Cheaper coins proposal 'a disaster'

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The proposed change would save the Royal Mint as much as £8m a year as the "silver" coins would be made from steel instead of cupronickel - an alloy of copper and nickel.

As the price of copper has risen greatly in recent years and the alloy-making process is itself expensive, the change has been considered but not officially announced.

But the new coins would require changes to vending machines and parking meters, including their software, which one expert told the Daily Telegraph could cost the nation as much as £100 million.

Jonathan Hilder, chief executive of the Automatic Vending Machine Association, told the newspaper: "We've told the Treasury and the Royal Mint that this is going to be a disaster, but they haven't taken notice.

"It's meant to be a money saving exercise, but this will cost the vending industry £42 million and the coin machine industry as a whole possibly as much as £100 million."

The humble vending machine is more sophisticated than it would first appear, as they have to be able to check each coin's shape, weight and magnetism to prevent fakes being used.

They will need to be recalibrated to accept the new coins as well as the old ones which will remain legal tender.

A spokesman for the Treasury said: "The proposal to make new 5p and 10p coins out of nickel-plated steel rather than a cupro-nickel alloy is one of many measures being considered by the Government with a view to reducing the fiscal deficit."