- The Bank recognises the concerns raised about the discovery of traces of tallow used in the production of its £5 polymer notes. Following detailed analysis and further work we are now able to provide an update to the public.
- As stated on 30 November 2016, the Bank was not aware of the presence of animal-derived products when it signed the contract with its supplier for the £5 and £10 banknote polymer. When the Bank discovered the presence of these products, its first step was to alert the public and subsequently has been treating the concerns raised by members of the public with the utmost seriousness. It has spoken to a number of groups to understand their concerns more fully.
- An extremely small amount of tallow is used in an early stage of the production process of polymer pellets, which are then used to create the base substrate for the £5 note. The Bank is continuing to work closely with banknote polymer suppliers to determine what alternatives might be available.
- Weighing the considerations below, the Bank has now concluded that it would be appropriate to keep the £5 polymer note in circulation and to issue the £10 polymer note as planned, in September. In reaching its decision, the Bank has given careful consideration to the possible alternative options for the current £5 note and the Jane Austen £10 polymer note. In doing so, the Bank has considered: its responsibility to issue and maintain the supply of high quality and secure banknotes, its obligations under the Equality Act 2010, the concerns raised about the use of animal-derived products, the impact of any changes on firms that process and handle cash, the potential impact on our suppliers, and value for money for the taxpayer.
- Further information on the current status and plans for the Bank’s assessment is presented in the accompanying paper. The key considerations include:
- Producing banknotes is complicated. A variety of processes are required to manufacture a secure note of the highest quality, and the lead times involved are therefore significant. Production of the new £10 polymer note began last August and the Bank has already printed 275 million notes, at a cost of £24 million, ahead of planned issuance later this year. The Bank has also spent £46 million on printing the £5 polymer note. Reprinting these notes on a new substrate would mean incurring these costs again. It would also require a further £50,000 for the secure destruction of the existing stock.
- The Bank works hard to ensure that the public has enough secure notes to use in daily life and destroying the hundreds of millions of notes already printed would put this at risk. The Bank cannot guarantee sufficient stocks of paper notes to replace the destroyed polymer notes.
- Delaying the issuance of the polymer £10 would also delay the benefits of the increased counterfeit resilience of polymer being achieved for the Bank and the public.
- Given the public interest in banknotes, and the complex issues involved, the Bank is seeking further opinions on the use of animal-derived products and plant-based alternatives before making any decisions on the polymer used in future production runs of £5 and £10 polymer notes and the new £20 polymer note. The new £20 polymer note is due to be issued by 2020 and production has not yet begun. It is necessary, however, to secure the supply of banknote materials several years before that issuance. The Bank has delayed the signing of the relevant contracts for supply of materials for the £20 polymer until we have decided the best way forward weighing all the considerations.
- The Bank will therefore launch a full consultation on 30 March about the content of polymer substrate to be used in its future banknotes. The consultation paper will set out the key issues and invite views from the public. This will allow the Bank to understand better the range of public opinion on this issue and inform its future decision making. We intend to include a range of information including:
- The production process for polymer banknotes;
- The importance of high quality, counterfeit-resilient banknotes;
- Plant-based alternatives to animal-derived products and their likely viability for banknotes; and
- Future cost implications.
- The Bank intends to publish in the summer a summary of the responses to the consultation, its conclusion and its proposals for the future content of polymer substrate.
- Following the discovery of traces of animal-derived products in the polymer substrate, the Bank asked its supplier of cotton paper to look into the process for making the substrate used in the Bank of England’s paper banknotes. That supplier has now conducted a thorough review and found that there are no animal-derived ingredients used in the primary manufacturing process for banknote paper. It has identified one ingredient used in the recycling of offcut material outside the primary manufacturing process which includes a trace amount of animal-derived ingredients. However, it has established that this ingredient is wholly consumed in the secondary production process and that no trace has been detected in the finished banknote paper.
- The Bank has sufficient stocks of £20 and £50 notes such that it does not need to order new banknote paper until July 2017. The Bank confirms that, when it does re-order, materials containing animal-derived residues will not be included in any recycling processes. The Bank will work with its supplier to identify whether alternative agents are available to enable continued recycling of offcut material.
- The Bank is committed to being open, transparent and accountable and we look forward to engaging with the public through this consultation.
Assessment of the next steps following the discovery of traces of animal-derived products in £5 polymer banknotes:
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