It’s 50 years since the UK replaced its centuries-old £sd coinage with a new, streamlined decimal currency. The shift away from a currency that divided the pound into 20 shillings, each of which was further subdivided into 12 pence, directly affected everyone in the country – from school children to pensioners.
Over the years, many people in Britain have sought to paint the move to decimal currency as an early sign of the UK’s identity being subsumed by Europe. The UK’s non-decimal system was virtually unique, so abandoning it in favour of the type of currency prevalent in Europe and the rest of the world was a dramatic change.
On the 40th anniversary of decimalisation in 2011, historian Dominic Sandbrook argued in the Daily Mail that the switch to a decimal system similar to that already in place in most of the world signalled:
the end of a proud history of defiant insularity and the beginning of the creeping Europeanisation of Britain’s institutions.
In similar vein, author Stephen Bayley, writing in the Daily Telegraph, referred to:
a politically mandated purge of the old order… richly symbolic of a yearning to be modern… drawn by the compelling gravitational force of Euro-normality.
But picturing decimalisation as part of a wider European project and a departure from British exceptionalism is wide of the mark.
As a modernising measure it was decidedly traditional. Some of the benefits of decimalisation were diluted by retaining the pound at its existing value for reasons of tradition and prestige. Because the pound was now divided into 100 pence, rather than 240 in the pre-decimal currency, this meant that an inconvenient halfpenny coin would be needed.
Changes in the Commonwealth
A key stimulus for the UK’s decision to abandon decades of splendid isolation as the last major economy with non-decimal coinage was the decision by other Commonwealth countries to abandon £sd for decimalised systems. By the beginning of the 1960s, South Africa had already decided to replace the £sd system with a decimalised rand. Australia and New Zealand were actively considering following suit.
Following consultation with his opposite numbers in Australia and New Zealand, the Conservative chancellor Selwyn Lloyd, in December 1961, set up a committee of enquiry, chaired by the eminent scientist Tony Halsbury, tasked not with recommending whether to decimalise, but to set out how it should be done.
The committee quickly concluded that the choice lay between retaining and decimalising the existing pound or following the antipodean example of replacing it with a major unit of half the value (the so called ten-shilling system), divided into 100 cents. In the event, reporting in late 1963, Halsbury’s committee decided in favour of the former option.
Jim Callaghan, the Labour chancellor who had since replaced Lloyd, eventually accepted this recommendation. He announced in March 1966 that the new currency, retaining the pound but divided into 100 new pence, would be introduced in 1971.
What is striking about both the Halsbury committee’s conclusions, and the government’s subsequent adoption of its recommendation, is how little consideration was given to harmonising with Europe. In the mid-1960s the major currencies of Europe such as the deutschmark and the French franc had values approximately equivalent to one-tenth of a pound or two shillings, known colloquially as a “florin”. It might have been expected that Halsbury would give serious consideration to a major unit of similar value, by using the existing florin as the basis for the currency. But the committee’s report dismissed this European option as having “no great significance”.
By way of contrast, in the Irish Republic there was a significant body of opinion arguing for a florin-based currency. This was supported both within government, and by the Federation of Irish Industry, which resulted in the government delaying its decision by two years to follow the UK’s lead and keep the pound.
Halfpennies and compromises
So why did the UK follow neither the examples of its Commonwealth partners or European neighbours in its choice of the pound as the major unit? Despite not ultimately recommending it, Halsbury acknowledged that the Australian/New Zealand system was more relatable to the previous coinage and avoided the need for an inconvenient halfpenny coin. The ten-shilling option, as implemented in Australia and New Zealand, was overwhelmingly supported by retail and consumer interests.
But the committee was swayed by the arguments of the City of London which thought it necessary to maintain a high value, “heavy” currency for reasons of prestige, and to negate any international perception that the currency was being devalued.
In current parlance a “world-beating” currency unit was required. For this reason the committee opted to retain the pound, and, with it, the problematic halfpenny coin.
This prestige argument chimed with Callaghan’s traditionalist instincts, as illustrated by this exchange with the BBC’s Graham Turner on the day the decision to decimalise was announced:
Callaghan: Speaking for myself I think there’s a lot to be said for the pound. Every one of us in Britain is familiar with it, we know what it stands for, abroad they know what it stands for.
Turner: Why have you decided not to use the word ‘cent’?
Callaghan: Oh, I much prefer ‘penny’, why should we go American – penny is a good, it is indeed the oldest coin in Britain, it was originally a silver coin. I see no reason why we should adopt ‘cent’, it’s a miserable-sounding word by comparison with penny.
The result was a very British modernisation. It sacrificed the potential benefits of having a fully decimalised system (such as being able to avoid the fiddly halfpenny) in the name of tradition and prestige. Creeping Europeanisation played no part at all.