Pennies Aren't From Heaven - New King Charles 1p Coin ‘a £4m Waste Of Money'

11th October 2022

The home delivery expert ParcelHero says new King Charles III 1p coins would cost a mint to produce - and 60% are only used once before vanishing down the sofa or into forgotten piggy banks.

The home delivery expert ParcelHero says minting a new 1p coin would be a literal waste of money. The Royal Mint has already unveiled its first coins featuring King Charles III's head: a commemorative £5 coin and a 50p piece that will enter general circulation. ParcelHero says that these should not be followed by proposed new 1p coins.

ParcelHero’s Head of Consumer Research, David Jinks M.I.L.T., who was formerly the Editor of ‘British Coins Market Values’, says: ‘Coining a new 1p piece would be throwing good money after bad. A total of over 1.5 billion 1p coins had to be minted ready for decimalisation in February 1971. Imagine the cost of eventually replacing all of them.

‘Of course, that’s not going to happen all at once, but the Royal Mint has said the existing Queen’s head coins "will be replaced over time as they become damaged or worn and to meet demand for additional coins". The most recent major minting of 1p coins was in 2015, when the latest design was introduced bearing a new portrait of the Queen designed by Jody Clark. A total of 418,201,016 of these were produced that year.

‘The recent fall of the pound against the US dollar means a rise in the cost of base metals. The cost of producing the 1p coin must now be nearing parity with its face value. Every coin uses 3.56g of steel and copper-plate. It’s likely that the production cost of the coin, in terms of base metals and energy used, is nearing 1p each. That’s a £4m waste of money even if there is only a relatively small new run mirroring the 2015 mintage.

‘It's not as if the 1p coin is needed any more. The UK’s Royal Mint, the government-owned company which produces coins for the country, revealed in 2016 that 60% of 1p and 2p coins are used only once, while 8% of pennies are simply thrown away. The rise of e-commerce and increased use of credit cards and payment Apps, set against a background of increasing inflation, has made the 1p coin obsolete.

‘There’s little doubt the penny should have followed the old half pence into oblivion years ago. The half pence was scrapped in 1984; ironically, at the time of its withdrawal it was already worth the equivalent of 1.7p today.

‘The latest 1p coins, introduced in 2015, were already controversial. That same year, the then-Chancellor, George Osbourne, had announced plans to axe them entirely, before giving way to a sentimental backlash. Today, the 1p piece is worth even less and costs even more to produce.

‘Indeed, such is the expense of producing the 1p piece, that as long ago as 1992 its whole manufacturing process had to be scrapped. From its introduction in 1971 until 1992, the coin was made from bronze, after which time it was produced from copper-plated steel. That’s because the bronze the earlier version was made from was already worth more than the face value of the coin. In fact, a bronze 1p coin is today worth 1.66p. If it wasn’t illegal, you’d be wealthier melting them down for their base metal value than spending them. It’s easy to tell a bronze 1p from a copper-plated steel one as the latter are magnetic, whereas the earlier ones aren’t.

‘In 2018, the Royal Mint declined to tell “The Times” newspaper how much it cost to produce UK coins, only saying “in general terms” the cost of making them was “less than their face value”. At this time of rising inflation, it’s very doubtful that this is still true of the 1p coin.

‘The Treasury argues that doing away with 1p coins could raise inflation, as stores will round prices up the nearest 2p or 5p. However, it made the same argument back in 1984 with the demise of the 1/2p and there was no such rise.

‘The call to axe plans for a new penny is not a criticism of the distinctive new official effigy of King Charles III, with his profile following tradition in facing the opposite way to the previous monarch. However, Norway, Israel, New Zealand, Brazil, Australia and Switzerland have all recently phased out their low-value coins, and it’s time the UK cashed in.

‘For more information about the changing nature of retail, from the demise of cash and cheques to the environmental damage caused by paper receipts, see ParcelHero’s study at https://www.parcelhero.com/research/study-stamping-out-receipts