THE BATTLE FOR THE PENNY
Canada got rid of the penny in 2012, but it’s proving to be a tougher customer in Britain.
PENNY UNDER THREAT
There’s a saying in Britain: “Look after the pennies and the pounds will look after themselves.” But the penny appeared to be in danger this week when the government’s senior financial minister, Philip Hammond, announced Tuesday that the smallest denomination of the country’s currency might be facing the furnace. One day later, after an outcry from charities and from the news media — one tabloid ran the headline “Save Our Coppers” — a spokesman for Prime Minister Theresa May backtracked. Britain wouldn’t scrap the penny, after all. At least, not yet.
MONEY SENSE?
It was during his spring financial statement that Hammond, the Chancellor of the Exchequer, floated the idea of taking two copper- plated coins — the penny and the two pence — out of circulation, along with the red-tinted 50-pound note. The Treasury argued that production of the low- denomination coins no longer made financial sense. Sixty per cent of penny and two pence coins were used only once, and in eight per cent of cases, pennies were simply thrown away. In addition, more than 500 million penny and two pence coins were produced every year to make up for the shortfall of pennies taken out of circulation when they were, for example, lost to piggy banks or down the backs of couches. At the other end of the scale, the 50-pound note is rarely used for routine purchases. While there is significant overseas demand for the notes, the perception in Britain is that the 50-pound is used mostly for money- laundering, tax evasion and in illicit transactions. Some shops, fearing a costly mistake with a counterfeit, refuse to accept them.
CANADA SAYS GOODBYE
“The penny is a currency without any currency in Canada,” finance minister Jim Flaherty said in March 2012. “Some Canadians consider the penny more of a nuisance than a useful coin. We often store them in jars, throw them away in water fountains or refuse them as change,” the government of the day said in a budget document. Ottawa said the penny retained only onetwentieth of i ts original purchasing power. It costs 1.6 Canadian cents to produce each one- cent coin and stamping out the penny wou ld save around $ 11 million. At the time, it was estimated that there were 30 billion one- penny coins in circulation in Canada when they were axed. Last year, third- year economics and mathematics student Christina Cheung, from the University of British Columbia, wrote a paper saying grocery stores were cashing in on the demise of the coin. She said grocers were making $ 3.27 million per year from pennyrounding.
FINANCIAL FRIENDS
Advocates for keeping the 50-pound note were few and far between, but champions of the copper-coloured coins were fiercely vocal as soon as the idea of abandoning them was announced. Charities raised concerns about losing pennies, which are almost exactly the size of the American cent, because they rely on them for donations, often collected at shops or on the street. “Certainly cash is still a very significant form of fundraising for charities. It is still where we receive the majority of our donations,” said Andrew O’Brien, director of policy and engagement at the Charity Finance Group. The British news media discussed whether the idea was a “PR disaster
in the making.” Some responses on social media were even more outspoken, with one user claiming that to abolish the one- pence coin would be “to give into inflation and to trash 1,000 years of history.” In fact, the current penny was i ntroduced in 197 1, when Britain began using the decimal system.
HALFPENNY MEASURES
The last time Britain got rid of a coin without replacing it was in 1984, when the halfpenny was removed from circulation.