Producer Responsibility Obligations (Packaging and Packaging Waste) Regulations 2024

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Producer Responsibility Obligations (Packaging and Packaging Waste) Regulations 2024.

My Lords, these regulations were laid in draft before the House on 24 October 2024. They introduce extended producer responsibility for packaging, which I will refer to as pEPR, in England, Wales, Northern Ireland and Scotland.

PEPR is one of the three core pillars of the Government’s ambitious packaging reforms, alongside the forthcoming deposit return scheme and the simpler recycling programme in England. These will overhaul the packaging waste system, introducing the biggest change to policy in a generation. Collectively, the packaging reforms are estimated to deliver carbon savings of more than 46 million tonnes of carbon dioxide equivalent by 2035, valued at more than £10 billion in carbon benefits.

The new system established under these regulations will modernise the producer responsibility system for packaging in the United Kingdom by shifting the costs of managing discarded household packaging from taxpayers to those businesses that supply packaging and by applying the “polluter pays” principle. These regulations also implement international best practice, exemplified by the mature systems of our European neighbours, including Belgium and Germany, where comprehensive EPR schemes have been in place for some time.

I am sure that Members will note that this SI was drawn to the special attention of the House of Lords by the SLSC. I assure Members that this was on the grounds of it being politically or legally important and it giving rise to issues of public policy that are likely to be of interest to the House.

I turn to the benefits of the scheme. The revenue raised by this new system will generate more than £1 billion annually to support local authority collection, recycling and waste disposal services. This will benefit every household in the UK and stimulate much-needed investment in our recycling infrastructure. This will make a substantial contribution to the benefits of the packaging reforms, which together are estimated to support 21,000 jobs in our nations and regions, and will help to stimulate more than £10 billion of investment in recycling capability over the next decade. Revenue from pEPR will create a much-needed injection of resources into local authorities to improve the household kerbside collection system across the UK. In England, this revenue will fund the simpler recycling reforms that will enable consistent collection of all dry packaging materials, ending the postcode lottery for recycling.

Taken together, these reforms will support this mission-driven Government’s ambition to kick-start economic growth and create the foundations required to transition to a circular economy for packaging in the UK, ensuring that resources are kept in use for longer. It is a critical first step in meeting the commitment in our manifesto to transition to a resource-resilient, productive, circular economy that delivers long-term, sustainable growth.

My Lords, I congratulate the Minister on and thank her for bringing forward these regulations, which I wholeheartedly support; I also thank her for her clear exposition of what they contain. I have a couple of questions.

The Minister set out the responsibilities, particularly around informing households of what they are required to do. I understand that a lot of the waste that is contaminated cannot be effectively disposed of and recycled. Does the Minister know what percentage of household waste that constitutes, including whether it has gone up or down in, say, the last five or 10 years?

I am grateful to the Wildlife and Countryside Link and the Green Alliance for the joint briefing that they have produced for our use. I am also grateful to the Minister for drawing attention to the Secondary Legislation Scrutiny Committee’s report, which gave a very helpful background.

My understanding is that the regulations relate only to recycling. I wonder why the department has focused on recycling and not reuse. I have asked on a number of occasions both the Minister and her noble friend the Minister for Energy, the noble Lord, Lord Hunt, what the Government’s policy on energy from waste is. It is a good way of using household waste that has been contaminated and cannot be reused. It also prevents it going to landfill, which I understand is where most of the waste that is not recycled will go. So it not only reduces household waste and disposes of it in an energy-efficient way; it also provides an energy stream that other countries in Europe use to great effect. My late aunt and uncle in Denmark had their household heating provided by energy from waste at a reduced rate, so there was a community interest in taking it up. I have not heard anything from the Government—either this department or the department for energy—as to their views on energy from waste.

My Lords, I thank the Minister for her extensive introduction to this long-awaited SI. This is a complex issue; it has taken Defra and the Government since 2019 to bring it to this stage. I congratulate both of them on managing to get the devolved Administrations to sign up to more or less the same scheme, which should make things easier. I have received briefings from various producers and had face-to-face meetings for several years, and I was beginning to think that we would never get here. I am grateful to those who provided me this week with briefing material, as well as to the Secondary Legislation Scrutiny Committee for its report.

The opening section of the Explanatory Memorandum refers to implementing the “polluter pays” principle. That is to be welcomed. This is an opportunity to use the extensive powers in the Environment Act 2021 in order to implement the best environmental outcomes and to support the efficacy of reuseable packaging systems.

This SI obliges producers to provide evidence of the type of their recycling to the regulator. However, there is no information on how this is to happen, except that those manufacturers with a turnover of more than £2 million and which produce more than 50 tonnes of packaging will do this once a year. These producers will pay the fees to local authorities. Those with a smaller turnover of more than £1 million will have to report their recycling type but will not have to pay fees. There is nothing about how the information is to be collected by the manufacturer and what the format is for it to be reported.

I regret to say that this is something of a “get out of jail free” card. Defra and the Government are placing a great deal of trust in those who will pay the fee to provide the evidence of their recycling. The regulations include the principle, at Regulation 62(2)(b), that producers can offset fees for packaging that they market, as well as where they collect and recycle that packaging through self-funded initiatives.

Both the EM and the Secondary Legislation Committee report refer to the Secretary of State for Defra, the Ministers of the devolved Administrations and the Government appointing the scheme administrator. Can the Minister say what the process for this appointment will be? Will it be open competition among those involved in the waste management industry, or some other process involving the Environment Agency or another NGO? I would be grateful for some clarity on this aspect of the scheme. I can imagine a large amount of money being allocated to the scheme administrator’s role; therefore, the appointment process needs to be transparent.

The EM refers to the packaging waste recycling note and the packing waste export recycling note; the Minister also referred to them. There are new regulations for reprocessors to register with the regulator of the DAs and Defra. This is especially important if we are to continue exporting waste, instead of dealing with it ourselves. There have been some desperate stories of what has happened to our waste when it is sent overseas. One very worrying aspect of this scheme is that accreditation of reprocessors and exporters to issue PRNs and PERNs remains voluntary. This gives the impression that our waste could be disposed of in an unregulated manner. Can the Minister comment on this?

I am sorry to ask so many questions, but I admit I am disappointed that we do not seem to be any further forward with a deposit return scheme, especially as the fees to be applied to the producers under this SI are based on the weight of the waste. This severely penalises glass producers, whose product is eminently recyclable. Glass faces policy fees per unit that are over 40 times higher than those for plastic. Five thousand glass bottles can be manufactured compared with 67,000 plastic or aluminium containers of the same size. Manufacturers of aluminium beverage containers will not pay any fees at all until a DRS starts in October 2027, giving them an advantage. Can the Minister say why there is nothing in the impact assessment on the impact of material switching away from glass, which, as I said, is one of the most recyclable containers?

Defra’s impact assessment indicated that implementing the pEPR will hit expenditure for the average household by between £27.98 and £55.95 per year. This may seem small but, as it stands, consumers will pay more for glass than plastic. British Glass estimates that a basket of 10 household items with glass packaging will cost the consumer an extra 52.18p in pEPR taxes, whereas the same products in plastic would pay just 7.89p in pEPR fees. This is a direct incentive to use more plastic, which is a lot less recyclable. Surely this cannot be what the Government intend, given the devastating effect of plastic on the environment. I am surprised that Defra has not designed the pEPR to take account of the per unit cost, which would create a level playing field for all materials. Is the Minister able to say why this has not been part of the scheme and whether she will ensure that it becomes part of it?

Local authorities will collect the fees annually. They have recycling performance targets, some of which relate to kerb-side collections. These vary greatly across the country and, even if local authorities do not reach their targets, they can keep 80% of the fees collected.

In Wales, local authorities have statutory recycling targets. As we all know, Wales has one of the highest recycling rates in the world. Wales is on our doorstep, so why are the same targets not being implemented in England? What we have with this SI is a packaging tax with no prospect of improved recycling in its outcomes.

I am conscious that local authorities are chronically underfunded. The move to EPR will boost their coffers but, with no KPIs on recycling linked to the fees received, this money will not necessarily be used to improve kerb-side collections but might go into the social care budget desert. Can the Minister comment on this?

Under the previous Government, a second pEPR consultation included a proposal to include in pEPR legislation the mandatory retailer take-back of paper cups. This followed major investment by the major coffee shop brands, which provided facilities for the public to return used paper cups to their premises and to those of their competitors. The cups were then sent to facilities, such as James Cropper, to be recycled.

Between their consultation response and the publication of the SI, the previous Government announced that only premises employing 10 or more full-time equivalent employees would be mandated to take back cups. That announcement served to confirm that the take-back scheme would go ahead, with a timetable for inclusion in this SI. The industry received a shock when the SI did not include paper cup take-back. No announcement or statement was made by Defra on this. The whole point of cup take-back was to set a precedent for packaging that would not normally be disposed of in domestic bins. In early discussions, Defra raised the possibility of similar schemes for confectionery and snack packaging. As there is no ability to amend any SI, I would be grateful if the Minister could meet with me to consider how the paper cup take-back scheme could make the progress expected by the industry.

The Secondary Legislation Scrutiny Committee report clarifies how the Environment Agency is funded and gives assurances that the increased charges will provide additional funding to reflect the new duties. However, after years of decreasing funding for the EA, there is concern that the increase will be insufficient to support the enforcement and auditing of this scheme. Can the Minister give reassurance on this?

Finally, although I welcome the SI, I am concerned by the missed opportunities. Having carefully considered the option of a fatal Motion, I decided that, despite its omissions, the country needed to get on with reducing waste, and the SI is a vital part of achieving that. As we are currently unable to amend SIs, it would be a blockage to progress.

I have asked the Minister a lot of questions. If she is unable to provide answers this afternoon, perhaps she would agree to meet to discuss this important matter, about which I readily admit to having something of a bee in my bonnet.