Date: 7 November 2017
- What is the purchase or manufacture cost to the Bank of England of the new £5 note, £10 note and £20 note?
The Bank of England (the ‘Bank’) has printed 595 million polymer £5 banknotes, of which 248 million were in circulation at end-August 2017, at a cost of £46 million. We expect to print 1,262 million polymer £10 banknotes by end-October 2017 at an estimated cost of £99 million. The quantity of £20 polymer banknotes to be printed has yet to be finalised but the number of paper £20 banknotes in circulation at end August 2017 was 2,229 million.
- The numbers of each expected to be issued in a year and the numbers of each actually issued in the most recent 12 month period. This information is published on our website.
- The expected life of a banknote of each denomination.
The average life is expected to be at least 5 years for polymer £5 and polymer £10 banknotes. Reflecting its different pattern of usage, the average lifespan for polymer £20 banknotes could be in excess of 20 years.
- The recent consultation decision on the use of polymer in banknotes quoted a £16.5m differential over 10 years between tallow based and palm oil based, for the £5; £10 and £20 notes. Please provide the basis of this calculation.
The additional cost of £16.5 million to change the composition of the polymer substrate to avoid the use of animal-derived additives in manufacture was based on estimates of additional costs provided by potential suppliers and forecasts of demand for £5, £10 and £20 banknotes over 10 years. For £20 banknotes, this includes production of the £20 polymer banknotes launch stock. As noted in the consultation response, the cost would represent a 5% rise in the annual cost of banknote printing. Furthermore as the contracts for the supply of the £20 polymer banknote are not yet finalised and a move to palm oil-derived additives could necessitate commencing a new tender, the total cost incurred as a result of moving to palm oil-derived additives could increase further through the process to finalise contracts. This uncertainty was considered as part of the Bank’s decision.
 This response reflects the position as at 15 September 2017. The results of the tender for the production of the £20 banknote were announced on 5 October 2017.