The question arose once again this month about whether the two smallest coin denominations should be discontinued in the United Kingdom. This was today put to rest at least for the foreseeable future by British Finance Minister Philip Hammond. The announcement, made during the Verdict of the Pyx ceremony in London, where he reiterated plans by the treasury to safeguard the future of cash ranging from copper coins to larger banknotes.
Despite the fact that the penny and two-pence coins are, for the most, part rarely used in cash transactions, Mr. Hammond — who is both the chancellor of the Exchequer (or finance minister) as well as the official mintmaster — reiterated that there will be no changes to the mix of coins and banknotes, with all denominations from the penny to the £50 banknote remaining in circulation.
The current versions of the penny and two-pence pieces were first introduced into circulation in February 1971 when the United Kingdom transitioned to a decimal currency. These two denominations are now minted in copper-plated steel, beginning in 1993, when their bronze composite was discontinued. It is estimated that six out of 10 penny coins are used only once before being discarded in jars by the public, and astonishingly, one in 12 are actually thrown out.
In 2018, it had been suggested that the two lowest coin values were to be discontinued when a leaked treasury memo suggested this could occur in the near future. The rumour was soon quashed when the chancellor stepped in and confirmed the coins would not be discontinued and the £50 banknote, the highest value in circulation, would undergo a redesign and be printed on a polymer substrate following those of the £5, £10, and in 2020, the £20 denomination.
At that time, he also called for an independent review and consultation to determine how cash is used in the United Kingdom, which determined that more than 2.2 million Britons are more reliant on cash transactions than electronic payments, which is more prevalent in rural areas of the country. A new working group will be chaired by the treasury who will set up a strategy and coordinate work to support nationwide cash access to help safeguard physical money for those who need it, under plans being outlined by the chancellor.
In terms of using penny coins in transactions, the legal limit to pay for goods or services is up to 20-pence, but many businesses complain that processing the two smaller coin denominations is both too costly and too expensive to transport small denominations.
Presently, the Royal Mint produces up to 240 million penny coins and up to 17 million two-pence coins. Although countries like Australia, Canada, Sweden, and other countries within the euro-zone have either discontinued the production of their one and two-cent coins, or have discouraged their use due to their low buying power, the chancellor ended his comments by stating the penny and two-pence denomination coins will be used in cash transactions “for years to come.”.