No new 1p or 2p coins produced last year - MSE News

MisterMotivated

Barring paying for petrol/diesel (which is a rather bizarre quirk that serves no purpose these days other than being a marketing ploy) or buying shares, I can't recall ever buying anything with a price ending in a fraction of a penny.

With petrol, I could live with rounding up the price by up to 0.9p as it's an individual item priced based on volume and not quantity, so the variation will only ever be ~1p. For shares, I don't even know if it's possible to buy them for cash but, again, could live with the rounding up.

It's not that simple for removing 1-9p values from all other transactions though. Imagine you go into Tesco for a loaf, at a time when 10p is the smallest coin value. Given the amount of cash transactions still taking place, I would expect supermarkets would have to round prices up or down (probably up, but let's assume down for prices currently ending 1-4p and up for prices ending 5-9p) to accommodate. Otherwise there will be a lot of awkward conversations at the checkouts when someone buys an 85p loaf and expects 5p change from their 90p. So, the result is paying 5p more than before for your loaf, or any other item in the shop. Now picture going in for your weekly shop. You're not just rounding up/down the total to the nearest 10p, you're potentially paying up to 5p extra for every single item you buy, given that every item will have been repriced under the new structure. Even that might not seem too much of a stretch for most people (let's say around £2.50 extra per shop), but for people on the breadline, it really will make a difference.

masonic

MisterMotivated wrote: »

It's not that simple for removing 1-9p values from all other transactions though. Imagine you go into Tesco for a loaf, at a time when 10p is the smallest coin value. Given the amount of cash transactions still taking place, I would expect supermarkets would have to round prices up or down (probably up, but let's assume down for prices currently ending 1-4p and up for prices ending 5-9p) to accommodate. Otherwise there will be a lot of awkward conversations at the checkouts when someone buys an 85p loaf and expects 5p change from their 90p. So, the result is paying 5p more than before for your loaf, or any other item in the shop. Now picture going in for your weekly shop. You're not just rounding up/down the total to the nearest 10p, you're potentially paying up to 5p extra for every single item you buy, given that every item will have been repriced under the new structure. Even that might not seem too much of a stretch for most people (let's say around £2.50 extra per shop), but for people on the breadline, it really will make a difference.

Since decimalisation in 1971, inflation has made the penny worth less than one tenth a 1971 penny and the tuppence worth 1/7 of a 1971 penny, the 5 p coin worth 1/3 of a 1971 penny, etc.

Such precision wasn't needed back in the 70s and it isn't needed now.

MisterMotivated

masonic wrote: »

Since decimalisation in 1971, inflation has made the penny worth less than one tenth a 1971 penny and the tuppence worth 1/7 of a 1971 penny, the 5 p coin worth 1/3 of a 1971 penny, etc.

Such precision wasn't needed back in the 70s and it isn't needed now.

Inflation and the value of current vs old coins doesn't really come into it. A current 1p coin will still buy you 1p worth of goods at today's prices. There are still innumerable items for sale at prices not ending in 10p (I won't go on about the effect the application of %age interest or discounts would have on prices). Therefore, in a society that still heavily relies on cash, I see no reason why we should remove the means to pay the exact price for those items.

masonic

MisterMotivated wrote: »

Inflation and the value of current vs old coins doesn't really come into it. A current 1p coin will still buy you 1p worth of goods at today's prices.

Inflation only doesn't come into it if you don't understand inflation. The penny, when it was introduced, was worth about 20 p in today's money.

There are still innumerable items for sale at prices not ending in 10p (I won't go on about the effect the application of %age interest or discounts would have on prices). Therefore, in a society that still heavily relies on cash,

Speaking of sales, it has been a common practice for some time for shops to use the last digit of the price of an item to signify their desperation to sell it. The last digit could be dispensed with quite easily and it would only take is back to the situation we were previously in with 10p in todays money being roughly equivalent in value to the old half-penny when it was introduced.

I see no reason why we should remove the means to pay the exact price for those items.

We cannot currently pay the exact price for an item because we round to the nearest penny. Rounding to the nearest 10p is eminently doable, and desirable.

In another 30-40 years, we could scrap pennies entirely and pay for things solely in whole pounds.

MisterMotivated

masonic wrote: »

Inflation only doesn't come into it if you don't understand inflation. The penny, when it was introduced, was worth about 20 p in today's money.

That doesn't mean that the minimum possible cost of any item on sale today is 20p, or that all current prices should be multiples of 20p.

Besides, prices have increased at different rates for different items, so your 1p when introduced might only be worth 7p in today's money if used to buy a loaf of bread, for example.

Speaking of sales, it has been a common practice for some time for shops to use the last digit of the price of an item to signify their desperation to sell it.

Even if that were true 100% of the time, it doesn't change the fact that all such prices would have to be adjusted, which would impact everyone, including the poorest in society, to some degree.

We cannot currently pay the exact price for an item because we round to the nearest penny.

So 100 pennies does not allow enough precision to accurately calculate the exact price of milk, for example, but it provides too much precision when it comes to deciding on the sale price? Therefore, the milk costing precisely £1.14638741456 to produce, but which is rounded up to £1.15, should just be rounded up by around 4% to £1.20?

Obviously there has to be a minimum unit used as a basis for pricing, which is generally accepted as 1p (though some individual items may be sub-1p and sold in bulk, such as drawing pins, sheets of toilet paper or grains of rice), given that it allows any price to be paid in cash using our existing coinage.

Anyway, for clarity, let me rephrase my previous comment.

I see no reason why we should remove the means to pay the exact price advertised by the seller based on rounding to the nearest penny for any item.

Based on your arguments, you might as well reduce the value of everything, including all coins and banknotes, to 1/10 of their current value. 10p today could be replaced by 1p tomorrow, a £200,000 house could be revalued at £20,000 and so on. At least that policy would remove the need for constant rounding up on transactions with values that end in any number other than 0. Then, a tin of beans being rounded up from the new 4.5p to 5p wouldn't seem so bad. Except that it's still more than a 10% cost increase. :rotfl:

In another 30-40 years, we could scrap pennies entirely and pay for things solely in whole pounds.

Why whole pounds? They'll seem pointless; we might as well just round things to the nearest £10, then we can get rid of £1 coins altogether.

Ultimately, removing the ability to pay amounts to the individual penny, in a system where there is always the possibility of prices ending in individual pennies - unless additional calculations are applied - just seems like an unnecessarily high amount of work in order to get rid of some coins.

Zero_Sum

Flobberchops wrote: »

It's a non-story, timed to sound like it's related to last year's debate on whether to scrap circulating coppers. It's actually completely unrelated; the mundane truth is that mintage is controlled by the Treasury based on demand from cash centres, and for the exact same reason barely any 10ps and no £2 coins are being circulated this year.

The question of whether we *need* coppers is a different kettle of fish entirely. I personally feel leery about the prospect of having a system of currency which is based on 100 subdivisions of the Pound, but no physical coin to represent that. It's far from uncharted territory though as many other currencies have successfully demonetised smaller denominations, including Canada, New Zealand, and several Scandinavian and Eurozone countries (USA stubbornly refuses to reform its currency, true to form).

I find the claim that most copper coins are only spent once, a difficult one to swallow. It boggles my mind that people would throw good money in the bin, but apparently that happens. Still, any pennies and other small denominations that are consigned to piggy banks or charity pots will eventually be deposited and re-enter the cash cycle, no? It could be used as an argument for not requiring *as much* circulating copper coinage, but as long as people use cash and receive exact change, they will be necessary.

I know that cash is being used less & less, but the lack of minting £2 coins is a strange one, as there really is a shortage of them. I know a few people who save them (including my OH) which is possibly talking loads out of circulation
When I go to the local market for fruit & veg, every time i take a peek in the till, the number of £2 coins in there is in single figures. All other coins & notes the sections are full.

Zero_Sum

masonic wrote: »

Inflation only doesn't come into it if you don't understand inflation. The penny, when it was introduced, was worth about 20 p in today's money.


Speaking of sales, it has been a common practice for some time for shops to use the last digit of the price of an item to signify their desperation to sell it. The last digit could be dispensed with quite easily and it would only take is back to the situation we were previously in with 10p in todays money being roughly equivalent in value to the old half-penny when it was introduced.


We cannot currently pay the exact price for an item because we round to the nearest penny. Rounding to the nearest 10p is eminently doable, and desirable.

In another 30-40 years, we could scrap pennies entirely and pay for things solely in whole pounds.

Personally id feel uncomfortable having a decimal system without the single unit coin. You could just stop minting copper coins, and gradually phasing out. So that if the retailer doesnt have the change then the cost is rounded up to nearest 5p. This is done in a lot of Europe. I wouldnt go as high as 10p, id still keep the 5p.

And with use of cash declining, there should be enough copper in circulation to get by for the next decade or so anyway.

eskbanker

MisterMotivated wrote: »

Imagine you go into Tesco for a loaf....

[...]

for people on the breadline, it really will make a difference.

:rotfl:

It'll make a difference for those who really knead the dough....

Zero_Sum

eskbanker wrote: »

:rotfl:

It'll make a difference for those who really knead the dough....

Or those on the breadline

masonic

MisterMotivated wrote: »

Based on your arguments, you might as well reduce the value of everything, including all coins and banknotes, to 1/10 of their current value. 10p today could be replaced by 1p tomorrow, a £200,000 house could be revalued at £20,000 and so on. At least that policy would remove the need for constant rounding up on transactions with values that end in any number other than 0.

Great idea. Although the money in our pocket becoming 10 times more valuable overnight could create a few issues.

The most practical solution is to simply withdraw the low denomination coins. Many countries have done this, see https://en.wikipedia.org/wiki/Withdrawal_of_low-denomination_coins

Why whole pounds? They'll seem pointless; we might as well just round things to the nearest £10, then we can get rid of £1 coins altogether.

This too will come in time. For a speeded up version, just look at the economy of Zimbabwe a few years ago during its hyperinflation phase.

In 30-40 years, when your 4 pints of milk that costed precisely £1.14638741456 in todays money costs exactly £11.4638741456 to produce, rounding up to £12 doesn't seem excessive, as the shop selling it and the producer should be making a profit on the sale. This would amount to 4.7% shared between them. If I'm still around in that future (and actually drank milk), I'd happily pay £13 if that made the industry a little less cut-throat than it is today.

In 100 years or so, when your 4 pints of milk that costed precisely £1.14638741456 in todays money costs exactly £114.638741456 to produce, rounding up to £120 is exactly equivalent to the above.

Ultimately, removing the ability to pay amounts to the individual penny, in a system where there is always the possibility of prices ending in individual pennies - unless additional calculations are applied - just seems like an unnecessarily high amount of work in order to get rid of some coins.

There is no need to do a lot of work getting rid of them, all that needs to be done is to stop minting them and withdraw their status as legal tender.