The Weekly Debate
FirstNews
Issue 471
26th June – 2nd July 2015
The Dilemma Should 1p and 2p coins be abolished in the UK?
THE STORY
Scrap small coins?
One and two cent coins may be scrapped in Ireland.
The Irish Government is meeting to discuss the idea
after a trial run in Wexford town. During the trial all
buying and selling was rounded up or down to the
nearest five cents. This meant that the smaller coins
weren’t needed any more. One cent coins cost 1.7
cents each to make, so they cost more than they’re
worth! The Central Bank of Ireland thinks the whole
country should follow the rounding system.
BACKGROUND
Opinion
denomination)
but they need to
“Although cash will not disappear in our lifetime,
be replaced very
the continuing payments revolution will make it
regularly. This is
an ever smaller part of our spending.”
because people
Mike Bowman of the Payments Council
don’t want to carry
them around as
they are heavy and
they can’t use them to buy anything
or put them in machines – so they
dump them in a jar at home. What’s
more, a survey showed that one in
five people aged 18 to 24 see the
The trial was hugely successful
coins as worthless and just throw
and results showed 100% of
them in the bin! This means that
retailers and 85% of consumers
hundreds of these small coins are
in Wexford thought that ditching
taken out of circulation every day
the small coins was a good idea
and then, because shops need lots
and that the rest of Ireland should
of them to give change, more have
do the same. It looks like the Irish
to be produced.
MILLION one and two cent coins
Government agrees and here’s
in circulation in Ireland at any one
why…
But the bizarre thing is that
time… well, you do the maths! And
making
each
coin
costs
MORE
it is not only producing the coins
The Central Bank of Ireland
than
the
coin
is
worth!
So
a
two
that is pricey – the government
mints a lot of one and two cents
cent
costs
more
than
two
cents
to
and the retailers also have to splash
coins (more than any other
mint, and more
out on storing, transporting and
specifically a
counting of them, too. Add to this
one cent coin
the fact that you can’t buy much
costs about 1.7
with coins of small denominations
“It seems senseless that we are bending over
cents to mint!
anymore and you can understand
backwards to produce these coins given the cost of
Doesn’t sound
the Irish Government’s way of
production costs more than their stored value.”
like much,
thinking. The UK got rid of the 1/2p
does it? But if
coin back in 1984, but now should
Catherine Noone of Fine Gael political party in the
Republic of Ireland
you think that
it follow Ireland and give 1p and 2p
there are 30
coins the heave-ho, too?
The Irish coin experiment was
called the ‘rounding trial’ and it took
place over nine weeks in 2013 in
one town in Ireland called Wexford.
The Republic of Ireland is part of
the European Union and, unlike
the UK, has the euro as its currency
which means the coins that may be
abolished as a result of the trial are
one and two cent coins, rather than
1p and 2p coins.
Opinion
The Weekly Debate
FirstNews
Issue 471
26th June–2nd July 2015
The Dilemma Should 1p and 2p coins be abolished in the UK?
AT THE TILL
In the coin trial in Ireland, individual items stayed
at the same price but the final bill was rounded to
the nearest five cents. So if your final bill came to,
say, €3.54, the cashier would round it up to €3.55. If it
came to €3.52, they would round it down to €3.50. The
smallest coin needed would be 5 cents. And, perhaps
surprisingly, retailers did not tweak prices so that they
could round up and make more money – just as many
dropped the price as increased it!
A LITTLE PIECE OF HISTORY
Our 1p coin
ably
would prob as
just end up !
l
scrap meta
The 1p and 2p coins (along
with the 1/2p coin) were
introduced to Britain on 15
February 1971 as part of its
new currency system called
‘decimalisation’. The system,
which we still use today, is
based on the pound being
divided into 100 pence. It was a
much-needed change – up until
then we had pounds, shillings
and pence, with 12 pennies
to the shilling, 20 shillings to
the pound and 240 pence to
the pound. The system was
based on that of the Romans
and meant that popping to the
shops required some rather
tricky mental maths!
AROUND THE WORLD
Opinion
The Irish Republic would not be
the first country to kill off its smallest
units of currency – Sweden ditched
its equivalent of the penny back in
1972 and the Netherlands, Finland,
Norway, Denmark, Hungary, France and
Spain are also among those who have
removed small denomination coins from
circulation, with Belgium about to follow.
And it’s not just happening in Europe
– elsewhere in the world, Israel, Brazil,
Australia, New Zealand and Canada have
all gone for it too.
“There aren’t a great deal more things that are
perennial, things that we live with every day,
expressions of what we think the nation is. The
coinage is one of them.”
Spokesman for the Royal Mint Museum
The Weekly Debate
FirstNews
Issue 471
26th June–2nd July 2015
The Dilemma Should 1p and 2p coins be abolished in the UK?
WHAT HAPPENS TO THE OBSOLETE COINS?
If the scheme goes ahead in
Ireland, the production of the coins
would stop but existing ones would
remain legal tender for a while –
which means they could still be used
to buy things. But once they were
phased out completely, what would
happen to all those old coins? In
Canada, charities launched penny
drives so that people donated all
their soon-to-be obsolete coins
to good causes. Meanwhile, in
Australia, the defunct one and two
cent coins were melted down and
transformed into bronze medals for
the 2000 Sydney Olympic Games!
There are those who hope that if our
1p coin got withdrawn it would have
collector’s value, but don’t rush off
to empty your money box just yet –
they are not old enough and there
are just too many of them. They
would probably just end up as scrap
metal!
Opinion
“We have had to replace those coins going out of circulation
– we have issued over €30 million worth of one and two cent
coins since the euro was introduced in 2001.”
Ronnie O’Toole from the Central Bank of Ireland
DO WE NEED ANY
HARD CASH ANY
MORE?
With credit and debit cards,
there is less and less need for
coins or notes. It is quicker and
more convenient to pay by card
and it is now considered an
acceptable way to make even
the smallest purchase. At the
moment, cash is still widely
used to buy low-value items
but overall more is spent on
cards than with cash. However,
even plastic is looking a bit
old-fashioned now – it has
been estimated that contactless
payments using smartphones
in the UK could add up to
more than £1.2bn by 2020 with
about 60% of us Brits using the
method to make a purchase
at least once a week. Is it just a
matter of time before we live in
a totally cashless society?
FACT BOX
When they were
introduced to
Britain in 1971, the
1p and 2p coins
were made of
bronze but in 1992,
because the price of
metals had gone up,
they were changed
to copper-plated
steel. The steel
content makes them
magnetic!
In New Zealand,
where one, two and
five cent coins have
all been scrapped,
some shops give
small change in
sweets instead!
When the British
2p coin was brought
in 44 years ago, it
was about enough
to buy you a Mars
bar – ah, those were
the days!
Most vending
machines do not
take copper coins
any more – they just
spit them back at
you!
The old-fashioned
penny games in
seaside arcades only
take 2p coins now.
Children used
to be able to buy
penny sweets (like
cola bottles and
flying saucers) for
1p but now they cost
2p, 3p or 5p each,
or else are sold by
weight.
The debate about
scrapping 1p coins
hit the headlines
again recently
because the 99p
Stores chain has
just been sold to
Poundland. Even
they are rounding
up!
The Weekly Debate
FirstNews
Issue 471
26th June–2nd July 2015
The Dilemma Should 1p and 2p coins be abolished in the UK?
VIEWPOINTS
Opinion
“From a retailing point of view it was very simple.
People got used to it very quickly.”
Madeleine Quirke, CEO of Wexford Chamber of
Commerce, on the coin trial in Ireland
Should 1p and 2p coins be
abolished in the UK?
The coins cost too much to make.
They are practically worthless – you can’t
buy anything with 1p or 2p any more.
All that loose change is heavy to carry
around and fiddly to use.
People just hoard them at home which
takes them out of circulation and means
that more have to be minted regularly.
It is expensive for retailers to get enough
of the coins to their shops, count them,
take them to the bank etc.
Opinion
“We mint them, retailers give them to consumers
and consumers put them in jam jars.”
Ronnie O’Toole from the Central Bank of Ireland
Should 1p and 2p coins be
abolished in the UK?
Rounding to the nearest 5p could mean
that shops round UP more often than
they round down so that everything
would cost a bit more.
Like flags, stamps and banknotes, coins
are part of Britain’s history and national
identity, and we should protect them.
Charities would lose out because people
often put their 1p and 2p coins into
collection boxes near the till.
Having small coins helps children
understand how money works and how
to add it up.
The Weekly Debate
FirstNews
Issue 471
26th June–2nd July 2015
The Dilemma Should 1p and 2p coins be abolished in the UK?
Glossary
Retailer – an individual or shop that sells goods to
Discussion Questions
the public
Consumer – a person who buys goods or uses
services
To mint – to make coins by stamping metal
Denomination – a unit of value, particularly of
Discussion Questions
Decimal system – a number system based on
1. If you were given a 1p or 2p coin as
change, would you throw it in the bin?
Decimalization – changing to the decimal system
2. If you dropped a 1p or 2p coin would
you bother to pick it up?
money
simple multiples of 10
Legal tender – the money that is officially used in a
country
Obsolete – no longer used
Defunct – no longer existing or working properly
Contactless payment – giving money for
something using wireless technology
Payments Council – a UK organisation of financial
institutions
Perennial – lasting a very long time
The Royal Mint – the government-owned
company permitted to mint UK coins
3. Do you know what the designs are on
the two sides of the 1p and 2p coins?
4. Do you think coins are an important
part of the identity of a country?
5. Do you think people would give more
or less money to charity if the small
coins were withdrawn?
6. What could be done to mint coins
more cheaply?
7. Is it important for children to handle
coins?
8. Is a cashless society a good or bad
idea?
9. Is it inevitable?
10.Do you think that people are wiser
with money if they are handing over
cash rather than a credit card?
11.What do you think should be done
with obsolete coins?
12.Should 1p and 2p coins be abolished
in the UK?