Twelve sides to every coin: Q and A on the new £1
The new £1 will be the first time the circle of copper, zinc and nickel will get a makeover since it replaced the one pound banknote in 1983. But is it a case of penny wise pound foolish?
The Treasury announced shortly before the March budget of 2013 that it was bringing in a new design for a £1 coin. To be introduced in 2017, the coin will have a bi-metallic structure, like the current £2, will be 12 sided and will include the Royal Mint’s new secure technology. But what’s the point? And is it really worth it? Channel 4 News set out to find out.
Why bother?
The Treasury lists many reasons why it is time to upgrade the £1 to a newer model: at 31 years, it’s the oldest coin in circulation. Even the humble five and ten pence pieces have been revamped in this time, and the coin’s technology “is no longer suitable for a coin of its value, leaving it vulnerable to ever more sophisticated counterfeiters”.
But whatever the practicalities of it, there is no denying that the pound coin has immense symbolic value which the Tories will be keen to capitalise on.
The £1 is the most counterfeited of all currency, according to official figures, though we don’t know how many coins under a pound are counterfeited as the Royal Mint doesn’t collect that number. In October 2007, about two per cent of £1 coins were fake; that had risen to about three per cent by November. There are about 45m fake £1 coins in circulation, according to the Royal Mint.
Compare that with fake banknotes. Each one may be worth much more, but counterfeiters are not as prolific when it comes to paper money. During 2013, a total of 680,000 fake banknotes were taken out of circulation by the Bank of England; fake £20 notes made up for the bulk of these (416,000). That was a counterfeit rate, of all banknotes, of 0.00022 per cent.
There are about 45m fake £1 coins in circulation, according to the Royal Mint
Of arguably equal, if not greater, value, is the sense of ownership over the currency the Conservatives will get from being able to say that they refashioned it altogether, and in their own image. What better way to show the party is in command over the economy?
It is the pound sterling, the cornerstone of the economy, an emblem of national pride, and it works well in a myriad of everyday phrases. Hence, in 1997, why Tony Blair was so quick to declare: “I love the pound.”
Whose idea was it to make it 12-sided?
There is one man much of this points back to, and that’s the chancellor, George Osborne. According to Whitehall sources, he took a very keen interest in the design of the coin.
Other departments – the Royal Mint and the National Crime Agency – also played their part in the genesis of the idea.
Though the new coin is being touted as “the most secure circulating coin in the world to date”, Treasury officials admit the 12-sided design was not specifically to address security concerns. The 12 sides, and the harking back to the threepenny piece it is modelled on, is more for reasons of vanity than function.
All the briefings on the coin are keen to stress that the design is “distinctly British … which evokes memories of the pre-decimalisation threepence piece”, and clearly, a lot of thought has gone into the 12 sides.
Osborne said he was “particularly pleased” the coin would pay “tribute to the past”.
Today I will deliver a Budget for a resilient economy – starting with a resilient pound coin pic.twitter.com/Ev2IuNpXg4
— George Osborne (@George_Osborne) March 19, 2014
How much will it cost?
Andrew Mills, head of circulation at the Royal Mint, has calculated it will cost £15 to £20m to change machines over.
Other industry figures suspect this may be a wild underestimation.
The new coin means not only that vending machines will have to be changed, but shopping trolleys too. Parking metres, ticket machines, lockers and telephone boxes will also need to be upgraded. There are a million vending machines in the country, all of which will need to be modified.
Jonathan Hilder, chief executive officer of the Automatic Vending Association, pointed out that when the new five and 10 pence pieces came in, the Treasury estimated this cost £80m.
There are far more five and 10 pence coins than £1 – there are 5,411m five and 10 pence pieces compared with 1,528m £1 coins. But far more machines or devices use £1 coins.
The Treasury are refusing to be drawn on any figures as to how much the new coin may cost, saying the plans are still out to consultation.
How much does counterfeit currency cost the UK?
Announcing the new coin, the Treasury said that in some parts of the UK, use of forged coins is as high as six per cent.
We asked the Royal Mint where these areas were, but a spokeswoman said: “We cannot share a regional breakdown because it could compromise ongoing law enforcement activities in these areas.”
We asked the National Crime Agency and the Treasury how much counterfeit currency cost the UK, and both said they were not aware of any figures.
It is a big thing to calculate. Not only does it include the face value (or lack of) of counterfeit coins or notes, but the fact that each one makes real currency lose its value.
This leads to inflation due to more money being circulated.
There are also other costs, such as the impact on confidence in the currency. In the case of banknotes, the Bank of England says that as they’re worthless, it will not compensate.