Are new Plastic Packaging Tax revenues being spent on improving sustainability? Asks Zoe Brimelow, brand director at packaging manufacturer and consultancy, DUO.
As COP27 commences, countries will once again come together to take action towards achieving our global collective climate goals as set out in the Paris Agreement. Yet, with all of the UK Government’s recent political turmoil, it seems that our country’s climate action plan – and the 2042 target of eliminating ‘avoidable’ plastic waste – might have taken a back seat.
On 31 October 2022, the Government will have received another windfall of approximately £68 million from the UK’s Plastic Packaging Tax – that figure is based on estimations following a Freedom of Information (FOI) request that Duo submitted to HMRC in September.
The tax was introduced on 1 April 2022 and FOI data shows that for the period April – June 2022, over 347,000 tonnes of plastic packaging used in the UK didn’t contain at least 30% recycled plastic. With a levy of £200 per tonne, this generated over £69 million in tax.
It’s reasonable to assume that the same number of businesses, approximately 2,600, will have submitted Plastic Packaging Tax returns on 31 October for the second period (July – September 2022). While consumer spending dipped slightly this summer, which may suggest a marginal decline in packaging usage and associated taxes, another £68 million in tax revenues for the second quarter seems plausible.
We believe there’s a significant opportunity to improve how much post-consumer plastic content is recycled here in the UK.
And yet, six months into the new levy, the Government has still not shown how the new tax revenues are being spent. I believe this must be forthcoming from the new Prime Minister and his Cabinet. When the Plastic Packaging Tax was first introduced, the main policy objective outlined was to create greater demand for recycled plastic, which urgently requires large-scale investment here in the UK.
Since the tax was introduced demand has most certainly increased, yet there’s been a major shortage of recycled plastic content in the UK which has left businesses with little option in the short-term other than to import more recycled plastic from overseas where suppliers can meet the demand.
At the same time, we’ve seen reports that businesses are simply continuing to use virgin materials and pay the levy as they cannot obtain or produce their product using recycled content to meet the 30% minimum threshold required. Looking at the figures from the FOI request, perhaps the latter is more likely as the revenue generated in the first quarter alone is almost 30% of HMRC’s predicted £235 million total revenue for the tax in its first year.
The FOI data shows there’s a huge demand for recycled plastic pellets that simply isn’t being met. This demand is likely to increase as more companies comply with the Plastic Packaging Tax and respond to growing calls for more resourceful packaging.
Closed-loop recycling infrastructure is severely lacking in the UK and it is imperative if we want to reduce the use of virgin resources long-term. Plastic Packaging Tax revenues should be reinvested to help fund this, and businesses paying levies are entitled to know how taxes are being reinvested in sustainable policies and practices.
Closed-loop recycling is the most effective way of keeping this valuable material in the economy.
As a packaging manufacturer, we made a critical decision to invest £3 million into establishing a new recycling business in the north of England that specialises in the recovery and recycling of plastic packaging, preventing end-of-use material from going to waste and keeping it within closed-loop recycling streams to improve resourcefulness.
We believe there’s a significant opportunity to improve how much post-consumer plastic content is recycled here in the UK, to help meet the increased demand from businesses and to support more companies to reduce their reliance on virgin plastic.
Closed-loop recycling is the most effective way of keeping this valuable material in the economy; keeping the same types of material together during recycling, means the repurposing and reuse of plastics can be significantly extended to reduce environmental impact.
It’s exactly this kind of forward-thinking investment and circular strategy that we need to see coming from the Government, and the revenues generated by the Plastic Packaging Tax should be used to support businesses that perhaps don’t have the capital to invest in recycling facilities due to other unprecedented inflationary pressures.
With further market unpredictability expected, I cannot stress enough the value of optimising recycling processes here in the UK. Economies around the world are becoming increasingly circular and it’s more important than ever to minimise the amount of material being lost to waste during recycling.
The UK Government has an opportunity to make a real impact with the revenue generated by the Plastic Packaging Tax and should be prioritising investment in innovation and forging partnerships with industry that will increase the recovery of post-consumer plastic waste and deliver true sustainability gains long term.
