March 13, 2014

Horse 1635 - Should Britain Get Rid Of The Penny?

Australia got rid of 1c and 2c coins in 1992.
New Zealand rid of 1c and 2c coins in 1989 and 5c coins in 2006.
Canada got rid of 1c coins in 2013.
Japan still uses ¥1 coins.
The United States still uses 1c coins.
When it comes to Eurocents, some countries do and some countries do not use them

The question then about Britain geting rid of the Penny is mainly a matter of utility.

Following a series of Tweets, I sent an email to the Royal Mint in Llantrisant with regards how much it costs to make a 1p coin. They didn't tell me but sent this link:
The cost of producing United Kingdom coins varies according to the specification of each denomination. The value of metal in each coin accounts for a large part of the total cost, but it is also necessary to take into consideration the broader costs of the manufacturing process. These vary according to the complexity of the coin.
The Royal Mint does not reveal exactly how much it costs to make specific coins as such information could be used to its competitors' advantage.

I also found elsewhere on the site, this:
All new five pence and ten pence coins have been made from nickel-plated steel since January 2012 and to date 330 million nickel-plated steel coins have been issued into circulation.
This programme will recover the metal alloy contained in the old specification coins. The value of the metal in both the cupronickel and nickel-plated steel coins is still less than their face value.

The Penny in the UK has been made from copper plated steel since September 1992. The Royal Mint it seems is quite forward thinking when it comes to producing coin of the realm. I would tend to suggest that it probably costs less than 1p to make a 1p coin or else the Royal Mint would have to answer to the Treasury.

I also note that in the past coins such as the Farthing ended in 1961 and the Half Penny in 1984 and this is also useful.
If you assume that general inflation runs at 4% (which is a good estimate since the end of the Roman Republic) and assign an index of 100 to the year 1961 when the Farthing was dropped, then the logical point at which coins should be demonetised is the point at which they too fall below that same point.
If a Farthing is indexed at 100, then a Half Penny would be 200, a Penny 400 and the Two Pence 800.

the decimal Farthing could have been logically dropped in 1982.
- the decimal Half Penny should have been logically dropped in 1999. (instead of 1984)
- the decimal Penny should be logically dropped in 2016.
- the decimal Two Pence should be logically dropped in 2033.

You can check my workings here:

Assuming that there's a bit of lag in legislation to remove the Penny, then it is going to be removed within five years. There's even been calls to drop the penny have been made by many members of the press:

Unlike the United States which for some hitherto unknown reason, still wants to keep their one cent coin, Britain which is far more dispassionate on the subject, would probably quietly kill the penny without much of a fight; the same way as it did with the Half Penny.

Should Britain Get Rid Of The Penny? Not quite yet but it wouldn't hurt anyone and no-one would mind either way and that's the most British answer of all.

1 comment:

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