A proposal to scrap the 1p coin has sparked fury among Britons and has been described as “disastrous” amid concerns of the impact of inflation. The Isle of Man has announced it was phasing out the coins, making it the first part of the British Isles to do so.
Last week, the Treasury of the crown dependency confirmed it will no longer produce 1p or 2p coins due to the changing nature of the economy. A move to a more cashless society and higher manufacturing costs is putting pennies in the firing line but coin collectors are reminding the Government of the consequences of doing so.
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Consumers are worried about the impact of cash rounding on their shopping bill
According to the Isle of Man’s Treasury Minister, high production and storage costs contributed to the territory’s decision.
Dr Alex Allinson, the Isle of Man’s Treasury Minister, explained: “Part of it is the overall move towards a cashless society.
“Part of it is just the economics — that to make a 1p coin now costs more than a 1p coin is worth. Even the 5p pieces, we calculate now that each one is about 20p.
“It is getting more and more expensive to produce currency. We’ve also got significant quantities in storage in various banks, which has an extra cost.”
According to Dr Allinson, the majority of businesses on the island do not believe the decision would exacerbate inflation but “certainly the public perception is that it would do”.
Coppers will still be considered legal tender on the island in the financial transaction of goods and services.
However, the Government has asked businesses to round prices to the nearest 5p with there being an expectation of a penny shortage in the future.
The Economist has urged the UK Government to consider scrapping the penny altogether, noting that the 1p coin is now worth less than a tenth of its original value since its introduction in 1971.
The 1p coin could be scrapped in the future
Commenters on the Chance Checker website, which is a forum for many coin collectors warned that businesses, consumers and charities could be adversely affected. One commenter named Clive said: “If they are phasing out the little coins, how long before the 5p disappears too?”
Richard Jarvis added: “I don’t feel the UK should discontinue the copper coins. It would be disastrous for seaside amusements.” Commenter Lynne Cadman voiced her concern over how cash rounding will be implemented and how it could hike up bills.
She explained: “I would be concerned that many businesses would round up rather than down which would increase shopping bills on food and household essentials significantly.”
Kate Morgan, who managed the community blog, shared: “You can’t deny that cash usage has significantly decreased in the last 10 years, and especially so since the pandemic, with some establishments even refusing cash payments, so there is generally less need for cash and small change.
“However I personally think that the joy of coin collecting cannot be replicated with digital payments, and it would be a real shame to lose any of our definitive currency.”