Coins fall prey to spending cuts
Even coins have fallen prey to spending cuts, with cheaper metal to be used in their production from next year, it was disclosed.
The Royal Mint will produce cheaper versions of 5p and 10p coins from January and put them into circulation in April, in a move that should save £10 million a year.
But the change, which was contained in the small print of the Comprehensive Spending Review, could cause problems for people using vending machines and parking metres, as the new coins will be slightly thicker.
The decision to change the metal has been taken because of the volatile price of copper, which is used to produce cupro-nickel coins. Strong demand for the metal from developing economies, such as China and India, has led to big increases in the price of copper.
As a result, from next April 5p and 10p coins will be made out of steel, which is cheaper; they will then be covered with nickel plating. But the new coins will be slightly thicker than the old ones at 1.9mm, compared with 1.7mm.
The Royal Mint said it had decided to use the cheaper metal on the 5p and 10p coins first, following a consultation.
Andrew Stafford, chief executive of the Royal Mint, said: "It is public knowledge that HM Treasury announced it plans to change the composition of 5p and 10p UK coins from cupro-nickel to nickel-plated steel within the next 18 months.
"The savings to be achieved by the Royal Mint announced in the spending review report today result from the reduction in metal costs associated with the change to 5p and 10p production over the next few years."
The new coins will not only be cheaper to make, but they should also last longer, remaining in circulation for an average of 25 to 30 years.
But the vending machine industry is likely to face a significant bill as they adapt machines to recognise the new coins, with some estimates putting the cost at between £42 million and £100 million for all coin operated machines. Councils will also have to pay the cost of adapting their parking meters to accept the new coins.