Royal Mint suspends production of coppers
Despite assurances coppers are here to stay, production is halted as there are more than enough in circulation
The Royal Mint struck no new coppers last year for the first time in decades, after it ruled that there are more than enough of them in circulation already. It was the first time since 1972 that no new pennies were struck and the first time since 1984 that no new 2p coins were produced. There are around 10.5billion 1ps in circulation, plus 6.3billion 2ps. There have been doubts over the future of copper coins, although the Government has said there are no plans to scrap them.
WHEN the Bank of England suggested copper coins should be scrapped, the response was outrage.
But despite the Government’s pledge that 1p and 2p coins are here to stay, the Treasury ordered no new coppers last year for the first time in decades, after it ruled that there were more than enough of them already.
It was the first time since 1972 that no new 1p coins were struck for circulation and the first time since 1984 that no new 2p coins were produced.
The Treasury said it did not ask the Royal Mint to produce any as there were “already enough”.
The death of the copper seemed to be nigh when, in his March 2018 spring statement, Philip Hammond, the former chancellor, called for views on the mix of notes and coins in circulation. “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 in circulation, does not contribute to an efficient or cost-effective cash cycle,” the Treasury consultation document stated.
In August 2018, the Bank of England also seemed to support scrapping 1ps and 2ps. A blog by two of the bank’s economists said: “As inflation steadily erodes the purchasing power of low denomination coinage, the case for its removal becomes stronger.”
However, following anger among the public, MPS and the charity sector, the Government was forced to clarify and said there were “no proposals” to scrap the penny.
Such was the level of concern, that Mr Hammond felt the need to reconfirm in May this year that coppers were not going to be scrapped.
There are around 10.5billion 1ps in circulation, plus 6.3billion 2ps sitting in wallets, tills, jars and piggy banks.
Usually, more than 500 million 1p and 2p coins are produced every year, but the Treasury has previously said around 8 per cent are thrown away. The Treasury also announced no £2 coins were produced last year, as there were already sufficient numbers in circulation at around 494million.
A Treasury spokesman said: “We didn’t ask the Mint to issue any £2 or 1p/2p coins this past year because there are already enough in circulation. The amount we ask the Royal Mint to produce depends on demand.”
In May when Mr Hammond safeguarded the future of the 1p and 2p coin, the Treasury also announced plans to lead a group to plan, coordinate and safeguard access to cash for those who need it, amid concerns over the future of high street banks and free-to-use cashpoints.
Cash use has fallen sharply in recent years as the popularity of contactless payments has surged.
Reduced demand for coins means banks may not need to order as many new ones. However, around 2.2million people are estimated to be almost entirely reliant on cash, with the elderly, the vulnerable and those in rural communities likely to be hardest hit by any decline in cash availability.