In September, 52% of you were in favour of scrapping the 1p coin following our MSE poll. In fact, 24% of MoneySavers wanted to abolish the 2p and 5p coins too. It got me thinking – with most MoneySavers no longer fond of the penny, is it time it was scrapped?
In a host of countries, the penny (or ‘cent’ equivalent) has already been binned. There hasn’t been a one-cent coin in Australia for nearly 25 years and the 10-cent coin has been the lowest denomination coin in New Zealand since 2006. Closer to home, in Europe, you’d be hard pressed to find a retailer in Finland, the Netherlands or the Republic of Ireland issuing change in one-cent coins – though they remain legal tender.
So what are the arguments for keeping the penny here in the UK?
Some pro-penny campaigners waltz around the idea of keeping the coin as a matter of tradition. The penny has been with us for over a thousand years so it’s hard to dispute its historical significance.
Some would counter this argument however, and suggest that the UK has been here before, scrapping the historic halfpenny in 1984 (and a host of others during decimalisation). The reasons given were that the halfpenny coin was simply worthless, too fiddly in size and costing more to produce than its monetary value. The Royal Mint won’t disclose how much the current 1p coin costs to mint, though it’s unlikely it makes any profit in doing so.
Some champions of the penny suggest that having the coin in circulation makes it easier to save and to donate to charity. Yet this argument suggests that having a jar-full of pennies is desirable. For many, waiting for copper change at the tills or collecting coins and then counting them isn’t worth the time or effort. The same could be said for charities which have to employ staff or volunteers to count increasingly worthless coinage. If the penny coin were abolished, it could even be argued that charity boxes would be full of 2p and 5p coins instead. Winners all round perhaps?
Some say scrapping copper coins could lead to increased inflation and a national rounding-up of retail prices. However, the adoption of ‘Swedish rounding’ policies in penniless economies seems a fair solution to this; £1.21 becomes £1.20 and £1.24 becomes £1.25 – but that would only work if the 2p coin were killed off too.
The effects on potential inflation are harder to determine, though current rising inflation will continue to erode the value of the 1p regardless.
Whatever your view, it’s important to note that during decimalisation in 1971, a pint of milk cost 6p and a pint of beer 16p – so the penny was obviously worth picking up from the floor back then.
Nowadays, with an increasing number of people opting for alternative methods of payment, such as contactless and online spending, it is surely a matter of when, not if, the penny will finally be scrapped.
Let us know which side of the coin you support by leaving your comments below.