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Coinage (Measurement) Bill

Volume 729: debated on Friday 15 July 2011

Second Reading

Moved By

My Lords, apparently, the Olympic Games organisers some 2,531 years ago introduced the idea of coins for those games to appease those who were not able to get seats to watch them. I do not know if there is any particular parallel to be drawn from our current situation, but that is not the essence of what this Bill is all about.

I am grateful for the opportunity to present the Bill to the House this morning. Initially, therefore, I will deal with its technical aspects. This two-clause Bill makes a minor technical amendment to the Coinage Act 1971, which governs the striking of coins by the Royal Mint and contains various standards in respect of a coin’s weight, fineness, composition and dimensions with which coins struck by the Royal Mint must comply. The Act also makes provision for permitted variations from those standards. Section 1(6) of the Coinage Act 1971 requires that the variation from the standard weight of any coin be measured as the average of a sample of not more than 1 kilogram of that coin. This is perfectly fit for the purpose for which it was originally conceived. The current weights of UK circulating coins range from the 5-pence piece at 3.25 grams to the £2 coin at 12 grams. A sample of a kilogram is therefore a perfectly reasonable measure of the tolerated variation from the standard weight.

However, circulating coins is just one part of the Royal Mint’s business. As with all good businesses, it is constantly seeking to evolve, expand and explore new technologies and commercial opportunities. Such a commercial opportunity, of course, is presenting itself in that London will next year be hosting the Olympic and Paralympic Games. To commemorate this historic occasion the Royal Mint has designed an Olympic coin programme that is likely to be one of the largest ever in the history of the Olympics. It is worth visiting the Royal Mint’s website. Its 29 coins have been struck for each of the 29 participating sports. We should congratulate the Royal Mint on the quality of its designs.

As part of that programme, the Royal Mint is keen to strike kilogram coins. As I set out earlier, the current wording of the coinage act would effectively prohibit this. It is not possible to measure the variation from the standard weight in the case of the proposed Olympics coins because the weight of each coin is likely to be equal to or greater than the 1 kilogram aggregate limit in Section 1(6) of the Act. Clause 1 of the Bill therefore amends the Coinage Act so that the variation from the standard weight of any coin can be specified by royal proclamation as provided for in Section 3 of the Coinage Act 1971. That provides flexibility.

I am sure that your Lordships will appreciate that this removes a technical and legislative obstacle to the proposed Olympic coins and will allow the Royal Mint to develop and continue to develop new and innovative designs and exciting opportunities to continue to push coinage boundaries. We hope that our 2012 Olympics will be the best Olympic coin programme to date—and, of course, it will be self-funding.

The striking of kilogram coins has recently become part of the Olympic Games tradition. Most other host nations in recent years, such as Australia, Canada and China, have issued coins of this type and they have been extremely popular. Indeed, in the past 10 years over 40,000 Olympic kilogram coins have been issued around the world. The Bill will allow the Royal Mint to continue this tradition in commemoration of the London 2012 Olympic and Paralympic Games—and, indeed, any future important cultural or national events, subject to the approval of Her Majesty the Queen, the Chancellor of the Exchequer and the Royal Mint Advisory Committee.

Because of their large size, the kilogram coins will be an exciting, artistic and eye-catching part of the Olympic Games. The intention is for them to be significant works of numismatic art. The Royal Mint would approach high-profile artists to prepare these designs, and that is under way. Currently, the plan is to produce 60 gold coins and 14,000 silver coins, with a nominal value of £1,000 and £500 respectively. Judging from the reception that similar coins have had around the world, and after consulting with representatives of the coin trade and collectors, the Royal Mint is confident that United Kingdom kilogram coins will be extremely well received. These coins are being produced to the highest standards of socially responsible business, and the accreditation has been given.

The Royal Mint proposes to make its kilogram coins from 22-carat gold and fine silver. These coins will be the largest ever UK coins, with a diameter of 10 centimetres. The Olympic programme would generate royalties for both London 2012 and the Exchequer, as the Royal Mint corporate entity is 100 per cent owned by Her Majesty’s Treasury. Under the UK coin contract, the Royal Mint pays a royalty to Her Majesty’s Treasury for commemorative coins. It is estimated that the Olympic coin programme, including the kilogram coins, would generate an estimated royalty payment of approximately £2 million. At the current prices, 1 kilogram of gold costs approximately £32,000 and 1 kilogram of silver costs approximately £750. The retail prices are therefore likely, on today’s estimates, to be £40,000 and £1,250 respectively.

Through these royalties, the Olympic coin programme will contribute to funding the London 2012 Olympic and Paralympic Games. This is of course a commercial enterprise and the Olympic coin programme will also generate revenue for the Royal Mint. The amount that the Royal Mint will make will depend on sales and on the final price of the coins, which will largely be determined by the price of gold and silver closer to the event. The Royal Mint being 100 per cent owned by the Treasury, all profits will end up in the public purse. For the past three years, the Royal Mint has paid a dividend from profits directly back to the Treasury as a shareholder.

Noble Lords will be reassured to hear that these kilogram coins form just one part of a whole range of products that the Royal Mint is issuing to commemorate the 2012 Olympics. The striking of kilogram coins will not be limited to commemorating the Olympics. To ensure that London 2012 and future events of national significance can be appropriately celebrated with commemorative coins that will be held in posterity for years to come, it is first necessary to make these minor amendments to the Coinage Act 1971. Therefore, I commend the Bill to the House. I beg to move.

My Lords, when it fell to me to say a few words about this Act, a variety of things came to mind. A coin that weighs a kilo is certainly not small change or something that might be used in payment. Indeed, looking at the practicalities of putting these into circulation, I rapidly came to the answer that it would not happen. Therefore, calling them medals might have confused one or two of us rather less in the initial stages. However, from what the noble Lord, Lord Risby, has said, it is clear that such a coin would be either an investment or something that is kept. The only appropriate reference that I can find in literature is from Douglas Adams. One of his characters in Life, the Universe and Everything tries to pay with an American Express card millions of light years away from Earth, saying that they are accepted everywhere. The image of paying for something with this, using it as a normal coin, is almost incomprehensible to the average person. I suggest that this is a very good thing—a small thing but a good thing. I hope it will add a little to the whole experience of the Olympic Games.

My Lords, I fully support the Bill. I declare an interest since I work for the London Organising Committee of the Olympic and Paralympic Games in several areas, going back to the bid stages. The production of a commemorative coin is most welcome, not purely because of the interest of a significant number of collectors. The fact that the Royal Mint is the licensee for these coins and they will be made in the UK is also most welcome.

London 2012 has led the world of sport in showing the inclusion and diversity of disabled athletes. A 50p coin is currently in circulation that shows wheelchair rugby, which is a unique sport in the Paralympic Games. The Paralympic reputation is incredibly strong around the world. The production of these coins will send a strong message. It is more than a commemorative coin; it shows how British society values diversity. While the Olympics and Paralympics have been mentioned, I hope that the Paralympic coin will also be included. I ask that consideration be given to, and strongly encourage, continuing this positive message by producing Paralympic coins, which I see as a very important part of our Paralympic legacy.

My Lords, I am grateful to my noble friend Lord Risby for the clarity with which he introduced the Bill. I have a long-standing interest in commemorative coins. In 1986, my noble friend Lord Lawson, as Chancellor of the Exchequer and, therefore, Master of the Mint, and I had the honour of presenting a coin for Her Majesty’s approval. That coin was a £2 piece, which was connected to the holding of the 13th Commonwealth Games in Scotland at that time. Could we have launched a £2 coin for currency at that stage? I do not believe that we could. We had just been through rather a traumatic period, trying to get public acceptance of the £1 coin because people were so attached to their £1 notes. Time moves on and larger coins are now acceptable.

I shall make just a few comments, first about the size and format of the coinage, and secondly about design. Since the Middle Ages the English currency has been based on a weight relationship. A sixpence contained half as much silver as a shilling, and so on throughout the range of values. I remember 40 or more years ago, when I was a trainee cashier in the City, that coins were sometimes counted using a shovel. Since their weights were all in relation to each other, you could quickly assess how much money you had.

If you have a handful of change, there will be a mixture of round and seven-sided shapes, but it is difficult to feel or see at a glance how much is in your hand. That has come about—I am sure it was not in any sense a policy—through the gradual replacement of denominations, one after the other. This has meant that there is a changing size slot for the introduction of new coins. However, the result is that it has not been very easy for those who use them.

As to design, the Olympic coinage will identify itself prominently. However, since the 1990s, special commemorative coins have been issued for other reasons, celebrating greater or lesser occasions. The £2 coin that one is most likely to find in one’s pocket was introduced in 1997 to celebrate technological progress from the Industrial Revolution to the computer age. It shows one circle of buttons and another of what look like casts of a bunch of inebriated worms. More inspiration has subsequently been applied to this process. The design of the 2003 commemorative £2 coin, which looks a bit like a skipping rope to me, is meant to show the double helical structure of DNA. I would put big money on no other noble Lord having any idea about that; I did not myself until I looked it up for this debate.

There needs to be a degree of abstinence about striking commemorative coins. They are good and interesting but, if you overdo it, it rather spoils the market for specialist collectors. The other problem is that there is a temptation to use designs which are not widely familiar, such as the DNA one. The £2 coin is not really suitable for abstract or complex designs, even though it has often been used in that way. I make a plea that commemorative coins should not have designs that are too crowded. We should resist temptation to cram in as much as possible. We should leave it simple. There is no point in commemorating things if nobody recognises them. I entirely support what my noble friend and the noble Baroness have said. I hope that the new coin arrangements will be satisfactory and profitable.

My Lords, I speak in the gap to seek an explanation. The Bill refers to Section 1(6) of the Coinage Act 1971, but the version of the Coinage Act that the Printed Paper Office is handing out does not have a Section 1(6), so has the Coinage Act 1971 been amended in the intervening period? Could we have an explanation of how the sections tie up?

My Lords, there are few joys of being in opposition but one of them is not having to answer a question like that at short notice. I sympathise with the Minister in that regard.

The Opposition warmly welcome the Bill. On the innumerable occasions on which I spoke in this House as the former Minister responsible for DCMS, I never recall the issue of coinage crossing my desk when I spoke about the progress of the Olympic Games bid and its development. Here is yet another dimension of the Olympics which I heartily applaud. I think that, at times, we all must have some reservations about the extent to which the Olympic Games, which were born of the great amateur tradition in Greece and were sustained for a considerable period in the world in their modern form in amateur terms, have become commercialised. Here we are, a century or so after the modern Games were established, in an era in which everything is fairly professional and everything is likely to be commercial. It grates at times when you see some English teams proudly bearing the logos of major international companies. I hope that no British team bears the insignia of News International. If there is, it would be well advised to drop it fairly quickly. However, corporate logos play an important part in the Games; I guess that that is inevitable in this modern age.

However, we should have no reservations about the Royal Mint commemorating the Games and producing coins which are likely to produce a fairly healthy profit. I know that the Minister will seize with both hands the opportunity to praise this example of public enterprise. The Royal Mint has had an exceptionally good record, both while it was at the Tower of London and now that it is in Llantrisant in south Wales. It is a hugely successful enterprise. There is no doubt that the minting of these coins will result in significant gain to the Mint as the commemorative coins will be greatly valued.

I emphasise that there are aspects of the transfer of the Royal Mint to Llantrisant which have not been exemplified greatly in its products. I have never seen the Welsh dragon on any British coin. Given the location of the Royal Mint, it seems strange to me that it does not ensure that its ordinary coins bear some reference to Wales. That would not apply to all coins, of course, but we recognise that aspects of the United Kingdom are represented on £1 coins. However, the Welsh dragon, which is by far the most emphatic symbol of Wales, is not.

I wonder whether the noble Lord is familiar with the gold sovereign of Henry VII, which has a Welsh dragon on it. It is very small but it is quite easy to identify it.

My Lords, this House is always informative on all occasions. I was aware of Henry Tudor’s Welsh origins. I have never had any difficulty locating the circumstances of his birth and his commitment to Wales, although I do have great difficulty locating the relevant battlefield, given that historians have doubts about where Bosworth is located.

Noble Lords who have visited the Supreme Court will note that the Welsh dragon is not represented on the arms of the Supreme Court but the leek is. Is that because the dragon is extinct?

I do not know about that. I have never had any hesitation about the Welsh leek, nor the Welsh daffodil, which is somewhat prettier and has a less pungent and unattractive smell. I hear what the noble Baroness says; I merely indicate that I have not seen an ordinary coin in circulation which reflects the Welsh dragon, although the Welsh dragon is an important symbol of Wales. I am surprised that the Royal Mint has not represented that dimension.

With the extinction of the Welsh dragon, is it not more appropriate to say that the dragon that was slain by St George is also extinct?

I am not sure about that. St George is venerated in about eight other countries in addition to England. I do not think that there has ever been any suggestion that the evil monster that he struck down was a Welsh dragon—far from it, I have never seen a depiction of the dragon that St George destroyed which remotely resembles the red dragon of Wales. I am sure that my noble friend will agree with that.

It is important to empower the Mint not just in terms of commemorating the Olympic Games and the Paralympic Games. I am very grateful to the noble Baroness for introducing that important dimension. We hope that the World Athletics Championships will also be a success and that we can resolve that small matter which seems to be continually contested by a club for which I have a great affection, Tottenham Hotspur, about what is going to happen to the Olympic stadium. We have to get the Olympic stadium’s future absolutely clear, otherwise our ability to bid for significant events such as the World Athletics Championships will be damaged. The World Athletics Championships are not quite of the same significance as the Olympic Games but they are important sporting events in which the country takes great pride. We want the Mint to look at the serious issue of commemorating those events as well and this Bill will empower it to do that.

We should certainly be concerned about legacy because we would never have succeeded with the Olympics bid if we had not emphasised the Games’ very significant legacy for this country, particularly for deprived sections of the country such as east London. Commemoration is also important. This Bill gives us the opportunity to commemorate the Games in a very distinctive way. That is why I am delighted to applaud the Bill. The Opposition give it their full support.

My Lords, I start by thanking my noble friend Lord Risby for sponsoring the Bill and for leading this morning’s debate. I also thank all noble Lords for their welcoming comments. Several have given helpful advice—in particular my noble friend Lord Stewartby and the noble Lord, Lord Davies of Oldham, and their points are well taken. If I may, I will avoid inserting myself into the Welsh discussion, except to say that I have sympathy with the general point made by the noble Lord, Lord Davies.

The legislation put forward by my noble friend is neither complicated nor controversial. Indeed, the Bill completed its passage through the other place, again with universal support from all parties. I am happy to say at the outset that the Government support it.

In the course of its 1,100-year history, the Royal Mint has become one of the world’s leading international mints. Not only does it supply all coins circulating in the United Kingdom, it is the chosen supplier for more than 60 countries worldwide. Of course, a large part of its business—and the part that applies to today’s debate—concerns commemorative coins. It is understood that for almost as long as there have been coins, there have been coin collectors. Originally hoarded for their bullion value, coins later started being collected for their artistic value. In this century, coin collecting is no longer an exclusive pastime reserved for the privileged classes. Indeed, its growing popularity has led to a re-coining of its description, and it is now known by many as the king of hobbies.

As such a long-standing and traditional pastime, it is perhaps unsurprising that market and consumer demand has evolved—which brings us to the reason we are here today. As we have heard, the Bill seeks to amend the Coinage Act 1971 in order to accommodate that evolution of demand and allow the Royal Mint to strike 1 kilogram coins. Experience shows us that there is a sizeable international market for kilogram coins. In the past 10 years, more than 40,000 Olympic kilogram coins have been issued around the world. Kilogram coins are an enduring keepsake, a lasting investment, and a valuable piece of numismatic art and history. It is therefore right that the London 2012 Olympic and Paralympic Games should follow their predecessors and feature kilogram coins as the crowning pinnacle of the Royal Mint’s Olympic coin programme.

Overall, it is estimated that the Olympic coin programme will generate approximately £2 million in royalty income for Her Majesty’s Treasury, as well as royalties for the London organising committee, the International Olympics Committee and revenue for the Royal Mint. Of course, the legislation does not limit the striking of kilogram coins to the London 2012 Olympic Games. Future events of national cultural and historical significance would also be able to be commemorated with kilogram coins. As such, this Bill will have a weighty impact for generations to come.

I echo the comments of the noble Baroness, Lady Grey-Thompson, about London’s leadership in diversity in its approach to these Games. The Royal Mint Olympic coin programme has represented both the Olympic and Paralympic movements in its designs for the gold and silver kilogram coins, which commemorate the London 2012 Games as a whole. The entire Olympic coin programme has been developed in collaboration with LOCOG. It and the Royal Mint are committed to ensuring that both the Olympic and the Paralympic Games are appropriately commemorated. As my noble friend Lord Risby said, the legislation does not limit kilogram coins to the Olympic Games alone. Thereby, other significant occasions can be similarly commemorated.

The right reverend Prelate the Bishop of Chester asked how Section 1(6) of the 1971 Act arose. I can tell him that it was inserted by Section 1(1) of the Currency Act 1983. I hope that is helpful to him.

My noble friend Lord Stewartby made a valuable point that there needs to be a degree of abstinence in striking commemorative coins so as not to debase them. He is right. As my noble friend Lord Risby explained, the Royal Mint is planning on producing just 60 gold coins, precisely for that reason.

I repeat my thanks to my noble friend Lord Risby for sponsoring this Bill, the effects of which he has explained so clearly that I do not need to reiterate them. The Government fully support the Bill.

My Lords, perhaps I may take this opportunity to thank all who have participated in this debate, including my noble friend Lord Addington. I, and I think the whole House, are grateful to the noble Baroness, Lady Grey-Thompson, who reminded us of the Paralympics aspect of the Olympics programme that will take place next year. There was also the most interesting speech of my noble friend Lord Stewartby, with his considerable experience and the point he made about abstinence. However, given the limited number of coins and their cost, by definition there will be a certain amount of self-denial in those who are able to purchase these very expensive coins. I also thank the noble Lord, Lord Davies of Oldham, for his support from the opposition Benches. I actually agree with his point about the dragon, simply because, after all, Welsh gold is a very significant part of the life of the Royal Family and is always commemorated in that way. I hope that those at the Royal Mint who may read these proceedings take his point on board. I am grateful for the points made by my noble friend Lord De Mauley.

As we have heard, this is not a controversial issue and this piece of legislation is not complicated. It enables the Royal Mint to deal with the Olympics taking place next year and with future cultural events. I therefore ask your Lordships’ House to give the Bill a Second Reading.

Bill read a second time and committed to a Committee of the Whole House.