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All Change: Decimalisation

The original florin of 1849

An official Committee of Inquiry was appointed in 1961 under the chairmanship of the Earl of Halsbury

...a momentous and historic decision

James Callaghan, House of Commons, 1 March 1966

On 1 March 1966 the Chancellor of the Exchequer, James Callaghan, announced that the centuries-old £sd system would be replaced by a decimal currency in which the pound was to be divided into 100 units.

It was a change that had been in prospect since the middle years of the 19th century, when the decimal lobby had been strong enough to secure the introduction of a coin valued at one-tenth of a pound. Other countries, once also wedded to £sd, had been less reluctant to shy away from the temporary disruption that a decimal coinage would bring and by 1966 there was a danger that Britain might soon be the only major country in the world without the benefit of decimal currency.

1849 florin (obv&rev)

The decision to go decimal was seen and justified as an aspect of the wider modernisation of Britain. The greater simplicity of the decimal system would be an important aid to productivity, making money calculations quicker, easier and less liable to error, and benefiting machines as well as people. In schools significant time would be saved by not having to teach children the intricacies of £sd.

Recognising the enormity of a change that would affect every business and household in the country, that would wipe out the ingrained money habits of generations, the government proposed a five-year preparatory period before changing over in 1971.

Decimal pound starts storm

The Sun, 13 December 1966

Startling as it was, the Chancellor’s statement nevertheless found broad acceptance of the principle of decimalisation.

Where sharp controversy emerged was over the choice of system, with most retail associations and consumer groups favouring ten shillings and not the pound as the major unit. Such a system, it was argued, fitted in better with the existing coins, enabling the popular sixpence to be retained as a 5p piece and the half-crown as 25p, and seemed to offer greater protection against price rises.

On the other hand, leaving the pound intact avoided a disconcerting break in continuity by maintaining a familiar point of reference. It was also likely to be less disruptive to the business world, where a higher value unit was more appropriate for a well-developed industrial and trading economy.

The government’s decision in favour of the pound, though fiercely challenged, was confirmed by the Decimal Currency Act of 1967, which also specified that the minor units would be called new pence rather than foreign-sounding cents.