Have you heard the buzz about 1p and 2p coins potentially disappearing from our daily lives? According to recent reports, Brits might soon see a rise in prices for everyday items if these small denominations are phased out.
This comes after news that the Treasury has no plans to mint more copper coins in the foreseeable future.
In fact, the Royal Mint hasn’t been tasked with producing any new coins this year, a historic first.
Former Conservative pensions minister Ros Altmann has raised alarms that if 1p and 2p coins are removed from circulation, the cost of basic items could be rounded up to the nearest pound.
This could particularly impact vulnerable older people and those with low incomes who rely on cash.
Altmann points out that many prices are set just under a pound to appear more attractive, but without these coins, customers might end up paying a full pound, which could be a significant burden for cash users.
The Federation of Small Businesses (FSB) is also concerned about the potential fallout.
Craig Beaumont from the FSB notes that, similar to the halfpenny coin, the lowest denomination coins might eventually be phased out due to inflation.
He adds that the metal content of these coins has already been adjusted because their value was less than the cost of producing them, hinting at future changes.
Despite these concerns, the Treasury has denied any plans to completely eliminate 1p and 2p coins.
A spokesperson from the Treasury mentioned they are confident that there are enough coins in circulation without needing to mint more this year.
However, as Britain becomes increasingly cashless—cash payments made up just 12% of all transactions last year—officials are exploring various scenarios for the future of these coins.
Minting History and Changes
The Royal Mint’s figures reveal that no new 2p coins have been produced since 2021, when 118 million were minted, and the last batch of 1p coins was made in 2022, with 30 million produced.
Despite this, the Royal Mint reassures that they are working with the Treasury to manage demand and have a buffer stock to maintain supply.
Historically, changes have been made to the metal composition of these coins due to rising material costs, shifting from an alloy of copper, tin, and zinc to copper-plated steel since 1992.
Future Discussions
As the debate continues, proposals about the fate of these small coins are expected to be discussed with ministers.
The potential scrapping of 1p and 2p coins would be a significant shift, reminiscent of when the halfpenny coin was withdrawn in 1984 by then Chancellor Nigel Lawson due to its production costs outweighing its value.
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