LEGAL TENDER

HC Deb 27 March 1969 vol 780 cc1871-907

(1)	Coins made by the Mint in accordance with section 2 of the Decimal Currency Act 1967 or in accordance with the Coinage Acts 1870 to 1946 and not called in by proclamation under paragraph (5) of section 11 of the Coinage Act 1870 shall be legal tender as follows, that is to say—
5	(a) coins of cupro-nickel or silver of denominations of more than ten new pence or two shillings, for payment of any amount not exceeding ten pounds;
	(b) coins of cupro-nickel or silver of denominations of not more than ten new pence or two shillings, for payment of any amount not exceeding five pounds;
10	(c) coins of bronze, for payment of any amount not exceeding twenty new pence or four shillings.
	(2) In the foregoing subsection ' coins of bronze "includes threepences of mixed metal.
	(3) Subject to subsection (6) of this section and to any direction given by virtue of section 14(5) of this Act, coins of the old currency other than gold coins shall not be legal tender after the end of the transitional period.
15	(4) For the purpose of being used for any payment in accordance with the foregoing provisions of this section a coin of either the old or the new currency may be treated as being a current coin of the other currency of equal value.
20	(5) The powers exercisable by proclamation by virtue of section 11 of the Coinage Act 1870 shall include power to direct that any coins of the new currency made by the Mint in accordance with section 2 of the Decimal Currency Act 1967 other than coins of cupro-nickel, silver or bronze shall be current and be legal tender for payment of any amount not exceeding such amount (not greater than ten pounds) as may be specified in the proclamation.
25	(6) For the purposes of this section silver coins of the Queen's Maundy money made in accordance with section 3 of the Coinage Act 1870 shall be treated as made in accordance with section 2 of the Decimal Currency Act 1967 and, if issued before the appointed day, shall be treated as denominated in the same number of new pence as the number of pence in which they were denominated.—[Mr. Taverne.]

Brought up, and read the First time.

6.35 p.m.

The Minister of State, Treasury (Mr. Dick Taverne)

I beg to move, That the Clause be read a Second time.

This Clause restores, with one alteration, the original Clause 1 of the Bill which was, by some mischance, removed from the Bill during Committee proceedings. There is only one alteration in it, to which I shall come. When we discussed the former Clause 1, the Opposition members on the Committee objected to two parts of it. One was the part which continued to keep gold coins as legal tender, and the other was the absence of any specific reference to the retention of the 6d. As there is an Amendment to this new Clause dealing with the 6d., perhaps we can come to that when the Amendment is moved.

The alteration in the new Clause refers to the 50 new pence piece, which is now specifically referred to. The 50 new pence coin, which was not included in the First

Mr. Speaker

I have posted, as is my wont, a list of the selection of Amendments that I have made.

Schedule to the 1957 Decimal Currency Act, will be treated as a current coin of 10s., and it is proposed that it should be legal tender for any amount not exceeding £10. The Proclamation which determined the specification and design of this coin and gave currency to it was made on 20th December last. It also provided that the coin might be issued before Decimal-day as a current cupro-nickel coin of the denomination of 10s. Since the Committee stage we have given further thought to the legal tender limit for this new coin, and any other future high-value coin, for example, one which might be minted of 20 new pence and 25 new pence in a weight/value relationship and similar shape to the 50 new pence piece. The reasons for the increase in the legal tender limit from £5 to £10 are as follows.

First, there is the need to demonstrate that these coins are in a different category from the 5 new pence piece and the 10 new pence piece and second—and this is the main reason—the 50 new pence piece should be used as much as practicable. It could be said that if in law as few as 11 of these coins could be refused, then the use of the coin might be discouraged We would not wish to discourage the use of it, and accordingly we have provided for a higher legal tender limit.

Mr. Terence L. Higgins (Worthing)

The Minister of State has correctly recounted the history of this Clause. As he rightly points out, it effectively seeks to reinstate the Clause which was deleted in Committee, albeit with the particular alteration to which he has referred. It is right and proper that we should stress why we felt that the Clause, as originally drafted, ought to be rejected. The procedure that we have in Committee is one in which we seek to amend the Clause concerned and then decide, after the Amendments have been carried or defeated, whether the Clause is defective. We then vote accordingly.

At this stage the procedure is the opposite. We are now asked to consider this new Clause and we shall then seek to amend it later. In principle, it would be wrong for us to vote against it at this point, because we hope that it will be possible to amend it later, particularly when we come to the Amendment dealing with the 6d.

As the Minister rightly pointed out, our objections to the Clause, as it was presented in Committee, were twofold. First was the fact that it mentioned that gold coins should continue to be legal tender. We felt that there were a number of objections to that. Second, there was the question of the 6d., which it will be more convenient to deal with when we debate a later Amendment. I want to concentrate on the argument about the position of the gold coins, because although we have tabled an Amendment it will not be possible for us to debate this at a later stage as the Amendment has not been selected.

Perhaps I may say something on the difference between the Clause now presented to the House and that originally presented to the House at Second Reading and to the Committee upstairs. We appreciate the point that the Minister has made with regard to the introduction of the 50 new pence coin. This coin is likely to prove of considerable use and to facilitate cash transactions. But if as low a legal tender limit were placed on it as the £5 originally specified in the Bill as it came before the House on Second Reading this would mean that one was limited to tendering only 11 of these coins. While as many as 19 or 20 of them would be fairly heavy to carry round, nevertheless it would be unfortunate if the legal tender limit were set so low that the use of the coin was inhibited. Therefore, we should not have any objection to the alteration embodied in this new Clause as against the Clause as originally presented.

I want now to look at the question of the legal currency of gold coins. We were disappointed at the fact that the Government have not reintroduced this Clause in such a form that the expression with regard to gold coins is deleted; because, as the House will now see, the Government's Clause suggests that gold coins shall continue to be legal tender and shall so continue beyond the end of the transitional period, as far as we can see. Our objection during the Committee stage arose from a probing Amendment which we put down seeking to delete the reference to gold coins. Originally, we had expected a fairly simple explanation from the Minister but the more we went into it the more our doubts were aroused with regard to the purpose of this part of the Clause.

First, we were surprised to discover that gold coins which had been minted by the Bank of England were apparently of considerably greater value than their bullion content. This was a point of interest to the Committee rather than one which aroused any feeling of concern. What we were worried about was the apparent inconsistency between the statement in the Government's original Clause that gold coins should be legal tender and the actual position as we know it to exist in this country at the present time. There are very considerable restrictions on the circulation of gold coins. These particular restrictions arise partly from the original Exchange Control Act 1947, and in particular from Sections 1, 2 and 3 of that Act; because this legislation limited the buying, selling and holding of gold coins. This restriction was further strengthened by the introduction of a Statutory Instrument in 1966 which was also concerned with the circulation of gold coins.

Effectively, what this legislation does is to provide that no one may hold more than four gold coins and may hold these four coins only if they had held them before 26th April, 1966. In other words, the holding of gold coins which had been minted after the date 1837 and their circulation were vigorously controlled. It was authorised by this House that anyone who happened to hold more than four of those gold coins, or happened to come into possession of any of them after the date I have mentioned, would be obliged to hand them in to an authorised dealer, who, in turn, would dispose of them. It was perfectly clear, therefore, that the effect was to prevent the circulation of gold coins as currency in this country.

Yet when we came to the Committee stage we were assured by the Minister that one of the main reasons why the Government wished to include this provision in this particular Clause was that if that were not done it would be impossible for the Government to prevent the counterfeiting of gold coins overseas—I believe he suggested in the Middle East or Italy—and that these counterfeit gold coins, being of higher value than their bullion content, might then circulate. The Minister asserted that only if these coins were legal tender in the United Kingdom would it be possible for the Government to take legal action against anyone who happened to be counterfeiting such coins. The Minister quoted in aid a treaty which he said enabled the Government to do this.

Mr. Speaker

I would remind the hon. Gentleman that the Amendment on gold coins has not been selected. I have allowed him to talk about the discussion on Second Reading but he must not pursue the subject in such detail as to make it appear that the Speaker has selected the Amendment for discussion when he has not done so.

6.45 p.m.

Mr. Higgins

I am directing myself to the fact that the new Clause continues to perpetuate a reference to gold coins and arguing that there is some. doubt in my mind about the validity of the Clause, because I do not believe that it achieves the objective that the Government wish to achieve.

Mr. Speaker

We are each seized of the point that the other is trying to make. I am only asking the hon. Gentleman not to go into too much detail.

Mr. Higgins

I am grateful to you, Mr. Speaker. I am only saying that it seemed to me that to reintroduce the Clause in this way was open to objection; and I thought it would be helpful to the Government to spell out what I believe is the objection since it is a point that ought to be considered in introducing the new Clause. The essence of the argument is that the Government feel they need to reassert what they believe to be the position with regard to legal tender of gold coins in order to prevent counterfeiting overseas. The Government have called in aid a treaty which we have subsequently discovered—the Minister could not tell us this at the time—to be Cmnd. 666, signed in 1929. The definition of currency in that treaty is given in Article 2 of it: In the present Convention the word ' currency ' is understood to mean paper money, in other words bank notes, and metallic money the circulation of which is legally authorised. It seems to me that this definition of currency as used in the treaty is quite inconsistent with the way in which gold coins are to be treated today, and, therefore, the Government cannot rely on the provisions of this treaty. Nor can they, by introducing this new Clause, seek to establish a protection which I do not believe they actually have. The Minister asserts that there have been cases brought under the treaty and that these have been successful.

To summarise, I do not see how the Government can assert in the new Clause that gold coins are legal currency and that they conform to the definition given in Article 2 of the treaty, and, therefore, have the protection which the Government assert they have. Clearly, it would be wrong, in my submission, to pass the new Clause if that is the case and if the Government's view of the true position is wrong.

I believe we were right to oppose the Clause in Committee and to reject the Government's argument, most especially because of the question of the 6d., but that is something to which we shall return and I will not delay the Committee further at this stage. I do hope the Minister can give us a better explanation of why the words referring to gold coins are still included and have been reintroduced in the new Clause, because I believe the argument on which the Government base their case is erroneous. Whether or not they have succeeded in getting other countries to agree to the provisions of the treaty, the definition in it does not seem consistent with the actual status of gold coins in this country at the present time.

Mr. Taverne

I hope that the hon. Member for Worthing (Mr. Higgins) will not mind if I answer his points very briefly.

With the Clause as it stands, there is no change in the law whatsoever. If the words were left out, there would be a change in the law. Gold sovereigns and gold coins are legal tender under the Coinage Act, 1870, and if these words were not in they would cease to be legal tender under that Act. If it were felt desirable at any stage that a gold coin should no longer be legal tender, the matter could be dealt with by proclamation, and it could be demonetised at any time without any fuss or need for statutory amendment.

The Bill is not the occasion for altering the status of gold coins. Having gold coins as legal tender is of value to this country because it is possible for the Bank of England to meet the occasional demand for gold sovereigns to the benefit of our balance of payments. I should have thought that that was a good reason for keeping them. If the coins were no longer legal tender, it would, at the lowest, make the task of counterfeiters abroad much easier. It has been possible to launch successful prosecutions against counterfeiters on the basis that gold sovereigns were legal tender.

Mr. Higgins

Is the Minister of State asserting that gold coins are currency within the meaning of the definition in the treaty which I have quoted?

Mr. Taverne

This matter has been decided by a number of foreign countries. I do not wish to go into the question of the interpretation which should be given to the treaty, but when it has been examined the courts have been satisfied that its protection extended to gold sovereigns. A vital part of the argument was that they were still legal tender under the Coinage Act, 1870, and evidence was produced before the courts that the 1870 Act was on the Statute Book and had not been repealed. It is, therefore, the protection afforded to gold sovereigns which maintains the value of gold sovereigns, which helps our balance of payments.

Mr. Eric Lubbock (Orpington)

Before the Bill was introduced, I had a long chat with the Financial Secretary about possible amendments to the Coinage Acts, the 1870 Act being the principal Act, because it occurred to me that the opportunity might be taken in conjunction with this legislation to consolidate all the previous Acts in one Measure. The Financial Secretary accepted that if this were to be done it would be better to do it by separate legislation.

When the question of gold coins arose in our discussion, I made the same proposal as the hon. Member for Worthing (Mr. Higgins). We had a considerable discussion on it, and, in the light of what the Financial Secretary said, I accepted that there were great advantages in retaining the present position, clumsy though it may seem, considering that gold coins would never in practice be used as a medium of exchange. The fact that gold coins are worth more than the metal content is an advantage, and, therefore, they bring some benefit to our balance of payments. This is a very important argument.

The question of whether the treaty to which reference has been made remains in effect has been tested comparatively recently in foreign courts. The example which the Financial Secretary gave me was Italy, where somebody began to counterfeit on a fairly large scale. It was drawn to the attention of the Italian authorities, a prosecution ensued, and the counterfeiter was convicted. That was an end of the matter.

We have this protection which, according to the legal experts, can be retained only as long as gold coins are legal tender. While it may seem an old-fashioned and ridiculous anomaly to pretend that these gold coins are legal tender, there would be practical consequences if we were to alter the law. It is, therefore, better to leave it as it is.

Question put and agreed to.

Clause read a Second time.

Mr. Higgins

I beg to move, as an Amendment to the proposed Clause, in line 13, after 'Act', insert with the exception of 6d. pieces'

Mr. Speaker

I suggest that we take

Two-and-a-half new pence

2.82759 1.9405

Three-quarters copper, one-quarter nickel

.0188

and Amendment No. new 10, the proposed Schedule: Further Amendment of Decimal Currency Act 1967 Schedule 1 to the Decimal Currency Act 1967 shall be amended by omitting the row relating to Two new pence, that is to say:

Two new pence

7.12800 2.5910

Mixed metal, copper, tin and zinc

.1500

Mr. Higgins

As I said a few moments ago, we felt in Committee that we should do everything we could to retain the use of 6d. pieces, although in the form of a 2½ new pence piece, beyond the end of the transitional period. A Division on an Amendment similar to this Amendment in Committee resulted in equal numbers of votes being cast both ways, and the Chairman, being bound by tradition, cast his vote against the Amendment. However, we felt so strongly on this issue that we thought it right to regard the Clause as defective and to vote against it again on the Question, That the Clause stand part of the Bill.

As the Minister of State said in Committee, the Government can by proclamation retain the use of the 6d. pieces in the way I have just suggested. But this is the prerogative of the Government and the Crown. It is not something that the Opposition can seek to do. Therefore, if we are to achieve our objective, the right approach for us is to seek to amend the Bill in the way we suggest.

Throughout our debates on the Bill not a single voice has been raised in favour of abolishing the 6d. piece, with the exception of that of the Minister of State and possibily one other. I therefore hope that we can examine the case on its merits. I wish to say why I believe it right and proper to retain the 6d. piece, although not necessarily far into the future or to enshrine in legislation a position which means that it must be retained in our currency until such time as further legislation is passed. The arguments in favour of retaining the 6d. piece beyond the end of the transitional period

at the same time Amendment No. 9, the proposed new Schedule entitled: Amendment on Decimal Currency Act 1967 Schedule 1 to the Decimal Currency Act 1967 shall be amended by adding after the entry relating to Five new pence the entry:

are overwhelming, and I should have thought they commended themselves to common sense.

The Government have put forward only one argument for their belief that the 6d. piece should be abolished. The reason why they have, unfortunately, felt obliged to defend the abolition of the 6d. piece is in many ways accidental. When we debated the original Decimal Currency Act two years ago, the great debate was on the case for the £ system as against the 10s. system. Many of us on this side of the House, although we took no party line, believed that the strong case was for the 10s. system. One of the main reasons why we thought that the 10s. system should be adopted was that, naturally, it would have a 6d. in it. On the other hand, the Government eventually carried the proposal for a £1 system. We are now necessarily bound to that system, and the matter must be debated within that context.

7.0 p.m.

At the time when the 1966 Act was going through the House the retention of the 6d. if the £1 system were adopted was not considered seriously. It was used as an argument in the discussion of the merits of one system against another. There is no reason why the 6d. should not be retained with the £1 system.

Mr. Lubbock

I cannot give the reference, but I remember an occasion on which I argued this case very strongly. I pointed out that if the 6d. were not retained, all the telephone boxes would have to be altered at great expense to the G.P.O.

Mr. Higgins

That was not the point I was making. I was saying that the argument about the 6d. was tied up with the argument for the 10s. system rather than with the argument that the 6d. could be kept under either system. Although for better or for worse, we have adopted the £1 system, there is no reason why we should, in addition, abolish the 6d. We should come to this with fresh minds, and it is not too late to alter the decision of the House.

The main argument of the Government has always been based on the experiment which was carried out before the Halsbury Committee reported as a result of which it was asserted that the existence of the 2½ new pence piece in the system would lead to confusion in cash and other transactions. This was on the basis of a small sample in an experiment which was conducted under somewhat artificial conditions.

A secondary argument of the Government was that there were ideal sequences of denominations, and this argument was spelt out in detail on page 92 of the Halsbury Committee's Report. It was conceded that the 2½ new pence piece—that is to say, the 6d.—could be retained in the system if there were no 2 new pence piece, or, alternatively, that there could be an ideal system under which there was a 2 new pence piece but not a 2½ new pence piece. This concept is somewhat metaphysical, and we must look at the matter from a practical point of view. While a system containing both a 2 new pence piece and a 2½ new pence piece would not fall within this so-called ideal, I do not see why both coins should not be kept for a certain period of time because of the overwhelming advantages which I shall mention later. The Government's case has been largely based on this two-pronged argument, the sample survey and the ideal sequence of denominations.

I come now to a point which I have not previously referred to. A report of the Bank of England, which is set out on page 234 of the Halsbury Committee's Report, points out that it is possible to include the 6d. in the £1 system. Indeed, this is argued as one reason why the £1 system should be adopted.

The positive arguments for the retention of the 6d. are fourfold. First, there is the simple argument of the cost of creating the new coinage. By retaining in circulation the existing 6d. and calling it a 2½ new pence piece, the number of coins which it will be necessary to create is substantially reduced because the existing sixpences can continue in circulation.

Secondly, there is a considerable improvement in what is called associability in the transitional period and beyond. It is obviously easier to change from one system to another, and mental processes will be facilitated, if there are markers; that is to say, new coins similar in shape and size to the old coins. If the 6d. is abolished, only the 2s. piece and the 1s. piece, which will become the 10 new pence and the 5 new pence pieces will act as markers in ordinary transactions. If the 6d. were retained there would be three markers for the ordinary housewives to use as a means of relating one currency to the other. This argument will diminish in importance as time goes by, but it may be that there will still be confusion even at the end of the transitional period, and the retention of the 6d. beyond the end of the transitional period will facilitate this mental process.

Thirdly, there is the cost of conversion. A great many business machines and slot machines will have to be converted if the 6d. is abolished, whereas if it is retained the costs will be delayed. The machines would wear out and could be gradually replaced as they become due for normal replacement. This would represent an additional saving in real resources. If the 6d. is retained the machines will not have to be converted.

Fourthly, will the abolition of the 6d. lead to an increase in prices? This seems to me to be the probable outcome. On Second Reading I raised the matter of telephone calls. Some progress has been made on this, and we have had an assurance from the Postmaster-General that machines now being converted will be able to take a coin which is equivalent to less than the present 6d., although the length of the telephone call which it will purchase will be reduced. This is a sensible move on the part of the Postmaster-General. He is from time to time sensible about various matters. It is the minimum charge on such things as telephone calls that is important. We welcome the announcement that the Postmaster-General made some time after this matter was discussed in Committee.

It is likely that the cost of items sold through vending machines will be rounded up. Parking meters are likely to become more expensive. If the 6d. is abolished, the minimum charge for parking will tend to rise. Unless the Government are prepared to compensate them, local authorities will have to bear the cost of converting parking meters, and therefore to some extent the increase in charges will reflect an increase in costs which will be brought about because the 6d. has been abolished.

Those are four simple, straightforward arguments which have to be weighed against the feeble arguments which the Government have almost stumbled on by accident to justify the perpetuation of the decision which they originally took on this issue. I hope that reason will prevail and that the House will agree that the Amendment should be written into the Bill so that the 6d. can be retained until it finally falls into disuse, when the Government can act in the way in which they acted with the farthing.

Mr. A. H. Macdonald (Chislehurst)

I rise to oppose the Amendment, and I want to make one or two brief comments about it.

Right hon. and hon. Members will remember that the Second Reading debate took place fairly late at night. I had the good fortune to catch your eye, Mr. Speaker, but, although I had been minded to make some remarks against the retention of the 6d. piece, so late was the hour that I decided to cut them out and concentrate on other points which I wanted to make. Since then, the hon. Member for Worthing (Mr. Higgins) has said again and again that no one on this side of the House spoke up in defence of the Minister. In view of that, I want to make it clear that I consider that we should not retain the 6d. piece for more than the transitional period provided.

Throughout my remarks, I shall refer to the coin in question as "the tanner". It will not be six new pence if it is retained.

I cannot help feeling that this constant hankering after the tanner stems from the feeling of many right hon. and hon. Gentlemen opposite in favour of the 10 bob system. However, I beg them to lift up their eyes from this rather myopic study of the difficulties which will arise during the transitional period and look at the long vista ahead where we are seeking to establish a currency which will last for many years. Surely this should be our common objective.

In view of that, I believe that we ought to choose the form of currency which will stand up best in the long run. If that is easier during the change-over, well and good. If it is not, certainly we should seek to minimise difficulties during the transitional period, but we should not amend the system of currency in a way which will linger on when that period is over.

How does the tanner stand in the light of the long-term arguments? I cannot help feeling that there is a good deal of muddled thinking on the part of right hon. and hon. Gentlemen opposite. In Committee, I ventured to offer a few remarks against the retention of the tanner. The hon. Member for Ormskirk (Sir D. Glover) immediately said that my arguments were rebuttable, because all that he and his right hon. and hon. Friends were arguing was that the tanner should be retained for a temporary though unspecified period—say three or four years—after the conversion to decimal currency, and then we could look at how things were going and, if it proved useless, it could be abolished conveniently at that stage. Indeed, the hon. Member for Worthing has just said that he does not propose retaining the tanner indefinitely, but merely for a limited period.

I can understand that, but it is quite irreconcilable with Amendment No. 10, which we are discussing with this Amendment and which proposes to cut out the two new penny piece. I do not see how it can be argued that we want the 2½ new penny piece for a limited period if at the same time it is suggested that we cut out the two new penny piece as well.

In the new system, we shall have a two new penny piece. Why? How can it be said that we want a 2½ new penny piece as well? To come back to present currency, we shall be having a coin which is equivalent to 5d. It seems odd to argue that we also want one which is equivalent to 6d. If we were to establish a new currency without any reference to anything that we had before, no one would suggest that we should have two coins so close together. Putting the argument in reverse, at present we have a 6d. piece, and no one clamours for a 5d. piece. It seems ridiculous to suggest that we should have the two coins together.

Turning to another argument against the retention of the tanner, I suggest that the retention of the 2½ new penny piece will diminish the value of the new system that we contemplate. The big disadvantage of the 10 bob system, as I saw it, was that, in the fullness of time, the lowest unit would become of little value. However, under the 10 bob system, it could not be demonetised, because it would be required to give change. We should have to retain this useless coin which would be too small to buy anything. That was the advantage of the £ system. If the time came when we wanted to demonetise the lowest unit, we could do it without difficulty, and it would not be necessary to keep it for change. If, into the £ system, we now insert the tanner which is equivalent to 2½ new pence, I seriously suggest that, when the time comes to demonetise the half new penny piece, we shall not be able to do it because it will still be required to give change for the 2½ new penny piece. So, with respect to the hon. Gentleman's quotation from the Halsbury Report, the 2½ new penny piece will seriously diminish the value of the currency.

7.15 p.m.

Mr. John Hall (Wycombe)

Can the hon. Gentleman explain how it will be necessary to retain the tanner indefinitely for the purposes of giving change?

Mr. Macdonald

I am sorry if I did not make it clear. In fact, I was arguing the other way round. I was saying that, if we insert; the tanner, 2½ new pence, into the system proposed, it will be necessary to retain the halfpenny piece. Even though the time may come when we wish to demonetise the halfpenny piece, without such a little coin it will be impossible to give change for the 2½ new penny piece. Therefore, if the Amendment is adopted for the sake of making the transitional period that much easier—even though we shall be keeping the tanner during the transitional period, in any event—we shall be "lumbered" with these two fractional coins.

I think that we are in danger of forgetting the whole purpose of the exercise, which is to convert our present system of currency into a decimal system. The existence of a halfpenny piece is a blemish and it would be foolish voluntarily to add another blemish which we do not need to introduce. The halfpenny piece is a regrettable necessity, but we can do away with it. But why voluntarily add another blemish and forget the object of the exercise?

Even in the short term, I doubt whether the arguments for retaining the tanner are quite as strong as has been supposed. In view of the indefinite nature of the retention advocated by the hon. Member for Worthing, manufacturers of vending machines and other slot machines will be placed in great difficulty. If it is not clear how long, if at all, the tanner is to be retained, when they come to manufacture new machines they will not know what slots to put into them. If it is to be retained for a farily extensive period, it will be a little "dodgy" to introduce slots sufficiently clearly distinguished for customers to know which slot is the appropriate one for the new penny piece and which one is appropriate for another coin. Difficulties are likely to arise.

The hon. Gentleman advanced as a main plank in his argument the subject of markers. In my view, the retention of the tanner would be the wrong kind of marker. I agree with him that the five and ten new penny pieces will assist people to convert to the new form of coinage. But the advantage of that is that they convert easily to a decimal system. If we retain an additional marker with a fraction attached to it, it will not assist people. Indeed, because there is a fraction, it will present an added difficulty in encouraging them to think in decimals.

Thinking back to the arguments about telephone boxes and slot machines, I must admit that they are serious and weighty. But how far should we allow them to weigh with us in the long term? In a hundred years' time I trust that this form of currency will be working acceptably. How foolish and silly it would look if we adopted a form of currency that might be less than effective in a hundred years' time simply because it was more convenient to convert to it now.

I am sure that hon. Members have noticed some of the interesting letters from practical people that have appeared in the last two or three days in the Financial Times pointing out that firms are already undertaking commitments on the assumption that the decimal currency is as set out. I was interested to see a letter the other day from a retailer pointing out that it seems difficult to suppose how the tanner, the 2½ new penny piece, will get into circulation. As the hon. Member for Ormskirk (Sir D. Glover) pointed out, people go into a shop with their pounds on pay day. If there are to be any halfpenny amounts it is almost certain that the change that the retailer will give will be the half new penny. It is doubtful whether he will give the 2½ new penny in change. If this is so, it is doubtful whether the 2½ new penny piece will come into circulation at all.

For those reasons, we would be wise to concentrate on the long-term advantages of the system proposed by the Government and to resist the introduction of an extraneous element.

Mr. John Wells (Maidstone)

The hon. Member for Chislehurst (Mr. Macdonald) has castigated hon. Members on this side of the House for apparently hankering for the 10s. system. He says that our argument for retaining the present-day 6d. piece, which he persisted in calling by the inelegant name of the "tanner", seems to show that we are harking back to a system which has already been condemned. But the hon. Gentleman is harking back entirely to this system when he says how inconvenient the new halfpenny piece will be and how inconvenient the present 1d. piece is, because, by implication, he is urging galloping inflation which will abolish the new halfpenny piece and, therefore, enable the pound and the new system to become realistic and reasonable.

The hon. Gentleman used the phrase, "We are setting up a system of currency which will still be working in a hundred years' time". I believe that we are setting up such an incredibly awkward and inelegant system of currency that it is extremely unlikely that it will be working in a hundred years' time.

I believe that I may have shown the hon. Gentleman in Committee the humorous medal which has been going around for some time dated 1971 which, on one side, has the figure of a little Britannia, apparently in the likeness of some well-known person, sitting puffing at a pipe and, written round the perimeter, "25 cents or such lesser sum as I may determine". This is precisely indicating that the hon. Gentleman and his right hon. Friend puffing at his little pipe are advocating such galloping inflation that this system that they are bringing in —

Mr. Speaker

Order. We must now come to what the hon. Member for Chislehurst (Mr. Macdonald) inelegantly called the "tanner" Amendment.

Mr. Wells

I am grateful for your reminder, Mr. Speaker. The point I am leading up to about the tanner is that it should be retained for at least a transitional period, because I believe that this currency which is being set up is likely to be a transitional and ephemeral currency. I do not think that it will last for all these years that lie ahead.

In Committee the Parliamentary Secretary indicated that the 6d. piece could be dispensed with. One of his arguments was that the "tickey" in South Africa had never really got going. I put the specific question to him but never got an answer then, so I ask it again in the hope that I may get an answer: was the "tickey" ever used as a parking meter or similar currency item? If not, then it naturally disappeared very quickly because there was no demand for it. It may have been used for parking meters, in which case the hon. Gentleman's argument may be valid. However, when he says that the "tickey" was abandoned rapidly and advocates this as an argument for abolishing the 6d. now, I question it. I should like a specific answer on that point.

The 6d. is used widely in parking meters. Hon. Members coming into the Chamber have been given a hand-out by the R.A.C. about this point. I was given mine only a moment or so ago. I see that a number of local authorities, according to the R.A.C, are already altering their parking charges in view of the proposal to abolish the 6d. I see that Maidstone is among those local authorities. This is news to me. Westminster, Kensington, Chelsea, Maidstone, Camberley, Gosforth, Glasgow and Perth are among the towns and cities which are adjusting their parking charges' on the assumption that the 6d. will be abolished. This seems decidedly inflationary and hostile to the interests of the motorists.

Mr. Lubbock

Not necessarily.

Mr. Wells

The hon. Gentleman says "Not necessarily".

Mr. Lubbock

If they have to use the shilling, they could allow twice as long on parking meters.

Mr. Wells

The hon. Gentleman is wrong. Many people do not want twice as long. We had the same argument when the Post Office abolished the 3d. slot in telephone boxes and said that people could have twice as long for 6d. But, as we heard in Committee, my hon. Friend the Member for Ormskirk (Sir D. Glover) can send the most loving messages to his wife for 2d. My hon. Friend is obviously a very accomplished married man in this matter. But many people wish to get the minimum time for the minimum unit. Therefore, I believe that the 6d., or the "tanner", could play a very real rôle in parking meters and so on for a long time to come.

Sir Douglas Glover (Ormskirk)

The hon. Member for Chislehurst (Mr. Macdonald) talked about getting rid of the new halfpenny, which is the equivalent of our present 1d. Does he not remember —

Mr. Speaker

Order. It helps the Official Reporters and, indeed, the Chair if hon. Members debate through the Chair at each other and not directly to each other.

Sir D. Glover

I apologise, Mr. Speaker. Your rebuke is more than justified.

My hon. Friend the Member for Maidstone (Mr. John Wells) will realise that the right hon. Lady the Secretary of State for Employment and Productivity, ran a great campaign about the outrage of women having to pay 1d. to go through the turnstiles in certain establishments. The hon. Member for Chislehurst says that the new halfpenny should be done away with. A fat lot of use it will be for these ladies going through the various turnstiles to be told that they can have twice as much time but they must pay twice as much!

Mr. Wells

I do not wish to follow my hon. Friend in this direction at the moment.

Time and again the Government have propounded the argument—and the hon. Member for Chislehurst deployed it in part this evening—that having a coin which is the odd-man-out of a series is inconvenient for some reason. In our present system there are plenty of odd-men-out. The half-crown is an odd-man-out looked at in one way. Although France and other continental countries have had a metric and kilo system since the time of Napoleon, people still, generally speaking, buy butter by the demi-livre, which has nothing to do with a kilo. Because a unit of conventional trade is an odd-man-out within the Government's concept of tidiness it does not mean that it is necessarily a bad coin. I deprecate this inordinate desire for tidiness. It will do nobody any harm if the 6d. piece is left in circulation for a little longer. It might be of value. It might stem inflation by a little, if only for the motoring public and some of the slot machine vendors.

7.30 p.m.

I must repeat a thought which I tried to put to the Government in Committee. Some slot machines work by gravity feed while others work electronically on the fall of a much lighter coin, generally speaking the so-called silver coins. Our current copper coins work machines by gravity. If we are to have the 1 new penny, 2 new penny and 3 new penny pieces, they will probably be of the heavier kind which will work gravity machines. It will be extremely inconvenient if we do not have coins of a single style which can work as weight multiples of each other. I hope that the Government will look at that again.

Perhaps I might give one example from my specialist sphere, horticulture. In the past year we have had great difficulty in trying to decimalise in the bunching and packaging of flowers into tens instead of dozens. Auctioneers and other salesmen who are in the habit of selling swiftly in the market by the natural mental processes of the buyer are able to do so if things are bunched in dozens, which is the way they like to bid, in sixpences and shillings as we now understand them. I do not doubt that our market salesmen are men of great ability and quickness of mind, but if the 6d. piece is done away with there will be further difficulties in the auctioning and swift selling of units, just as we have had great difficulty in the bunching of flowers in tens.

I realise that all this may mean nothing to the Government. They do not care about the unwarranted difficulties which they are creating for all these people. If the 6d. piece is left in circulation for an experimental period, and if at the end of that time it is found to have gone out of use, as the "tickey" did in South Africa, I shall be happy to come back and tell the Minister that I was wrong, and that it should be done away with, but tonight I believe that the 6d. piece should be kept.

Mr. Gwilym Roberts (Bedfordshire, South)

My hon. and learned Friend will have to produce much stronger arguments than he has done so far if he is to get my support for his attempt to remove the tanner. We accept that this is in many ways a rather lighthearted debate, but, having said that, I must add that an important issue is at stake.

In replying to a question that I asked the other day the Minister of State said that there were 1,900 million 6d. pieces in circulation, and that his estimate—and it can only be an estimate—of the number of insertions of 6d. pieces into various types of machines was about 11,000 million a year. This means in common or garden terms that every man, woman, and child inserts a 6d. piece into a machine of some kind about 200 times a year, or four times a week. When we note that, we realise that this humble coin plays a very important part in our lives.

The 6d. piece has considerable advantages. One great advantage—and no one has mentioned this so far—is its weight. It is possible to carry several 6d. pieces in one's pocket without any difficulty. It is used on innumerable occasions—when one wants to make a telephone call, when one wants to park one's car, and, what is extremely important, on the one-man buses. It has not been easy to get these one-man buses into service. There was strong feeling about their introduction, but their operation depends upon people having 6d. pieces to pay their fares.

It was said in Committee that there might be problems associated with the weight of the new coins. It was also said that the complexities of conversion might be considerable. There is also the real danger that converting old coins into new coins will lead to price increases. I am sure that the House welcomed what the Postmaster-General said about the 2 newpenny piece which is 4.8d. The hon. Member for Ormskirk (Sir D. Glover) said that not everyone requires the same amount of time to make a telephone call, and we therefore welcome what my right hon. Friend said, but there is a danger that in the general context of motoring, travelling on a bus, and other matters for which it will be necessary to do the conversion calculation, great difficulty will arise, and in addition we may find ourselves faced with a price increase.

Those are some of what I regard as the minor arguments against the removal of the 6d. piece. I believe that the major argument for retaining it is this question of landmarks in our coinage system. Switching over to decimalisation will represent a big change for the bulk of the community. It will bring many trials and heartaches. From the point of view of the housewife and the old-age pensioner collecting his pension, the more familiar coins there are the better it will be.

I have read the Committee stage reports very carefully. The Minister put the argument that there can be difficulties associated with conversion. I think that he talked about changing 30d. and getting 25 new half-pence. What we have to realise is that for a long time people will think not in terms of the new penny, but in terms of the old one.

Mr. Macdonald

Nonsense.

Mr. Roberts

I disagree with my hon. Friend. I maintain that for many years people will think in terms of the old 1d. In the old system, one can make up a simple amount like 9s. 6d. by means of four florins, one shilling and a sixpence, but if there is no equivalent for the sixpence, the individual will be lost.

My hon. Friend the Member for Chislehurst (Mr. Macdonald) said that this was a fractional coin, but that is not a strong argument. One of the first things that one learns in mathematics is that fractions and decimals are basically the same. Every coin is a fraction of something. Despite the arguments in Committee that the half-crown and coins like the 25 cent piece are not fractions, I believe that they are fractions as much as the sixpence.

I hope that my hon. and learned Friend will put forward stronger arguments. The main argument seems to have been that once sixpences are gone, the machines will be obsolete. But familiarity is a great argument. We must make the change as easy as possible, and this can be done by keeping the traditional sixpenny piece. I hope that my hon. and learned Friend will consider what I have said and, even at this late stage, consider accepting the Amendment.

Sir D. Glover

The Minister of State must be slightly embarrassed, because he has brought back a slaughtered calf with no head and is now trying to do a transplant operation to sew the head on again—

Mr. Taverne

It has been sewn on.

Sir D. Glover

But we all know from transplant: operations that that does not mean that it will stay on. I intend to do my best to get some red blood in the carcase to make this work.

I like the hon. Member for Chislehurst (Mr. Macdonald), with whose arguments on many subjects I agree, but he seems to be very confused on this matter. By talking about this new currency going on for hundreds of years, he implied that this was the case with our present currency. This is basically true, but during those hundreds of years, a coin which was in common use in the Middle Ages, the groat, has disappeared and a coin which was in common use when I was a boy, the farthing, has also disappeared. No law of the Medes and Persians says that a coin must exist for ever.

No one on this side wants the Government to give a binding undertaking that the tanner or the shilling will remain for ever, but we want to control inflation and it would be wise to have a 2½d. piece, at least for a transitional period of five or ten years, to save the cost of alteration of vending machines and allow that industry to keep down the cost of parking and, ultimately, the cost of living. I should have thought that the Government would enthusiastically support our campaign.

7 45 p.m.

The hon. Member for Bedfordshire, South (Mr. Gwilym Roberts) years ago fought a delightful campaign against me. I was successful then, but I hope that we can form an alliance and both be successful now. After a good deal of research, he speaks of 11,000 million transactions, or four per person per week. Without the 6d., parking will probably go up to the next coin, the 1s. Those figures which the hon. Member gave, which were announced in reply to a Parliamentary Question, show what will happen for a family of husband, wife and one child. With 12 transactions a week, they will have to find 2s. 6d. a week more to balance their costs.

Mr. Gwilym Roberts

The facts are even worse, because the figure of 11,000 million was an estimate of insertions into meters and vending machines alone, so the actual number of uses of the 6d. must be much greater.

Sir D. Glover

I am grateful to the hon. Gentleman. His contributions in this matter have been weighty and well-informed. But the smallest of my calculations means that the cost of living of that family will rise by 2s. 6d. a week, an important amount of money. I cannot understand the Government resisting the Amendment. We do not say that the 6d. should last for ever. We are trying to avoid the rounding up for commercial gain which will inevitably result in increased costs. The R.A.C. brochure which has been mentioned said that certain councils are already saying that they will alter their parking charges in this regard.

I accept that, over a period, the normal parking charge will probably rise from 6d. to 1s., but surely this time of financial stringency is not the moment to encourage it, thus creating further inflation and demands for increased incomes. Our job is to make this change with the smallest possible upset; this is the point which the hon. Member for Chislehurst seems to miss. We are prepared to accept that, in five or seven years, because of increased traffic, councils might raise parking charges to 1s. and chocolate bars might legitimately cost 7½d., or, to be exact, 7.2 pence. A great deal of upheaval would be avoided if we retained the 2½d. piece, if only for a time.

Mr. Macdonald

The hon. Gentleman is suggesting that this coin should be kept for a short while, and, that, after that period the matter should be reconsidered. How does he reconcile that argument with Amendment No. 10, which proposes to do away with the two new penny piece? If that were accepted there would be no question of rethinking the matter after a while. One would have to keep the 2½d. piece, which means that it is a little smooth of the hon. Gentleman to suggest the possibility of rethinking the matter in, say, five years' time when one would be stuck with that coin.

Sir D. Glover

I am not responsible for my brother's thinking. I am speaking to this Amendment. For all the hon. Member for Chislehurst (Mr. Macdonald) knows, I may oppose Amendment No. 10. There is by no means complete unanimity on this matter. I would be prepared to accept an interim period in which we had coins worth 2 new pence and 2½ new pence.

Mr. Higgins

Perhaps I did not make my argument clear at the outset through trying to be brief. My own perference would be for a sequence of ½ new pence, 1 new pence, 2½ new pence and 5 new pence. This is why several Amendments appear on the Notice Paper. The alternative sequence would be; ½ new pence, 1 new pence, 2 new pence, 2½ new pence and 5 new pence. If the Minister prefers to accept the second sequence I should not insist on pressing the Amendment to eliminate the 2 new pence piece. If the second sequence were adopted, the 6d. might drop out of use quickly, whereas if the first sequence were adopted it might continue in use for many years.

Sir D. Glover

I am obliged to my hon. Friend for explaining the matter further. Hon. Gentlemen opposite will see that my hon. Friends are not being dogmatic about this. One need only read the OFFICIAL REPORT of our debates in Committee to see that there is not party unanimity on this matter. I am sure that if there were a free vote the House would support the retention of the "tanner" for a given time, for we want to see a smooth changeover.

I regret to say that whatever views are expressed the Minister will stick to his original argument. I have no doubt that his Ministerial brief has "reject" stamped on it in large red letters. This Amendment is not likely to get far, therefore, despite the overwhelming view of hon. Members who have spoken on this subject.

In view of the lack of wisdom shown by the Government in other matters, they are unlikely to accept our argument on this occasion. If they have any wisdom they will accept the Amendment because it will give them the flexibility which is necessary in making a change of this kind, and will overcome the difficulty about which we have been speaking.

Mr. Lubbock

For the sake of tidiness, it is best to avoid fractional coins in a decimal system. My first inclination, therefore, would be to adopt the Minister's point of view and oppose the Amendment. This is one of the difficulties of having a system based on the £ instead of 10s. Had the case which we were making three years ago been accepted by the Government, this problem need not have arisen. Now we must try to design a system which causes the minimum of inconvenience, even if it is not as arithmetically tidy as we would have liked.

It is obvious that the 6d. piece must be retained during the transitional period, which may last for as long as 18 months, according to the Decimal Currency Board. If the Minister accepted the Amendment he would not be prevented from asking Her Majesty to make a proclamation demonetising the coin at the end of that 18 months' period. In the meantime, he would have additional flexibility. If he found at the end of the transitional period that the 6d. coin was still being demanded on a wide scale by the public, he could extend the transitional period. On the other hand, if he discovered that everything was going swimmingly and that the Decimal Currency Board was happy with the transitional arrangements, the one fly in the ointment, the 6d. piece, could go. The Amendment would give him that little extra flexibility, and he should welcome it.

Far from going out of fashion, more and more 6d. pieces are being snapped up by the public. On 11th March I asked the Chancellor of the Exchequer … how many … sixpences … were minted by the Royal Mint in 1968; how many … will be minted in 1969 … The Financial Secretary to the Treasury replied in a Written Answer. In 1968 the Royal Mint struck … 76 million sixpences … In the first six months of 1969 the Royal Mint plans to strike … 85 million sixpences."—[OFFICIAL REPORT, 11th March, 1969; Vol. 779, c. 255–6.] Thus, the Royal Mint takes the view, based on the demands placed on it by the banks, that 6d. pieces are required.

I discussed this matter of old coinage with officers of the Royal Mint when I visited the Mint the other day. As I saw the number of old-type coins being produced I asked, "How does it come about that, with decimal currency shortly to be introduced, you are producing for circulation so many old coins?" I was told that, to a large extent, the Mint had to work to the demands placed on it by the public, as conveyed through the banks. The result is the number of 6d. pieces being produced in the first half of this year. This indicates that the public require this coin for their daily transactions.

When we discussed this matter in Committee the Minister said, in effect, that we should not prolong the agony and that, if the 6d. piece is to go out of circulation, we should kill it off quickly. I suggest that the 6d. piece should be kept, although the Minister should, at the same time, inform vending machine manufacturers and local authorities that it is only an interim measure. He should make it clear that, for parking meters and other machines, the 6d. piece will not have an extremely long life and that it would be unwise of them to buy machines designed to take 6d. pieces.

The hon. Member for Maidstone (Mr. John Wells) is lucky to pay only 6d. when he parks his car. I have found in London that the normal charge is 1s., and often 2s. It is unlikely that local authorities have been installing in recent months parking meters that take sixpences. If they were encouraged by the acceptance of this Amendment to go back on the programme of converting to other coins all that the Minister would have to do would be to make clear that he is not pre-judging going back to the use of the 6d.

8.0 p.m.

Sir D. Glover

Not all hon. Members present represent London constituencies. I think they would agree that the usual initial charge outside London still is 6d.

Mr. Lubbock

I accept the hon. Member's word for that. Perhaps they are slightly less inflationary in the Provinces than we are in London.

At the instigation of the Government, the Decimal Currency Board has been quite inflexible on the matter of compensation. Certain industries will be faced with serious burdens as a result of the abolition of coins now in everyday use. I think particularly of coins which are used to buy sweets and other items at low prices. If we are to force operators of these machines to spend large sums of money unproductively in converting to other coins and if at the same time we are to say to chocolate manufacturers and others that they must design new packets and reorganise the whole of their production lines, there will be very substantial expenditure with no economic benefit whatever to the nation. This will take place at a time when we can ill afford it.

I am concerned not only with industries which will be penalised but with the general economic situation. The Minister of State should take this into account in deciding what advice to give the House on this Amendment. Very powerful arguments have been put in its favour. It would cost him nothing to accept it, but it would save the country a great deal of money.

Mr. John Hall

The hon. Member for Orpington (Mr. Lubbock) has made some very telling points, particularly in drawing attention to the increasing popularity of the "tanner". I want to come back to the main theme which has run throughout the debate, the inflationary effect of dispensing with the tanner. The introduction of decimal currency will tend towards inflation and this would be added to by abolishing the 6d. piece. It is the overriding duty of the Government to avoid anything which leads to inflation. The inflationary argument is one of the strongest in favour of this Amendment.

The second argument, which has been stressed in various ways by hon. Members, is the capital expenditure involved in converting machines. Will the Minister of State tell us how much it will cost the Post Office, for instance, to convert telephone coin boxes? How much will it cost makers of vending machines who are likely to be affected, including the manufacturers of meters, if the 6d. is removed from the coins of the realm? I imagine that it will be a fairly large capital sum. When we consider the total cost of converting to decimal currency, which was quoted in the White Paper as about £128 million, we see that this will be a burden on the nation at a time when the country cannot afford such a burden. It will not add to any extent to the economic strength of the country. Anything the Government could do at least to defer for a considerable time some part of that expenditure would be welcome.

In his reply the Minister of State should deal with the removal of the 6d. coin, its effect on inflation, and the cost problem. I think it would avoid considerable cost for a considerable time if the "tanner" were kept. It would avoid making many changes which would have to take place in vending machines of one kind and another.

Mr. Taverne

I will first dispose of two points with which I do not propose to deal in depth. The first is the question of capital cost, which can be further discussed when we deal with compensation. Second, there is the question of flexibility. That does not affect the merit of the argument because it is perfectly possible for the Government to make a proclamation that the 6d. will not be demonetised but will continue as a coin of 2½ new pence in value. We resist the Amendment because we want to make the position quite clear. Flexibility is there whether or not the Amendment is passed.

There are two main approaches to this question. There are the long-term approach and the transitional problem. Most of the discussion in the House has been about the transitional problem, but I should say something about the long-term question. It arises because one of the Amendments we are discussing in this group is whether or not the 2 new pence piece should be removed. There are two main fallacies in the argument on the long-term directed towards keeping the 6d. The first is that what is popular in an £s.d. coinage system will be popular in a decimal currency system. This clearly is not so as many experiments have shown and as experience in other countries has shown. Experiments show that the use of a coin which includes a fraction is more difficult to handle than a coin which itself is a fraction like the ½ new penny. It slows down payment and increases the number of errors.

It has further been shown that in change-giving the 6d. coin or the 2½ new pence coin will not be used in the way in which it is used at the moment. This is not just the view of the Government. It is not just the view of the Halsbury Committee, and not just the view of the experiments carried out by Dr. Sheila Jones. This is something which has been realised by many people in trade. It has been made clear that large stores are planning and training their staff on the basis of giving change not in sixpences but in terms of the 2 new penny coin and the 1 new penny coin and the ½ new penny coin.

They are doing so because they realise that one cannot train young girls of 16 as effectively in change-giving if they are encouraged to use the 2½ new penny as by proceeding with twos and ones and getting rid of the ½ new penny by adding the individual half penny.

It was also the experience in other countries that in change-giving, which constitutes 80 per cent. of the transactions carried out in the retail trade, the 2½ new penny coin will not feature. It is a mistake to suppose that the 6d. coin would be popular under the new system in the way in which it is under the old. Most big stores are training their staffs on the basis of ignoring the 6d. even over a long period. No doubt the hon. Member for Ormkirk (Sir D. Glover) noticed a letter in the Financial Times by the Chairman of the Decimal Currency Committee of the Retail Distributors Association pointing out that the arguments for the 6d. are misconceived. He said: Most sectors of retailing are now well advanced with planning for decimalisation, and these plans do not include the use of the 6d. coin. … New methods of change-giving will be taught". It was made clear that they did not cater for the 6d.

Sir D. Glover

All that that argument means is that if I am a retailer and if for two years I have been working on the basis of the Decimal Currency Bill, I have been making my arrangements on that basis and, therefore, I do not want at this late stage to have the machinery altered. That argument does not touch the arguments we have been making about parking meters, slot machines, and so on, because these retailers do not deal with them.

Mr. Taverne

Of course it does not touch the argument about slot machines. That is a quite different argument, which I shall tackle separately. This is a point of fundamental importance which hon. Members opposite have neglected. In the change-giving process in the new decimal currency the 2½ new penny piece will not be a convenient piece to use and will not be used.

The second aspect of the long-term argument, which has been neglected by hon. Members opposite, is that it does not follow that a popular pricing system under the old system will be a popular pricing system under the new system. It is possible to arrange a new pricing and packaging system generally which will not be inflationary but which will no longer be based on the old 6d.

Mr. Gwilym Roberts

I am worried about the point made by the hon. Member for Orpington (Mr. Lubbock) about packaging. This is a cardinal point. If industry is geared to a present tanner packaging, enormous industrial costs will be involved in moving to a new unit of packaging.

Mr. Taverne

Of course costs will be involved. No one denies that costs will be involved for industry in changing over to the new decimal system. This has been made clear from the start. But it is totally misconceived to argue that it is impossible to have a new form of pricing and packaging without increasing the cost to the customer. Individual items can be arranged; the pricing and the packaging can be arranged so that in terms of value for money there will be no inflationary effect as a result of the change to the decimal system. We are not discouraging retailers from using the new halfpenny in the pricing of low-priced goods. It is totally false to argue that because things will still be priced in 2½ new pence, for example, we must have a 2½ new pence coin. At the moment, although it is popular to price articles in amounts ending with l1d., it does not follow that we need an eleven penny coin.

Let me come now to the arguments which mainly prevailed in the debate These were the arguments about the transitional arrangements. There is one point which hon. Members have totally neglected. The hon. Member for Orpington (Mr. Lubbock) should have paid slightly more regard to this. There is nothing that the Government can do to ensure the popularity of the tanner under the new decimal system. What is absolutely vital in considering what will happen is to consider how cash flows. The reason why sixpences are popular is that sixpences are drawn from the banks by retailers. They are drawn from the banks by retailers because at the moment the sixpence is a very popular way of giving change. There is a net movement of sixpences out of the banks to retailers. There is a net movement from retailers to customers. It is true that sometimes people pay in sixpences, but they receive more sixpences from retailers than they give back to retailers.

The next part of the flow is that these sixpences then find their way from the pockets of the public into coin-operated machines. There is a net flow from coin-operated machines to the banks. Therefore, the popularity of the sixpence depends basically on the fact that under the £.s.d. system it is a very easy change-giving unit for retailers. Once it ceases to be a popular change-giving unit for retailers, the public will not be able to get their sixpences. The fact that there are now millions of transactions in which the public use sixpences is a reason for making it quite clear that the sixpence will be demonetised, because if coin-operated machines continue to keep their sixpenny coin slot the result will be that there will be masses of machines which are still ready to take the sixpence but there will be no sixpences that people can put into the machines.

8.15 p.m.

Mr. Lubbock

If the Minister of State is so absolutely certain that after D-day the sixpence will cease to be a popular coin, why did he allow the Royal Mint to produce 85 million of them in the first six months of last year, at a cost to the taxpayer of £140,000?

Mr. Taverne

The reason why sixpences are produced at the moment is that sixpences are in great demand. It is the duty of the Mint to meet the demand that the public puts forward. When there is no longer a demand, when the public will not be getting the sixpences because the retail trade will no longer be providing sixpences to the public, then the supply of sixpences for the public to be put into coin-operated machines will dry up. The Mint must meet the demand. The demand will cease to exist far more rapidly than hon. Members realise or even imagine during the transitional period. This was found to be the case in South Africa with the "tickey". South Africa said,"Let us keep the ' tickey ', because it is a popular coin". Then it found, contrary to its expectation, that because a coin which includes a fraction is not a convenient coin for change-giving, the "tickey"proved to be far less popular than was imagined. There is one difference between South Africa and this country —

Mr. Lubbock

Only one?

Mr. Taverne

I must correct that at once and say, "as far as the ' tickey ' and the sixpence are concerned ".

The hon. Member for Maidstone (Mr. John Wells) asked whether the "tickey" was widely used for coin-operated machines in South Africa. The answer is, "No". The result is that, where it is not used for coin-operated machines, the "tickey" will stay in circulation much longer than the sixpence will in this country, because it is the coin-operated machines that remove the sixpences from circulation, that supply the sixpences to the banks, where the net flow is from the coin-operated machines to the banks. Therefore, it will be a far faster process of removing the sixpences in circulation in Britain than ever happened in South Africa with the "tickey". If retailers are not drawing out sixpences, they are quickly removed from the public by coin-operated machines. Sixpences will not be drawn out by retailers. Therefore, there is more likely to be a rapid removal of the sixpence than there ever was with the "tickey".

Sir D. Glover

I have a good deal of knowledge of the retail trade. I think the Minister of State is on a very dangerous argument. What he is saying is that prices in the shops will alter, because if prices in the shops do not alter a purchaser will get the same amount back in change. If I want to buy something which was 19s. 6d. before decimal currency and which should be 19s. 6d. after the change-over to decimal currency, I want a coin back which will give me the same change out of my £1 note as I got before decimalisation. If I do not get it, it means that the price has risen.

Mr. Taverne

What the hon. Gentleman is totally unable to do is to transfer in his imagination from an £ s. d. system to a decimal system. He is still arguing that because in the £ s. d. system the 6d. is a popular coin in change-giving, therefore it must remain one in the decimal system. This is what the South African experience shows to be untrue.

The fact is that there is nothing that the Government can do to stop the 6d. from going out of circulation. What would be the result if we were to accede to the arguments which have been advanced tonight and were to say, "We will see whether or not the sixpence proves to be unpopular"? The result would be likely to be confusion and frustration and a bringing of discredit on to the new decimal currency system. What would happen would be that the 6d. would go out of circulation; machine operators might be encouraged to wait and see and not to convert their machines; the machines would still be there waiting for the sixpences, but the public would no longer have the sixpences in their pockets. That is what would result if we were to encourage the 6d. to remain after the transitional period. It is absolutely essential, for the effective transition and the smallest possible dislocation, an object which we all share, to make it quite clear that the 6d. will be demonetised, to ensure that the trade and the machine operators have a firm basis on which to plan, and to see that the transition takes place as rapidly as possible.

It is then said that even if those arguments are true there is nevertheless bound to be an inflationary effect as far as the machines are concerned. It is very important to look at what the machine position is. There are about 1.7 million machines operated by sixpences. The largest single group, which consists of television meters, totals just over 600,000. They are fitted to ensure that the rent or hire-purchase payment is available when due, and the excess is returned to the user when the meter is emptied. If these meters use different coins for a different time there is no reason why that should or need be inflationary.

The second largest group, about 300,000, consists of amusement and gaming machines—mainly fruit machines, pin tables and juke boxes. Stakes and winnings can be increased commen-surately, as can the amount of time sold; so there is no need for an increase in the cost of living.

The next largest group is telephone call boxes. As my right hon. Friend the Postmaster-General has announced the intention is to change them so that the minimum fee will become 2 new pence, and, again, there is no reason why this should be inflationary. Indeed, taking the arguments advanced by some hon. Members opposite, this could have the opposite effect. It is rightly said by some that in certain cases the time can be adjusted. One may not necessarily want the extra time. I will not say what will happen if a smaller unit is used as the basic unit, as the 2 new pence unit will be, because I cannot predict. It is possible to adjust the time downwards, and those who wish to speak for only half a minute or a few seconds can do so at a smaller cost than they did before.

The next largest group of meters is gas and electricity meters, mostly electricity. In all, there are about 10 million gas and electricity meters, of which about 100,000, or 1 per cent., take sixpences. They are being changed to operate on shillings, and the amount of gas or electricity supplied can be changed as well; so again there is no reason for there to be any inflation.

One comes down in the end to parking meters, where one could make adjustments to ensure, if one wished, that there was no inflation with smaller coins. I cannot anticipate what local authorities will

do. Apparently some are changing to higher coins; many were doing so in any event. The hon. Member for Orpington made a perfectly good point about parking meters.

There is a point on the 100,000 machines selling chocolate and confectionery. But many of these now sell shilling bars for two sixpences, and there is no reason for any inflation here, because a 5 new pence piece can be inserted where two sixpences are inserted now, although one will no longer have a 6d. to put in. The amount of chocolate one gets for a shilling is more than double the amount one gets for 6d. The 6d. bar of chocolate is becoming rarer, and it is possible that a change might have to be made in any event.

There are 100,000 machines selling aspirins and indigestion tablets. These can be converted to take 5 new pence or 2 new pence coins and the number of tablets can be varied proportionately.

Looking at the vast majority of machines which will have to be adapted, I see no reason to suppose that the change need bring about any general inflation of prices.

The main fact is that the sixpenny piece is a convenient coin in the old system, and that the 2½ new pence unit will not be a convenient coin in the decimal system. Whatever the House says about this will not affect the practice, the flow of money, the machine transactions and the change-giving transactions in the shops, because they will be carried out differently in the future. Whatever one would like to do with machines, if we encourage the hope that the 6d. will remain we make planning more difficult, are likely to lead to the frustration of the public and are not likely to achieve the easy transition the whole House wishes to achieve.

Question put, That the Amendment be made:—

The House divided: Ayes 80, Noes 102.

Division No. 135.1	AYES	[8.24 p.m.
Allason, James (Hemel Hempstead)	Buck, Antony (Colchester)	Dance, James
Atkins, Humphrey (M't'n & M'd'n)	Bullus, Sir Eric	Dean, Paul
Biffen, John	Campbell, B. (Oldham, W.)	Drayson, G. B.
Boardman, Tom (Leicester, S. W.)	Campbell, Gordon (Moray & Nairn)	Elliott, R. W. CN'c'tle-upon-Tyne. N.)
Body, Richard	Costain, A. P.	Emery, Peter
Brinton, Sir Tatton	Crouch, David	Eyre, Reginald
Brown, Sir Edwsrd (Bath)	Dalkeith, Earl or	Fletcher-Cooke, Charles
Fortescue, Tim	Knight, Mrs. Jill	Rossi, Hugh (Hornsey)
Foster, Sir John	Legge-Bourke, Sir Harry	Russell, Sir Ronald
Gilmour, Sir John (Fife, E.)	Lewis, Kenneth (Rutland)	Sharples, Richard
Glover, Sir Douglas	Lubbock, Eric	Shaw, Michael (Sc'b'gh & Whitby)
Godber, Rt. Hn. J. B.	Maclean, Sir Fitzroy	Smith, Dudley (W'wick & L'mington)
Grant, Anthony	Maddan, Martin	Smith, John (London & W'minster)
Grant-Ferris, R.	Miwby, Ray	Taylor, Frank (Moss Side)
Grieve, Percy	Maxwell-Hyslop, R. J.	Temple, John M.
Gurden, Harold	Maydon, Lt.-Cmdr. S. L. C.	Turton, Rt. Hn. R. H.
Hall, John (Wycombe)	Monro, Hector	Vaughan-Morgan, Rt. Hn. Sir John
Hawkins, Paul	Montgomery, Fergus	Waddington, David
Hay, John	Osborne, Sir Cyril (Louth)	Ward, Dame Irene
Higgins, Terence L.	Page, Graham (Crosby)	Wells, John (Maidstone)
Hill, J. E. B.	Percival, Ian	Whitelaw, Rt. Hn. William
Holland, Philip	Powell, Rt. Hn. J. Enoch	wilson, Geoffrey (Truro)
Hooson, Emlyn	Prior, J M. L.	Wolrige-Gordon, Patrick
Hornby, Richard	Pym, Francis	Worsley, Marcus
Iremonger, T. L.	Ramsden, Rt. Hn. James
Jennings, J. C. (Burton)	Rawtinson, Rt. Hn. Sir Peter	TELLERS FOR THE AYES:
Kimball, Marcus	Rees-Davies, W. R.	Mr. Bernard Weatherill and
King, Evelyn (Dorset, S.)	Rhys Williams, Sir Brandon	Mr. Jasper More.
NOES
Anderson, Donald	Houghton, Rt. Hn. Douglas	O'Malley, Brian
Ashton, Joe (Bassetlaw)	Howie, W.	Oswald, Thomas
Atkins. Ronald (Preston, N.)	Hughes, Emrys (Ayrshire, S.)	Owen, Will (Morpeth)
Atkinson, Norman (Tottenham)	Hunter, Adam	Page, Derek (King's Lynn)
Beaney, Alan	Hynd, John	Palmer, Arthur
Benn, Rt. Hn. Anthony Wedgwood	Jenkins, Hugh (Putney)	Pavitt, Laurence
Bidwell, Sydney	Jenkins, Rt. Hn. Roy (Stechford)	Peart, Rt. Hn. Fred
Blenkinsop, Arthur	Johnson, Carol (Lewisham)	Pentland, Norman
Booth, Albert	Kerr, Mrs. Anne (R'ter & Chatham)	Perry, George H. (Nottingham, S.)
Bradley, Tom	Loughlin, Charles	Randall, Harry
Buchan, Norman	Luard, Evan	Robertson, John (Paisley)
Cant, R. B.	Lyon, Alexander W. (Cork)	Rodgers, William (Stockton)
Chapman, Donald	McCann, John	Roebuck, Roy
Concannon, J. D.	MacColl, James	Rogers, George (Kensington, N.)
Crawshaw, Richard	Macdonald, A. H.	Ross, Rt. Hn. William
Dalyell, Tam	Maclennan, Robert	Ryan, John
Davidson, Arthur (Accrington)	McMillan, Tom (Glasgow, C.)	Silkin, Rt. Hn. John (Deptford)
Davies, Ifor (Govwer)	Manor, Peter (Preston, S.)	Silkin, Hn. S. C. (Dulwich)
Dunwoody, Mrs. Gwyneth (Exeter)	Manuel, Archie	Skeffington, Arthur
Dunwoody, Dr. John (F'th & C'b'e)	Marks, Kenneth	Spriggs, Leslie
Ellis, John	Marquand, David	Taverne, Dick
English, Michael	Marsh, Rt. Hn. Richard	Tinn, James
Ensor, David	Mason, Rt. Hn. Roy	Tuck, Raphael
Evans, Gwynfor (C'marthen)	Mendelson, J. J,	Wainwright, Edwin (Dearne Valley)
Evans, loan L. (Birm'h'm, Vardley)	Mikardo, Ian	Wallace, George
Fletcher, Ted (Darlington)	Millan, Bruce	Weitzman, David
Fowler, Gerry	Miller, Dr. M. S.	Wellbeloved, James
Fraser, John (Norwood)	Molloy, William	Wells, William (Walsall, N.)
Griffiths, Eddie (Brightside)	Moonman, Eric	Wilkins, W. A.
Griffiths, Rt. Hn. James (Llanelly)	Morgan, Elystan (Cardiganshire)	Willey, Rt. Hn. Frederick
Griffiths, Will (Exchange)	Morris, Charles R. (Openshaw)	Winnick, David
Hamilton, William (Fife, W.)	Morris, John (Aberavon)
Hamling, William	Moyle, Roland	TELLERS FOR THE NOES:
Harrison, Walter (Wakefield)	Newens, Stan	Mr. Joseph Harper and
Hart, Rt. Hn. Judith	Noel-Baker, Rt. Hn. Philip (Derby, S.)	Mr Neil McBride.
Hazell, Bert

Clause added to the Bill.