THE £1 coin is to be scrapped and replaced by a new high-tech version as it emerged that over 45 million fakes are now in circulation.
The proposed new £1 coin, which will have the same shape as the pre-decimalisation 12-sided “threepenny bit”, will be the hardest in the world for criminals to copy, the Government said.
A public competition will also be held to design the “tails” side of the coin, which is expected to be introduced from 2017.
Further details about the competition will be revealed at a later date and, as with all UK coins, the Queen’s image will be on the “heads” side.
The technology behind the current £1 coin, which has been in circulation for over 30 years, is “no longer suitable” - leaving it increasingly vulnerable to counterfeiters, according to the Government.
Royal Mint figures show that around one in 33 (3%) £1 coins in the economy is a fake. In some parts of the UK, as many as one in every 20 (5%) £1 coins is a dud.
Around two million fake £1 coins have to be fished out of circulation every year, causing expense for banks, cash handling centres and the economy.
Common ways to spot fakes include the milled edges of the coin being poorly-defined, the colour not matching genuine coins and uneven lettering.
Several features of the planned new coin should make it harder to fake, including its 12-sided shape and its construction from two differently-coloured metals.
The coins will also incorporate the Royal Mint’s new “isis” technology which stands for integrated secure identification system and means they can be quickly scanned to check they are genuine.
The design of the new coin, which will be roughly the same size of the existing coin, will mean vending machines and parking meters will have to be overhauled.
The Government is consulting on the impact of the new coin and a Treasury spokesman said it will work with industry to minimise the expense involved in making the changes.
It is hoped that some changes can be made as firms make their regular updates to vending machines and businesses will also see the benefits of machines being able to pick up fakes more easily.
The Automatic Vending Association (AVA) said in a statement on its website that it was not surprised by the plans, but that it is “imperative” that those involved work together to ensure the changes can be made “at the lowest possible cost to industry”.
A Treasury spokesman said: “After 30 years loyal service, the time is right to retire the current £1 coin, and replace it with the most secure coin in the world.
“With advances in technology making high value coins like the £1 ever more vulnerable to counterfeiters, it’s vital that we keep several paces ahead of the criminals to maintain the integrity of our currency.
“We are particularly pleased that the coin will take a giant leap into the future, using cutting edge British technology, while at the same time paying a fitting tribute to past in the 12-sided design of the iconic threepenny bit.”
The historic three pence piece, fondly known as the threepenny bit, was in circulation from 1937 until decimalisation in 1971.
It was the first group of coins to feature the portrait of the Queen and its distinctive size and shape is said to have made it the easiest coin to recognise during the blackouts of the Second World War.
The £1 coin was first issued in April 1983, after it was decided that with a decline in its purchasing power, having the £1 in coin form would be more appropriate than the £1 banknote, which on average lasted just nine months due to its constant use.
Royal Mint chief executive Adam Lawrence hailed the “exciting project”, adding: “It is our aim to identify and produce a pioneering new coin which helps to reduce the opportunities for counterfeiting, helping to boost public confidence in the UK’s currency in the process.
“We’re extremely proud that the proposal includes the Royal Mint’s integrated secure identification system technology, offering greater currency security at a lower cost.”
A Bank of England spokesman said that together with the Bank’s recent decision to produce polymer banknotes, the changes will “enhance the security and integrity of the currency”.
National Crime Agency counterfeiting expert John Sheridan said: “The issuing of a new coin with enhanced security features will make it more difficult for criminals to copy as well as presenting increased opportunities for law enforcement to investigate and disrupt the producers and distributors of counterfeit currency.”
The Federation of Small Businesses (FSB) said counterfeit money can “seriously damage” firms.
John Allan, national chairman of the FSB, said: “Small firms who deal with low-priced items are more likely to be affected by fake currency but we do have concerns about the extra costs of introducing a new pound coin. For example, small firms may have to pay out to replace machinery.
“But there’s no doubt counterfeit coins and notes can seriously damage small businesses. Not only are they worthless, but a business could be prosecuted if it passes them on.”