With talks of a recession gaining momentum, there are understandably questions surrounding the Government’s response to the crisis and whether potential legislation, such as extended producer responsibility, will still come into place.
Since late 2021, the UK has experienced a fall in real disposable income alongside increased inflation and taxes, which has contributed to the cost-of-living crisis. We may know what is costing us more – energy bills, fuel costs, and food prices – but why have these expenses only risen over the past 9 months?
The genesis of our current crisis goes back to 2020; there has been pressure on the economy since the Government implemented lockdown measures because of the coronavirus pandemic. Energy bills have increased for several reasons, including increased demand for gas in Asia, depleted supplies in Europe, unexpected Liquified Natural Gas (LNG) outages, and the Russian invasion of Ukraine.
Rising costs are affecting us all. Naturally, when considering the impact of the cost-of-living crisis our first thoughts jump to the impact on our wallets. However, the reverberations of a potential recession may reach beyond households and potentially hit government policy and upcoming legislation.
The Strategy aims to ensure we, as a country, prolong the lives of the materials and products we use as we begin to transition from a linear “take, make, use, throw” economy to a circular model.
For the Resource and Waste Strategy, this could mean further delays to elements that have already been pushed back due to the UK’s exit from the EU and the pandemic. The 11 month transition period after Britain left the EU while a deal was negotiated put the sector in limbo while the pandemic put a pause on society as a whole, not just the resource and waste management industry.
All policies implemented or proposed as a result of the Resource and Waste Strategy come from the 25-year Environment Plan. As part of the plan, the UK Government pledged to ensure the environment is left in a better condition for the next generation and the strategy is a tool for it to achieve this goal.
The Government indicated that stakeholders would be able to contribute to the implementation of the plan through a series of consultations, however, after two consultations on extended producer responsibility (EPR) and a deposit return scheme (DRS) for packaging, there is still no clear plan – and the original 2023 and 2024 deadlines loom.
The Strategy aims to ensure we, as a country, prolong the lives of the materials and products we use as we begin to transition from a linear “take, make, use, throw” economy to a circular model.
Some in the resource and waste sector argue, however, that a circular economy is a long-term goal that doesn’t address the current issues, such as the cost of living crisis, impacting people today. This is one of the reasons delays and/or changes to EPR, DRS, and the strategy as a whole have been proposed.
How the cost of living crisis impacts the strategy
Recently, the Food and Drink Federation’s (FDF) chief, Karen Betts, said that “soaring inflation and the cost of living” is one reason why the Government should “rethink” EPR plans, saying EPR for packaging is “overly complex” and would end up costing shoppers more.
Producers are given a considerable financial and/or physical responsibility for the handling or disposal of post-consumer items under the EPR policy approach, which is the cause of concern for some organisations as they worry it could lead to significant cost increases for them which could trickle down to the consumer.
Of course, the prospect of costs being passed onto the consumer is not going to make any policy change popular. The FDF said it calculated EPR could add an extra £60 to every household’s annual shopping bill.
The estimates on the cost of EPR vary depending on who you ask. While it’s estimated that costs will increase in the short-term, in theory over time, a correct system will encourage innovation which could reduce costs in the future.
Without the EPR funding, the government will not be able to deliver on their consistent collection ambitions in England, and so we will not see the increase in recycling rates everyone is working so hard to deliver
The Department for Environment, Food and Rural Affairs (Defra) estimates that the initial costs passed on to customers will be £41 per household annually. Defra’s estimate for prices assumes all costs are passed back onto households. It also argues that the reforms will incentivise producers to use packaging that is easier to recycle, resulting in subsequently lower fees.
Betts told the Sun: “We all want to reduce the packaging we use. And we all want our food to be safe – and to reach us in peak condition. So, it follows that we need a best-in-class recycling and re-use system for food and drink packaging – one that’s affordable for shoppers, and which is also good for the environment. Right now, we’re on the brink of getting a system that’s neither.”
Contrastingly, in response, CIWM’s Policy and External Affairs Director, Lee Marshall, said: “Producers, and all others involved in the packaging journey, have agreed that changes are needed, so they must be seen through to fruition.
“Without the EPR funding, the government will not be able to deliver on their consistent collection ambitions in England, and so we will not see the increase in recycling rates everyone is working so hard to deliver.
“The household collection system needs an injection of funding and, if it doesn’t come through EPR, it is difficult to see where else it will come from.”
What happens next?
The polluter pays concept is driving the strategy and potential legislation. Large quantities of packaging that are difficult to recycle incur higher costs. In theory, over time, a correct system will encourage innovation and reduce costs.
It might be perceived that the delay in the Strategy’s progress is due to the Government believing there are more immediate problems to grapple with, such as the Conservative Party leadership race and cost-of-living crisis.
Until we find out what Liz Truss’ or Rishi Sunak’s tenure will look like – both candidates have been relatively quiet on the environment and green policies during the leadership race – it’s hard to know what the future of Resource and Waste Strategy related initiatives will look like.
CIWM believes there is a strong argument to delay DRS as the context is going to change once EPR and Collection Consistency are implemented
Defra originally closed the consultation on EPR on June 4 2021 and no formal response has yet been published – an interim summary of responses was published in March 2022, but there are already debates concerning whether proposals are “overly complex”, essential for the future, or going to pass on costs to consumers.
This is why organisations, like CIWM, are calling for the formal consultation response to be published, so all details on what EPR will look like are out in the open. Publishing the consultations will also signal to investors who want to fund green infrastructure that a strong legislative drive is incoming.
CIWM says it wants EPR and Collection Consistency in Household and Business Recycling in England introduced “as soon as possible” to “end the uncertainty that currently exists”.
However, CIWM believes there is a strong argument to delay DRS as the context is going to change once EPR and Collection Consistency are implemented. There are also concerns that a DRS may affect kerbside collections and arguments it would be smarter to wait for a digital system to become viable.
There seems to be an invisible line being drawn dividing those in favour of the current iteration of EPR and those apparently against it. What’s important now is that the Government pushes to publish the consultations on EPR and DRSs as soon as possible, that way all stakeholders can begin to move forward again.
