In a surprising turn of events, the Royal Mint has amassed a substantial surplus of 1p and 2p coins across Britain, sparking discussions about the future of these copper denominations. Approximately 260 million excess copper coins, valued at £4 million, are currently stored indefinitely in cash centers nationwide.
This surplus includes roughly two-thirds of all 2p coins and over half of 1p coins minted in the UK. The volume of stored coins is so vast that it surpasses the amount in circulation, occupying more than 2,000 washing machine-sized cages, each weighing a tonne.
Usage patterns of these small denominations have shifted dramatically in recent years. Surveys indicate that over 50% of 1p and 2p coins enter circulation only once before being stored or discarded. Remarkably, one in twelve copper coins reportedly ends up in the bin.
The Royal Mint, Britain's official coin producer with a history spanning over 1,100 years, has not recycled or melted down surplus coins since closing its smelting facility more than a decade ago. Unlike the Bank of England, which exchanges damaged banknotes, the Royal Mint only accepts damaged coins collected by banks.
Minting trends have seen a significant decline. In 2000, over a billion pennies were minted, contrasting sharply with recent years. In 2022, only 30 million 1p coins were produced, with none minted in 2023. The last 2p coins were struck in 2021.
The Treasury, responsible for UK monetary policy, has not instructed the Royal Mint to produce any coins this year. Despite this, the government maintains its stance of "no plans" to alter the current mix of UK coins, estimated at 27 billion in circulation.
"The industry is committed to the sustained use of cash. However, we really need to make sure that we have the right type of notes and coins that people want to use. And we should be thinking about how we might recycle some of the current coins in circulation."
Previous chancellors have contemplated scrapping copper coins. In 2018, Philip Hammond initiated a consultation on the coin mix, labeling copper coins as "obsolete". Similarly, George Osborne considered eliminating these denominations but was overruled by former Prime Minister David Cameron.
Proponents of retaining copper coins argue that their removal could lead to price increases, as retailers might round up to the nearest 5p. Additionally, cash remains the second most popular payment method after debit cards, with an estimated 3 million people still relying on it.
The penny, first produced in the 8th century, holds the distinction of being the oldest British denomination still in use today. As the UK grapples with this copper coin conundrum, the balance between tradition, practicality, and economic efficiency remains a subject of ongoing debate.