The news was announced by Labour Chancellor of the Exchequer – and future Prime Minister – James Callaghan, who described the decision to switch to decimal coinage as “historic and momentous”.
Many MPs had campaigned for a switch to a decimal currency, arguing it would bring Britain in line with other European nations and the USA, and Mr Callaghan’s announcement was greeted with loud cheers in the House of Commons. In the country at large opinion was more divided, with many reluctant to lose Britain’s traditional system of pounds, shillings and pence.
Dating back to Anglo-Saxon times, that system had 12 pennies in a shilling and 20 shillings in a pound, meaning there were 240 pennies in a pound. It came about because a Roman pound in weight of silver was divided into 240 silver pennies. However, many people thought the system archaic and out-of-touch with the modern world, where international trade required frequent currency conversion into the decimal systems of other nations.
Announcing the plan to go decimal in five years’ time, Mr Callaghan told the Commons: “It is the government’s conclusion, shared I know by large sections of industry, commerce, science and banking, that the change to a decimal coinage will bring considerable benefit to the economy at large.”
There were more cheers when Mr Callaghan announced Britain’s major unit of currency would still be called the “pound”, although it would now be split into 100 units to be called either “new pennies” or “cents”.
The strategy for a five-year countdown reflected the huge amount of planning and preparation needed in the run-up to the changeover. Those preparations were to start immediately, with the introduction of a Decimal Currency Bill in parliament. It would also establish a new Decimal Currency Board to oversee the switch and manage a massive public awareness campaign.
Mr Callaghan said businesses which needed to invest in new equipment because of the changeover would not be directly compensated, but would be eligible for tax relief to offset the cost. The day for the changeover was later set at February 15th, 1971. It was soon dubbed “D-Day” in the national press, the “D” standing for Decimal.
It would have been impossible to introduce all the new decimal currency on the same day, so instead it was phased in gradually. New 5p and 10p coins were introduced in 1968, initially having the same value as their pre-decimal counterparts, the shilling and the florin, or ‘two-bob bit’. The following year the new 50p coin was introduced, replacing the old 10-shilling note.
Pound notes didn’t need to be replaced so the only new coins introduced on ‘D-Day’ were the copper 2p, 1p and ½p pieces. Some people predicted the change would plunge Britain’s economy into chaos, but in fact it went smoothly, no doubt due to the years of meticulous planning.
Some older people initially found it hard to adjust to the new decimal system, although most shops displayed large ‘conversion charts’ to help them understand it. Children found the system much easier and more logical to learn and understand.
Decimal currency was pioneered in the USA, with the introduction in 1786 of the American dollar, comprising 100 cents. Many other nations followed suit, including many former Commonwealth countries which switched from the British system to a decimal one after gaining their independence. However, there was relief in Britain that ‘going decimal’ would not mean a new ‘UK dollar’.