New £1 coin rollout could push up parking charges, experts warn

Victoria Ward
The deadline to use the old one pound coin was at midnight - Getty Images Europe

Parking charges may rise due to the soaring costs of the new £1 coin rollout, experts have warned.

The round £1 coin ceased to be legal tender at midnight, meaning vending machines, parking meters, self-service checkouts and shopping trolleys will now reject them and businesses are under no obligation to accept them.

But the switchover has cost local councils and businesses tens of millions of pounds in costs which are likely to be passed on to the consumer.

James Daley, managing director of consumer campaign group Fairer Finance, told the Telegraph: “Of course, whichever organisations bear the increased cost of accepting the new £1 coin are likely to pass it on to the customer rather than take the hit on its bottom line.”

The round £1 coin is no longer legal tender Credit: Getty Images

The process of modifying machines across the country is estimated to have cost in excess of £100 million - five times the figure originally mooted by the Royal Mint.

The British Parking Association said the cost of replacing or converting 80,000 machines would reach £50 million, while the Automatic Vending Association, whose members operate the UK’s 500,000 vending machines, expects the cost of refitting them to be around £32 million.

Local councils, already buckling under the pressure of crippling budget cuts, have had to fork out to adapt the majority of the country’s parking machines and could try to recoup costs by increasing parking charges.

When new, thicker 5p and 10p coins were introduced in 2012, councils complained that the switch could cost £5.5million.

John O'Connell, chief executive of the TaxPayers' Alliance said it was important that people used the correct currency but added: “Councils must ensure that the cost to taxpayers of updating payment machines doesn't outweigh the benefits of cutting fraud in the wider community."

At a glance | Royal Mint

The Local Government Association said local authorities had been forced to adapt parking meters despite facing an overall funding gap of £5.8 billion by 2020.

Cllr Martin Tett, the LGA’s Transport Spokesman, said in response to a freedom of information request earlier this year: “This has been done this despite not receiving a penny in additional funding for making the change, at a time when funding pressures on local services continue.”

Railway firms have had to convert or replace 2,500 ticket machines while Transport for London has had to modify or replace about 1,000 machines at Tube stations.

Andrew Mills, the head of circulation for the Royal Mint, suggested in 2014 that the cost to the economy of changing the coin-operated mechanisms across the country was likely to be between £15 million and £20 million.

The Royal Mint last night said it was impossible to provide a “realistic estimate” of the cost to industry but confirmed that the government would not be making any contribution.

“We understand that there is some short-term transition costs to industry, in particular to operators of equipment that may need to be upgraded,” a spokesman said.

“In the case of previous changes in the coinage, such costs have been borne by industry. Following a public consultation the government is following this precedent, and so will not be providing compensation.”

Old pound coins

Mr Daley added: “The old coin was incredibly easy to forge so that was costing money as well so the Royal Mint did not do a very good job and now here we are.

“Businesses are going to struggle and I think the government should be sympathetic and provide some support.”

An estimated 500 million of the old coins remain in circulation.

While many retailers will no longer accept them, including Sainsbury’s, M&S and Lidl, several others, such as Tesco, Aldi, Iceland and Poundland, will continue to take them for a period of between one and two weeks.

The round coins can also be taken to any high street bank or Post Office to be paid into a UK bank account until further notice.

One pound coins were first launched on April 21 1983 to replace £1 notes.

The new, 12-sided pound coin, which resembles the old threepenny bit, was introduced to reduce the multi million-pound cost to British business from counterfeits.

Around one in every 30 old-style pound coins in people's change in recent years has been fake.

In numbers | Royal Mint

 

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