FIND a penny, pick it up, and all day long you鈥檒l have鈥� an annoying and practically worthless disc of copper-electroplated steel rattling around in your pocket. Far from stooping to pick them up, most of us are actively trying to get rid of the luckless things. According to the UK Treasury, , stashed or thrown away. Last year, for the first time in decades, the UK鈥檚 Royal Mint didn鈥檛 make any copper coins. There were already more than enough in circulation.
So why doesn鈥檛 the UK follow the lead of Canada, Ireland and many other countries and put these coins out of their misery?
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Change, it turns out, is hard. Over the years, the UK鈥檚 Bank of England, Treasury, Royal Mint and even a prime minister have thrown in their tuppenny-ha鈥檖enny worth to defend copper coins. One argument is that getting rid of them will cause inflation; another is that it will prevent shops from selling goods at that magical 拢X.99 price point.
Now, though, there is a new reason to want to see the back of coppers: it would, ironically, help save cash from being abandoned altogether.
Finding a penny was once a genuine slice of luck. A century ago, a British penny (then 1/240th of a pound) was worth the equivalent of 20 new pence. But today, there is literally nothing you can buy with one in the shops. The cheapest item on sale at the UK鈥檚 leading supermarket is a sweet that would once have been called a 鈥減enny chew鈥�. It costs 10 pence.
This is the inevitable fate of small denomination coins: inflation gradually gnaws away at their purchasing power, rendering them obsolete. The last time the UK dropped one was in 1984, when the halfpenny was deposited in the great piggy bank in the sky.
Since then, many other countries have taken their smallest coins out of circulation, such as Belgium, which binned its one and two euro cent coins in 2014. But it didn鈥檛 abolish the denominations: cash purchases are simply rounded up or down to the nearest five cents.
A winning solution, surely 鈥� so how long have 1p and 2p coins got? Don鈥檛 cash in your coppers just yet. Last year, the then prime minister, Theresa May, announced that the coins were safe for 鈥測ears to come鈥�.
The decision was hailed by fans of cash, who said that pinching pennies would have sent a signal that society no longer cared about the 20 per cent of people who rely on notes and coins. But according to Adam Townsend at Imperial College London, we have all been short-changed: keeping coppers will ultimately hasten the demise of cash. To defend coins and banknotes 鈥� and there are many good reasons for wanting to do so 鈥� we should cull the weakest coins and introduce a new, rather odd one.
At this point, it might be fun to ask yourself what coin would be the most useful addition. You might think a 99p, or a US-style quarter. Perhaps a 拢3 coin? Don鈥檛 put your money down just yet.
Townsend鈥檚 starting point was nothing to do with the cashless society, but instead a simple matter of annoyance. He was baffled and irked by supermarket self-checkouts, which dish out irrationally large quantities of change. If he paid in cash, he never got 50p or 10p pieces, but fistfuls of 20ps, 5ps and coppers. The reason is that the machines are made in the US, which has fewer coins in circulation than the UK, and so don鈥檛 have enough change-dispensing tubes for the UK鈥檚 eight-coin system.
That led him to a surprisingly fiendish question: if you make a purchase with cash, what is the average number of coins you can expect to get back in your change?
Being an applied mathematician, he decided to use real-world transaction data from the Office for National Statistics about the cash value of actual purchases of goods and services. After crunching the numbers, he found that the average number of coins you can expect as change in the UK is 4.61. This rises to 5.91 if you use a self-checkout.
For comparison, he looked at other economies. The UK average is similar to other places that use a 鈥�1, 2, 5鈥� coinage system, such as most of the eurozone. The US fares slightly worse at 4.75. For nostalgia fans, predecimal UK currency comes in at 4.9. Worst of all is Japan, which uses a 鈥�1, 5鈥� system that is common in Asia and that pays out an average of 7.51 coins per cash transaction.
Not coincidentally, the most change-efficient countries include ones that recently phased out small coins, such as Canada (3.94), Sweden (2.32) and New Zealand (2.96). Simply phasing out 1p and 2p coins would improve the UK鈥檚 score to 3.43, Townsend calculated.
But he says we could do even better. As well as taking coins away, you can add them. So he also analysed the effect of introducing one new coin. This brought an unexpected result: the most efficient system, which would instantly reduce the average number of coins in change to 2.6, requires a coin worth 拢1.75.
鈥淲hat coin would be the most useful addition? A 99p, or perhaps a 拢3 coin?鈥�
鈥淚t鈥檚 a bit of a silly number,鈥� he says. He admits that he can鈥檛 imagine checkout staff being happy with the introduction of such an arithmetically challenging coin, but points out that it is simply a thought experiment.
There is a genuine case for making cash more efficient and attractive, however. 鈥淭here are good social reasons to encourage people to use cash, which is an argument for making coins better,鈥� he says. Among these are privacy, security and the fact that many people still don鈥檛 have a bank account.
Of course, introducing a 拢1.75 coin wouldn鈥檛 be a permanent fix. Inflation, like death and taxes, is inevitable, so the price of transactions will gradually rise, rendering the 拢1.75 coin less and less efficient. Yet, as Townsend points out, prices are to some extent influenced by the coins in circulation. In the US and Canada, for example, Townsend has observed that prices ending in 25 and 75 are more common than elsewhere, driven by quarter coins. A 拢1.75 coin would temporarily stabilise prices around its multiples, he says.
But not forever. Once coppers are gone, the 5p will be next in line for the chop. Even a 拢1.75 coin will eventually be considered worthless. By then, our unloved 1ps and 2ps may well be collectors鈥� items, worth more than that odd 拢1.75 coin that was introduced for some stupid reason all those years ago. So next time you see a penny on the street, pick it up and put it somewhere for posterity.
