Plastic shakedown: Industry experts criticize UK government for failing to ensure plastic tax recycling investments

04 Apr 2022 --- As the UK Plastic Packaging Tax enters its first week, many industry experts are criticizing the legislation’s stipulations for failing to guarantee that funds raised by the levy will be used to build recycling infrastructure and instead place further burdens on already struggling businesses throughout the country.

The tax places a £200 (US$262) per metric ton penalty on producers or importers of plastic packaging if they do not include at least 30% recycled content. The legislation is expected to impact around 20,000 businesses in the UK, and recent research suggests a large majority of UK businesses are unaware the tax exists. 

PackagingInsights speaks to the British Plastics Federation (BPF), producer responsibility compliance scheme Ecosurety, and an expert lawyer about the ramifications of this tax for environmental and financial sustainability in the UK. 

We discuss how the legislation has failed to take vital economic considerations into account, how it may impact small businesses, and what can be done to develop the tax to improve recycling rates effectively. 

Reinvestment in recycling 
One of the main outcries by experts throughout industry has been that money raised through the levy will not necessarily be spent on needed recycling infrastructure but instead merely be collected by the British Treasury to be spent as it sees fit. 

Robbie Staniforth, director of innovation and policy at Ecosurety, explains: “The government has chosen not to hypothecate the tax because the Treasury does not want stipulations on what it should fund. Total spending autonomy allows the Treasury to spend where it believes funding is most needed, or in areas where it is politically expedient.” Experts are urging the government to spend all money raised by the tax on building recycling and collection infrastructure for plastic.

“Hopefully, the money will go to the public good in general, but it will not help improve outcomes for plastics.” 

A BPF spokesperson also says this lack of assurance over where the tax will be spent is troubling, as advanced recycling methods are increasingly important in tackling plastic pollution, and public investment is essential.

“Further investment in mechanical and chemical recycling and enabling this within the design of the tax could help boost recycling rates for plastic packaging. Additionally, consideration should be given to the introduction of robust industry recognized verification and certification systems to help prevent fraud,” they stress. 

Cost considerations 
Another issue is whether the tax will make recycled plastics more cost-competitive compared to virgin plastics. Recently, the price of recyclates skyrocketed throughout the UK and EU as major companies seek to boost their environmental sustainability credentials while recycling facilities fail to get needed licensing approvals. 

Jamie Cartwright, a partner at UK-based international law firm Charles Russell Speechlys, says that regulations seeking to discourage single-use plastic packaging are “fundamentally a good thing.” 

“However, the regulations do not self-evidently preclude the use of single-use plastic and, even with the cost of the tax, single-use plastic may not prove more expensive or materially more expensive when allowing for the cost and availability of recycled options alongside the evidential requirements to prove recycled content,” he says. 

He explains that the evidential burden of proving recycled content and how it operates in practice remains to be seen. It is hoped that the government “adopts a pragmatic and proportionate approach.”

“To encourage the move across, more ought to be done to improve the availability and accessibility of recycled plastic and alternatives so that the regulations become less of a tax and penalty to be borne but instead one element of a series of inducements toward improved [environmental] sustainability,” he continues. Making recycled plastic cheaper than virgin plastic is a major challenge faced by industry and policymakers.

“Cost will be an important consideration for business at a time when there is already significant supply chain pressure and rising costs and also as the UK enters a cost of living crisis.”

Improving legislative design 
The BPF spokesperson also says that the tax is “well-intentioned” and that the plastics industry supports the aim to use more recycled materials where possible. “However, the tax in its current design does not recognize regulatory, technical or supply constraints set to disadvantage certain industry sectors.” 

The current design of the tax should be improved by using the mass balance approach – a method used to measure the levels of recycled content used in some forms of chemical recycling, BPF continues. “Chemical recycling provides an opportunity to recycle some of the more difficult to recycle packaging formats.”

“To improve environmental outcomes from the tax, we would encourage the government to accelerate further investment in collection sorting and recycling of plastic packaging and divert the funds raised from the tax into these specific key areas.”

Damage to small businesses 
BPF asserts that in its current design, the UK Plastic Packaging Tax will “significantly” impact the plastic packaging manufacturers that supply F&B packagers, who will be forced to pay the tax due to regulatory constraints preventing the incorporation of recycled content in certain packaging formats. 

“It also causes further pressure on business at a time of increased inflationary costs to businesses which are at an all-time high. Other businesses that will be affected by tax include smaller manufacturers who will not be able to source materials due to intense competition of the scarce resource of recycled materials,” the spokesperson says. The tax could be improved to build effective recycling infrastructure in the UK, say experts, but not in its current design.

Raising awareness 
Last week, research by YouGov found that 77% of British retail and manufacturing businesses are unaware of the tax, indicating much of industry is unready to deal with the new legislation. 

“The tax needs to be continually widely publicized beyond the recent launch date,” says Staniforth. “The implementation of other packaging legislation over the years has demonstrated that businesses can go for decades without understanding their legal requirements.” 

“Furthermore, the point at which the tax is payable is complicated and on the whole importers are not as well prepared as UK businesses. With any new government policy, businesses are looking to ensure that it universally applies and creates a level playing field.” 

However, Staniforth says that despite the messy introduction of the tax, hope is on the horizon. 

“The introduction of a mechanism to redress the balance between the value of primary and recycled polymers is overall positive news. The low cost to produce plastic from virgin material is part of the reason that it is not properly valued in our economy and society at large.” 

“In the long run, I can foresee that the tax will help create solutions to include recycled material in new packaging products, but in the first few years, it is more likely to be a revenue-raising instrument for the Treasury.” 

By Louis Gore-Langton