USA both have 1 cent coins which are worth less than 1p. Neither has any plan to demonetise them.

In the history of UK coinage, there have been just four occasions when a coin has been demonetised because it is of such low value.

The table below shows:

  • the name of the coin
  • how many there were in £1
  • the year the coin was demonetised
  • its 2018 equivalent to the coin’s value at demonetisation.
Coin Number to £1 Year demonetised Current value when demonetised
Half farthing 1920 1869 6.1p
Farthing 960 1960 2.3p
Halfpenny 480 1969 3.3p
Decimal halfpenny 200 1984 1.6p

If the 1p and 2p coins were demonetised, the 5p coin would be the smallest coin. Shop prices would have to be in multiples of 5p which would mean some increases, particularly noticeable on lower value goods.

The decimal halfpenny was demonetised because shops, banks and individuals stopped using it. That has not happened for 1p and 2p coins. The day will come, but probably not for at least another 15 years.

The least popular coin is the 5p coin because it is so small. In 2018, Ian Watt of Durham collected 954,000 of them for St Cuthbert’s Hospice. He said people willingly gave them up as “it’s a coin that people hate”.

The Chancellor, who is also the Master of the Royal Mint, made the right decision.

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