Packaging laws in the UK are changing - we've got it wrapped

19 February 2019

The Government has announced four separate consultations all aimed at reducing single-use plastic packaging. We've summarised the key issues that you and your business need to know.



According to the Government's own figures, more than two million tonnes of plastic packaging are used in the UK annually - this accounts for 44% of plastic used in the UK, but 67% of all plastic waste. While packaging fulfils an important role in keeping the goods that we purchase free of contaminants and fresh, it does bring with it environmental impacts: both in the production of the plastic, but also when disposed of.

For a number of months, there has been increased scrutiny of plastics from the general public, the media and politicians themselves. Notwithstanding that a hard-Brexit is potentially less than 1,000 hours away, the Government is still finding time to launch new environmental policies and consultations (see our recent briefings on the Waste Strategy and Air Strategy).

The Government clearly has single-use plastics firmly in its sights and has published four measures, which it hopes will work together to tackle plastic packaging head-on. This briefing summarises those proposals.

A new tax

Just under a year ago, HM Treasury launched a call for evidence on using the tax system to tackle single-use plastics and it received more than 162,000 responses. A new tax was announced in the 2018 Budget and the consultation launched this week sets out the Government's initial proposals for how it might work.

What will the tax apply to?

It is proposed that the tax will apply to all plastic packaging manufactured in the UK, or imported (unfilled) into the UK, with less than 30% recycled content.

This raises questions as to what is "plastic" and what is "packaging". In essence, the definitions proposed will include fossil-based plastics as well as bio-based plastic and plastics that are compostable, biodegradable or oxo-degradable. This may be a surprise for many, but a future consultation on these materials is promised and the Government justifies their inclusion as the tax is intended to encourage greater recycling, not innovative plastic solutions. The definition of "packaging" will likely follow the definition in the Producer Responsibility Obligations (Packaging Waste) Regulations 2007 and will therefore include:

  • Primary, secondary, and tertiary packaging
  • Re-usable plastic packaging; and
  • Consumer-facing packaging, as well as distribution and transit packaging.

Who will be liable?

The tax will be levied on UK manufacturers of plastics and UK importers of plastics and it is proposed to have an export tax credit system for UK-based exporters to ensure that the tax is not anti-competitive. The tax will likely be applied at the point where the manufacturer or importer commercially exploits chargeable plastic packaging through sale or supply (including free of charge) to be packed or filled. Additional rules will be needed where there are multiple entities involved in the manufacture. The Government is not currently proposing to tax filled imports, but that may change as a result of the consultation responses.

Small operators will probably be excluded from the tax but at a lower level from the current de minimis levels in the UK's Packaging Regulations (£2m turnover and handling less than 50m tonnes of packaging a year). The Government is considering a universal relief on the first portion of chargeable products, which may be a simpler approach.

When, how much and how would the tax be calculated?

It is proposed that the tax would take effect from April 2022. This means that businesses have three years to prepare - by auditing their own plastics and packaging use, testing their compliance procedures and evaluating sources of recycled materials.

The new rate of tax has not been set, but the Government wants it to be "significant enough to change manufacturer behaviour and to drive demand for recycled plastic, while not imposing excessive burdens on business". The Government may introduce a flat tax rate, although it seems more likely to us that it will adopt a sliding scale, whereby the higher the recycled material content is in the plastics, the less tax will be payable.

It is likely that the tax will be charged per tonne of packaging. Complexities arise when plastics are combined with other materials to create packaging and so there will need to be careful examination of the technical rules to ensure that they are appropriate.

Registration and compliance

The burden will fall on registered businesses to self-report. Currently no formal standards are set, so it is likely that businesses will have to formulate their own robust audit standards and requirements to verify quantities and recycled content of plastics used - the Government has said, for now, that it will accept "any just and reasonable approach" in this respect. As with other forms of tax non-compliance, a full range of penalties will apply to those who do not comply with the packaging tax requirements.

Introducing a deposit return scheme for drinks containers

Unlike the plastic packaging tax, the proposed deposit return scheme (DRS) for drinks containers would apply in England, Wales and Northern Ireland only - the Scottish Government having consulted on similar proposals in 2018.

The Government notes that in the UK alone, each year consumers use more than:

  • 14 billion plastic drinks bottles;
  • 9 billion drinks cans; and
  • 5 billion glass bottles.

Many of these are not properly disposed of, let alone recycled.

The DRS Proposal

A DRS would involve the addition of a deposit to the price of drinks using "in-scope" drinks containers. The deposit would be returned to the consumer when the container is returned to a designated point, which might be "over the counter" in a small retail unit, or a "reverse vending machine" (RVM) in supermarkets, railway stations or in shopping centres, for example.

The amount of deposit is being consulted upon, but the Government notes that in Europe, the deposit ranges from 6p to 35p, so expect similar amounts in the UK.

What containers are "in-scope"?

The DRS is proposed to apply to plastic bottles (PET and HDPE plastics), steel and aluminium drinks cans, and glass bottles which contain water, soft drinks, juices, alcohol, and milk-based drinks, such as smoothies, ready-to-drink coffee and yoghurt drinks. Dairy milk and plant-based milks are considered essential products and are therefore likely to be excluded from scope of the DRS. In addition, the Government is consulting on including cartons and pouches and sachets (such as those used for energy gels).

The Government is considering two options for the DRS - one which would include containers or all sizes (the "all-in" model); and one which applies to drinks containers which are smaller than 750ml (the "on-the-go" model). Recycling rates for "on-the-go" containers could be lower than 10%.

Who will organise it?

The Government believes that a new not-for-profit organisation, the Deposit Management Organisation (DMO), would be established to manage the operation of the DRS, oversee financial and material flows, logistics, infrastructure maintenance and reporting.

The DMO would be funded by producers whose products are captured by the DRS and possibly by unredeemed deposits. The consultation questions whether all producers should be required to take part in the DRS, or whether a DRS should apply - based on the number of employees, sales figures, sales volume or other metric.

Will retailers be obliged to take part?

The Government's initial position is that all retailers would be obliged to provide a return point unless they fall below a de minimis threshold. The DMO would pay retailers a handling fee to reimburse their costs - the amount of the fee would depend on the floor space taken up by the RVM on the shop floor, and the storage space taken up by collected containers. The Government is consulting on whether the following should be obliged to host a return point:

  • Retailers who sell "in-scope" drinks
  • Transport hubs
  • Leisure centres
  • Event venues

In addition, the Government wants to know about the implications for people obliged to receive containers as part of the DRS - whether in planning, health and safety or other terms.

Reforming the UK's packaging producer responsibility system

Packaging waste has been subject to extended producer responsibility rules since 1997 and has helped recycling rates improve from 25% in 1999 to 64.7% in 2016. On the basis that the scheme is 20 years old, and in light of the other measures that the Government is proposing to introduce, the Government is proposing to reform the operation of the packaging producer responsibility scheme.

In particular, the Government is focused on eight areas:

  • Full net cost recovery
  • Incentives to encourage producers to design and use packaging that can be recycled
  • The businesses that are caught by the packaging extended producer responsibility system
  • Producer funding for local authorities for waste collection and management
  • Mandatory labelling to indicate if the packaging is recyclable
  • New packaging waste targets for the future
  • Alternative models for organisation and governance
  • Measures to strengthen compliance monitoring and enforcement

Taking these in turn:

Full net cost recovery

Currently, producers are not required to pay the full costs of collecting, sorting, treating and disposing of packaging when it becomes waste - the consultation notes that in fact only 10% (at best) of costs are covered, with the remaining costs falling to local authorities, other public bodies and businesses who consume packaged goods. Bearing in mind that the total amount of packaging placed on the market in 2017 was 11.5 million tonnes, there is a great deal of cost not met by producers.

Adopting a "polluter pays" principle, means that producers should cover the full net cost (taking into consideration that recycled materials can be sold) of their packaging. The Government wants to apply the full net cost recovery principle to all "consumer-facing" packaging, meaning packaging of produce used at home, as well as in restaurants, offices and so forth.

Better packaging design

Extended producer responsibility rules for packaging could be revamped to incentivise producers to design their packaging in such a way as to make it easier to recycle. The Government proposes two options:

  1. "Placed on the market" (POM) fees where producers pay more if their packaging is difficult to recycle, and less if it is easy; and
  2. A deposit fee whereby producers pay a variable sum of money per tonne of packaging material produced, which is redeemable if they can prove that an equivalent amount of packaging that they have placed on the market has been recycled.

Businesses caught by the packaging extended producer responsibility system

The current system imposes shared responsibility for compliance across the packaging chain: manufacturers of raw materials (6%); convertor (9%); pack filler (37%); and seller (48%), although some businesses perform a multiple role and roll-up their obligations.

The Government is conscious that shared responsibility may mean that businesses are not incentivised to act to reduce packaging or increase recyclability. Furthermore, the current de-minimis threshold for producers who turnover less than £2 million and handle less than 50 tonnes of packaging, means that 15% of waste does not fall within the system.

The Government is considering having a single point of compliance (not shared) given to those with the greatest amount of influence over packaging design and materials-use. This might be the brand owner (the pack filler), or the seller and importer.

Alternatively, responsibility could continue to be shared and changes made to the de minimis threshold (exempting small businesses from the scope of the obligations) or extending obligations on packaging distributors.

In the twenty years that the obligations first came into force, online distance sellers have become a significant retail force and e-commerce sales have climbed dramatically. The Government wishes to address producers based outside of the UK, who sell to consumers using online marketplaces; and it is considering introducing a requirement upon operators on online marketplaces to take responsibility for the packaging of goods sold through their websites - this would require a new class of "producer" to be drafted.

Local authorities for waste collection and management

The Government proposes new regulations to require local authorities to collect a core set of packaging materials from households:

  • Paper and card
  • Metal packaging
  • Plastic packaging
  • Glass
  • Food and beverage cartons

Producers would be required to pay (through the reformed packaging extended producer responsibility scheme) the costs of consistent and regular collections by local authorities of recyclable materials. The consultation sets out the options for the arrangements for financial distributions to be made.

Mandatory labelling to indicate if the packaging is recyclable

The Government is aware that inconsistent messages regarding the materials that can be recycled are not helpful to consumers and it proposes that greater local and national messaging and communications are needed - the "Council leaflet" being the best source! It looks likely that producers will pay for, or at least contribute significant costs towards, the communications campaign. To supplement this, the Government would like to see a mandatory UK-wide labelling scheme providing clear information to help consumers assess whether particular packaging is recyclable, and to state what the percentage of recycled content is within the packaging material itself.

New packaging waste targets for the future

The Government is considering whether to introduce overarching packaging targets for 2025 and 2030 that either meet or exceed targets set by the European Union as follows:
Material 2016 recycling rate Proposed target for 2025 Proposed target for 2030
Paper and card 82% 82% 85%
Glass 67% 70% 75%
Aluminium 51% 55% 60%
Steel 74% 75% 80%
Plastic 45% 50% 55%
Wood 31% 30% 30%
Total 65% 66% 70%

If the DRS proposals proceed, a specific target for drinks containers may need to be introduced.

Alternative models for organisation and governance

The Government recognises a need for a more transparent system of governance for the packaging extended producer responsibility scheme and puts forward four models for consultation:

  • Enhanced near-to-business as usual compliance scheme
  • A single not-for-profit producer scheme
  • Separate schemes for household/household-like packaging, and commercial/industrial packaging
  • Deposit-based government managed scheme.

The consultation documents provide details as to how each would operate.

Measures to strengthen compliance monitoring and enforcement

As part of the reform of the scheme, Government is reviewing compliance monitoring and enforcement. Powers may be introduced to enable auditing of producers by compliance schemes and regulators. Enforcement powers are likely to increase and individuals may be guilty of offences in the future - as well as corporate bodies. Enforcement powers may extend to allow the regulator to obtain information from third parties.

Making recycling rules more consistent

The Government recognises confusion among consumers as to what can and cannot be recycled and it wants to make recycling the easy option (not the difficult and lengthy one). Despite numerous campaigns, householder recycling hovers at 44/45%, but the Government wants to get to 65%.

Accordingly, the consultation includes the following proposals:

  • Obligations on waste collection authorities to collect a core set of recyclable materials from households, and to have separate weekly food waste collections
  • Obligations on waste authorities to collect garden waste for free
  • Measures to achieve greater separation of dry materials in waste collections (particularly paper and glass)
  • Whether statutory guidance on minimum service standards for waste and recycling should be introduced
  • How to develop non-binding KPIs to support high quality and quantity in recycling and waste management
  • How to support joint working between local authorities on waste management issues.

Final thoughts

It is patently clear that decreasing the use of single-use plastics, reducing packaging and improving recycling rates are firmly in the Government's sights and a number of policy levers are being used in a co-ordinated fashion. The scale of ambition and work by the Government in these areas is impressive.

However, it is important to remember that the proposals are just that - they are not law yet. The Government has outlined its thinking but will be open-minded to sensible alternatives and explanations as to where certain matters will be unworkable in practice, or more likely, how further technical advice will be need to address specific gaps which only industry might be aware of.

The consultations close on 13 May 2019, except the HM Treasury consultation on a new tax, which closes on 12 May 2019. Business should take time to carefully review the consultation and respond to it, and if necessary meet with officials in Whitehall to make their case - the time to make clear and persuasive representations is now.


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