In the autumn 2018 Budget, the UK government announced that it will introduce a tax on plastic packaging produced in, or imported into, the UK, which contains less than 30% recycled content (subject to consultation). The tax is proposed to take effect from 1 April 2022 and is just one of a number of measures being introduced in the UK that aim to incentivise the increased use of recyclable packaging, increase recycling and move away from single-use plastics. Retailers and food business operators (“FBOs”), in particular, together with others in the resource chain should be alert to the proposed measures, which could have potentially significant implications for them.
Single-use plastic packaging tax
The tax follows from the government’s call for evidence, Tackling the Plastic Problem, which ran earlier this year and considered the use of the tax system to reduce single-use plastic waste. The call for evidence received an unprecedented 162,000 responses, many of which indicated support for fiscal measures to encourage greater resource efficiency.
Around 2.26 million tonnes of plastic packaging is currently used in the UK each year, with the vast majority made from new plastic rather than recycled material. The aim is for the tax to act as an economic incentive for producers to increase the use of recyclable packaging and recycled materials in packaging, which will in turn create greater demand for recyclates.
Despite acknowledging the difficulties associated with recycling disposable cups due to their plastic lining, the government did not include the introduction of a “latte levy” in the Budget. It suggested that a levy on all disposable cups would not, at this time, be effective in encouraging widespread reuse. Instead, the government stated that it will give further consideration to the best way of tackling the environmental impact of disposable cups in the forthcoming Waste and Resources Strategy, which will examine ways to reduce avoidable waste and increase recycling. The strategy, which is keenly anticipated by many across a wide range of industry sectors, is expected to be published before the end of the year.
Producer responsibility reforms
The new plastics tax will work alongside planned reforms to the Packaging Producer Responsibility Regime, which aims to extend producer responsibility for the clean-up and recycling costs of the packaging waste they produce. The reforms are intended to encourage producers to design and use plastic packaging that is easier to recycle, and discourage the use of plastics that are notoriously more difficult to recycle, such as black plastic, which is used to package many food products. However, the Food and Drink Federation has responded with understandable concern that the “new tax on plastic packaging will result in significantly increased costs for UK food and drink manufacturers, due to the input costs required to produce food-grade recycled packaging”.
The government is expected to consult on both the plastic tax and the reforms to the Packaging Producer Responsibility Regime before the end of the year, to ensure the new policies work together in a coherent way. Notably absent from the Budget announcements, however, was how these actions will dovetail with the government’s proposals to introduce a Deposit Returns Scheme for single-use drinks containers, the consultation for which is also expected before the end of the year.
Ban on certain single-use plastic products
The government also launched a related consultation on 22 October 2018, proposing to ban the sale and distribution of plastic straws, drinks stirrers and cotton buds in England. A complete ban is proposed on plastic drink stirrers and plastic stemmed cotton buds. The government acknowledges, however, that plastic straws have a number of vital uses for those who may find it difficult to consume drinks due to medical conditions. As such, the sale and distribution of plastic drinking straws will be permitted for certain medical purposes only. Depending on the outcome of the consultation the ban is expected to be implemented between October 2019 and October 2020.
At European level, the European Parliament (“EP”) last week adopted a proposal for a Directive on the reduction of the impact of certain plastic products on the environment, which includes, among other measures, prohibitions on certain single-use plastic products and consumption reduction targets for others. EU Member State representatives have since agreed the position on the proposed Directive, clearing the way for negotiations to begin with the EP on 6 November 2018.
The government has stated that the future revenues raised from the introduction of this package of measures will enable investment in actions to address single-use plastics, waste and litter in order to meet the government’s ambitions for resources and waste. No specific details, however, have been provided on exactly where this future investment will be made and what these actions will be. The Budget announced that £20 million would be set aside to tackle plastics and boost recycling:
- £10 million will be directed towards funding research into new packaging materials, new recycling processes, and smarter plastic and packaging waste management to help businesses to transition away from non-recyclable plastics; and
- £10 million of funding will be provided in 2019-20 to support wider initiatives to tackle plastics, boost recycling and minimise litter, such as installing smart bins on streets. The details of such schemes are be confirmed in due course.
Whilst 1 April 2022 may seem some way off, in reality, FBOs should be looking at their packaging supply chain and processes now (if they have not done so already), in order to adapt their procedures and manage any increased costs before the introduction of the new tax and reforms to the Packaging Producer Responsibility Regime. Many FBOs are, of course, already taking action to identify innovative ways to address the issue of single-use and “low grade” plastics in the packaging and supply of their food and beverage products.
It is indisputable that there is a clear shift in policy towards the phasing out of difficult to recycle and single-use plastics, and a number of legislative measures are in the process of being introduced both at European and national level to achieve this. Precisely how and when such measures will be implemented remains to be seen. It is, therefore, important that those who will be affected by such developments, at all stages within the resource chain, follow this area closely and contribute to the forthcoming consultations.