How will a new pound coin affect vending?

In his 2014 budget, Chancellor George Osborne announced the launch of a new £1 coin in 2017. There are 1.538 billion £1 coins in circulation, of which 3.1 per cent are counterfeit. The value of these counterfeit coins is estimated to be £47.7 million, and counterfeit is on the rise – last year, the Royal Mint took £1.7 million in counterfeit coins out of circulation. The coin’s design is 30 years old, and so precedes modern counterfeiting technology.

AVA support
The Automatic Vending Association understands the requirements of The Royal Mint to maintain the integrity of the £1 coin, and it comes as no surprise that because of the increased level of counterfeiting, a new public consultation will be launched by the Chancellor for the introduction of a new £1 coin.
    
Speaking of The Royal Mint’s decision to introduce the new coinage, Jonathan Hilder, Chief Executive Officer of the Automatic Vending Association, said: “It is imperative that the vending industry works with all interested parties to ensure that the security and implementation of any proposed new coinage can be undertaken with minimal impact on vending users and at the lowest possible cost to our industry, due to its large machine base.  
    
“The Automatic Vending Association’s established working relationships with both The Royal Mint and The Treasury allow us to do just this, and we very much support the development of a new £1 coin which will be more secure than its predecessor, which will incorporate new technologies.  
    
“The Association’s involvement will also provide a better conduit of information for The Treasury and the Government, assisting with their understanding of the vending industry of Great Britain.”

The AVA welcomes the opportunity to be involved from the start of this process to develop the new £1 coin, and will look at the proposed introduction and composition of the coin.  

Why does it need to be changed?
The level of counterfeits is rising and the integrity of the coinage must be protected, so this is not an unexpected decision by the Treasury – it’s just a little earlier than the AVA had hoped for. A new, secure coin should remove this cost from business, although vending does not suffer too badly from this because rogue coins are rejected and consumers tend to use them elsewhere.

How will it affect the vending industry?
It will mean all vending machines which accept coins will have to be altered. Once the AVA knows what the new design and specification will be, we will be able to cost it. As soon as the industry has the solution, an engineer will need to visit each machine and upgrade the software. If it requires new hardware, then the engineer will need to make this change as well – so it’s set to be a busy two years for the vending industry.

What will it cost the industry?
This is unclear because we don’t know the final design and specification. However, the cost to the vending industry of the introduction of the 5p and 10p coins has been £25 million. The cost to introduce the new £1 coin will be more. The overall cost set out in the Treasury Economic Impact Assessment for the 5p and 10p for the whole coin operated industry was £80 million. The British Parking Association (BPA) has stated that the cost for them will be £50 million.

Is there enough time to make the necessary changes?
The time period will be fine if we are able to undertake and complete the consultation this summer and have samples to give to the coin mechanism manufacturers before the end of the year. Should there be any delays in the process, then the AVA will need to look at the timelines.

Who will bear the cost of this?
The UK vending industry will bear the cost of this change, but the AVA has already suggested to the Treasury that because this is the second change in less than five years we would appreciate some help for our businesses which are coming out of recession. So, creating a special 100 per cent allowance of all the upgrade costs against tax in the year in which they were incurred would be useful. The AVA will continue to discuss this with the government to see how this could work.

What are the next steps?
Over the summer, the Mint and the Treasury will consult with the AVA and other interested parties such as the BPA, British Retail Consortium and others. This will be twofold – to look at the timeline and how to reduce the economic impact; and the design and specifications of the new coin.
    
The overall effect of this must be that we have a more secure coin that can be implemented at the lowest possible cost to the industry and the AVA will help achieve that.

Further information
www.ava-vending.co.uk