Zoë Colosimo, COO of Neighbourly, explains why the new Labour Government must strive to achieve positive social impact whilst also supporting circular economy goals and where they could start.
Setting the policy landscape for a truly circular economy is the challenge (or opportunity) which now confronts Environment Secretary Steve Reed, Nature Minister, with responsibilities for circular economy, Mary Creagh, and their teams.
They must collaborate widely and find ways to integrate resource and waste policies into the agendas of other government departments while bringing about individual and corporate behaviour change to shift attitudes around the societal “acceptability” of waste.
Understandably much of the current framing about the potential benefits of a move towards circularity relates to lowering emissions and increasing economic growth.
Steve Reed has previously said he has seen analysis that shows moving to zero waste by 2050 could add a “£70 billion boost to the economy”.
However, an area which is severely lacking from conversations around a circular economy is the potential – and need – for more resources to be directed towards communities, which would bring associated positive social impact.
Already hundreds of thousands of dedicated volunteers and organisations are distributing surplus food and products across the UK.
At a time when over 4 million UK households are going without essentials, taking advantage of existing support to divert surplus resources to areas of need is an absolutely fundamental shift in thinking.
However, the distribution of surplus resources is not the solution to poverty in our society as valuable resources must be treated as such and prioritised for diversion to most in need, underpinned by other policy measures.
With joined-up thinking between waste reduction, environmental and social goals, and changes to two policy areas which are currently limiting wider-scale redistribution, short-term and significant positive impacts can be generated.
VAT reform on donated goods
The first policy area requires Treasury involvement to reform VAT rules on the donation of products. According to a British Retail Consortium (BRC) report into retail sector charitable giving, retailers gave £76m worth of direct product donations during 2022/23.
This number could be significantly higher if the rules on VAT relief, which currently apply to the onward sale of products, could be applied to donations which are intended for direct support.
Businesses must currently pay VAT on end-of-the-line products they wish to donate for direct use within communities – the very type of support which small charities such as baby banks, community centres, and schools most need.
This represents a barrier which, if removed, would enable a significant increase in donations of surplus goods. We see how much support there is for such a move through our work with the BRC and with retailers such as B&Q, Aldi and Sainsbury’s.
Former Prime Minister Gordon Brown, who has championed multi-banks – a single location which combines the support of a food, baby, hygiene, furniture and clothes bank into one location – is also a vocal supporter of the move.
The clear need for this multi-bank model is a stark reminder of the range of needs across our communities in the third year of the cost-of-living crisis, and the diversity of the products needed is reflected in our findings from our charity network.
While 70% of respondents stated they need food donations, there is also demand for toiletries (58%), household and cleaning products (45%), baby care products (30%) and kitchen and cooking equipment (25%).
The removal of VAT on items donated by retailers to local good causes would go some way to addressing these needs, as well as enabling major environmental benefits from diverting these products away from landfill and other disposal methods.
Outdated barriers to the distribution of fresh food
It is not yet clear what the Labour Government will decide regarding the much-debated mandatory food waste disclosure policies.
We were among many stakeholders to call on the government earlier this year to revisit this policy and impose clear rules to report and reduce.
But while reporting is valuable to drive behaviour, we must not lose sight of other barriers which are preventing the distribution of safe-to-eat food to local communities.
As it stands, the rules governing food collection differ for individuals and charities. Despite their role in distributing surplus food to the areas of greatest need, charities and community organisations face more complicated processes which result in less food being provided to those who need it.
These rules relate to the requirements for the safe handling of chilled food, however, there appears to be limited justification for having different standards for consumer and charity collection.
These rules should be revisited through collaboration between policymakers, redistribution platforms, retailers and the Food Standards Agency.
At Neighbourly, we’ve calculated that up to 3.3 million meals worth of food per week could be unlocked for distribution to those in need from supermarkets alone.
For retailers, the benefits extend beyond reducing food waste, supporting communities, and reducing emissions.
Our recent polling on levels of trust and support for food businesses among the public showed that companies that donate their end-of-day surplus food to local charities are, on average, more positively rated than those who provide the food to employees or the public.
There is a huge 23% uplift in scores for businesses that donate to charities versus the public.
Making use of what we have to deliver a positive impact
Currently, the many players in our redistribution system are working together as best they can to address urgent social and environmental problems, meeting immediate needs as well as building fairer processes for the long term.
This means that the infrastructure necessary to prevent waste and support those in need, already exists. Policies just need to be updated to reflect current challenges and to reframe our current attitudes towards the disposal of valuable or reusable items.
Indeed, the kind of rapid partnership needed to channel produce into communities and prevent it from going to waste is not without precedent.
During the pandemic, the COVID-19 Emergency Surplus Grant was quickly mobilised and logistical barriers around storing, freezing and onward distribution were addressed thanks to collaboration and unity around a shared goal.
So, while singular policy changes will not leapfrog us forward to a zero-waste economy overnight, what we are advocating for here is imminently achievable, provided there is political will and collaboration between government, retailers and the third sector.
Crucially, these actions demonstrate the value of considering community needs and social benefits when designing circular economy policies. Without such a framing we will be missing opportunities on both fronts.
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