Royal Mint 'abandons' £4m of 1p and 2p coins after fears Treasury would scrap them

The Royal Mint has reportedly "abandoned" approximately 260 million of "unwanted" 1p and 2p coins - worth around £4 million - in warehouses across the UK.

It comes after it emerged that no new copper coins were minted this year or last year, which forced The Treasury to quash rumours the small change was being discontinued. There had been reports that lowest denomination coins could scrapped as cash transactions plummet.

Now it has emerged that around  260 million 1p and 2p coins are sitting in storage. This is more copper coins than there are currently in circulation. 

In total, more than 110 million of the 200 million 1p coins produced are said to have been stockpiled.  And approximately two-thirds of the 225 million 2p coins minted in the UK -  another 150 million coins - are currently in storage.

The coins are "unwanted" and have effectively been "abandoned", reports The Telegraph. The Royal Mint - which makes Britain's coinage - has not recycled or melted down surplus coins for more than a decade, after it closed it closed its smelting facility. 

And The Treasury has not ordered any new copper coins - and doesn't expect to order any for the next few years. However,  The Treasury's estimates suggest that the Royal Mint will need to issue more than 500 million 1p and 2p coins every year to replace those falling out of circulation. 

A spokesman for the Royal Mint said: "The Royal Mint only accepts damaged circulating coins. These are processed to ensure the value of the metal can be recovered."  

UK Finance, the UK banking and financial services sector's trade association, declined to comment on coins in storage or the failure to mint more copper coins.  But it did say the industry  "is committed to the sustained use of cash".  

A spokesperson added: "However, we really need to make sure that we have the right type of notes and coins that people want to use. And we should be thinking about how we might recycle some of the current coins in circulation.”

Back in 2018, the then Chancellor Philip Hammond branded copper coins “obsolete”. He launched a consultation about the mix of coins in circulation.   

Hammond eventually U-turned and said consumer choice remained a big factor. His predecessor George Osborne also wanted to scrap copper coins, but was overruled by Lord David Cameron, who was the prime minister at the time.  

Data showed that two-thirds of the coins issued by the Royal Mint are no longer in active circulation. This is because many are taken overseas - or end up being stored in piggy banks and jars.  

Cash is the second-most popular payment method, after debit cards. An estimated three million people still use cash as their preferred payment method. 

Pro-copper campaigners claim scrapping 1p and 2p coins will push prices up.  They say retailers will round prices up to the nearest 5p.