Impact assessment of changing the composition of 5 pence and 10 pence coins

16 February 2011

From 1 January 2012, the composition of 5p and 10p coins will change from cupro-nickel alloy to nickel-plated steel. The coins will retain the same weight and diameter, although they will be marginally thicker than the current 5p and 10p coins in circulation.

This change will not impact on the public’s use of 5 and 10p coins, and the extended period of introduction (originally scheduled for early 2011), will give the affected industries sufficient time to update machinery and software to accept the new coins.

This decision is expected to deliver significant savings for HM Treasury (estimated to be £7-8 million per year) in relation to expenditure on metals. A trend of rising metal prices over recent years has meant that the continued use of cupro-nickel is likely to become increasingly expensive.

The Royal Mint conducted a consultation exercise in the first half of 2008 with a wide range of interested parties, including the cash handling industry, cash in transit companies, retailers and gaming and vending machine operators, as well as relevant industry associations.

The Royal Mint wrote to everyone who participated in the 2008 consultation in March 2010 to inform them that the proposed change to 5p and 10p coins would be going ahead from early 2011. Since then, the Mint has been working closely with the cash handling and vending and gaming industries to facilitate the transition to the new nickel-plated steel coins by providing prototype samples, and has distributed bulk samples to allow them to conduct the required recalibration of machines well in advance of roll-out.

Since September, Treasury and Royal Mint officials have met with several interested parties to ensure that full account has been taken of the costs to industry of introducing this change. Following this, the decision has been made to delay implementation in order to allow the industry greater time to accommodate the change.

A Royal Proclamation providing for the production of the new coins was made in July 2010. As this remains valid, subsequent formal clearance has not been required.

However, in having regard to better regulation principles, a full impact assessment setting out the cost benefit analysis of this decision has been developed and discussed with the Better Regulation Executive, and published on the Treasury website: http://www.hm-treasury.gov.uk/consult_ria_index.htm

Impact assessment of changing the composition of 5 pence and 10 pence coins

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