My Lords, I thank noble Lords for their valuable contributions to the debate. There has been an enormous amount of questions, which I will do my best to cover but I may well end up writing in response to some of them. As the noble Lord, Lord Blencathra, said, it is a large document, although, having worked on the Levelling-up and Regeneration Bill, which I needed a wheelbarrow to get around the House, nothing ever seems large to me again. I will try to cover as many questions as I can but, if noble Lords will bear with me, I will go through Hansard and pick up anything that I miss.
The noble Baroness, Lady McIntosh of Pickering, asked a number of questions about household waste. The UK household recycling rate was 45% in 2021, with no substantial change since 2015. However, there is a lack of robust data on contamination rates, so I cannot provide any detail on that. We have used assumed contamination rates, which have been informed by data from sector experts, for the impact assessments for collection and packaging reforms.
The noble Baroness also asked about incentives or targets for reuse as well as recycling. Under pEPR, there are already incentives to support the adoption of reusable packaging. Producers are obligated only once for a piece of packaging, not for each time it is collected and reused. Additionally, where reusable items are collected for recycling by businesses, these can be offset against their overall pEPR obligations. We think that this exemption, in combination with the offsetting provisions, incentivises a move to reuse and drives a move away from single-use packaging, but we will continue to review the effectiveness of these measures to ensure that they are sufficient to meet the UK’s ambitions to increase the reuse of packaging.
The noble Baroness, Lady Bakewell, asked about enforcement and compliance. The pEPR regulations set effective and proportionate enforcement powers to achieve high levels of compliance. We have worked closely with the environmental regulators to ensure that the fees payable to them are adequate to fund the full regulatory service. One such power is the ability to issue variable monetary penalties in respect of certain offences, including the failure to register and the failure to report data. These new variable monetary penalties will enable the environmental regulators to issue financial penalties that are commensurate with the nature of the offence and the size of the business, meaning that larger businesses may face significant financial consequences for failing to comply with the regulations.
Additionally, the scheme administrator that will be created by the SI will be granted the use of civil sanctions, including variable monetary penalties, to address the non-payment of disposal fees. Where a producer fails to pay its disposal fees in the prescribed time, the scheme administrator may issue a variable monetary penalty, the amount of which will be equal to 20% of the unpaid disposal fees or up to 5% of the business’s annual turnover, whichever amount is higher. The noble Lord, Lord Blencathra, asked for more detail around the fees that would be charged.
The noble Baroness also asked about the appointment of the scheme administrator. The scheme administrator will be hosted in Defra and will report to the four Ministers of the four nations. There will be a governance structure that will include representatives from the value chain—in other words, producers and local authorities.
On the deposit return scheme, which was mentioned by a number of noble Lords, we are completely committed to launching DRS in October 2027 in England, Northern Ireland and Scotland; we laid the regulations for England and Northern Ireland on Monday. The Scottish Government are making the necessary amendments to legislation in Scotland, thereby enabling us to progress the appointment of the deposit management organisations in April next year.
Materials, the glass sector and plastics were all mentioned. I am sure noble Lords have read that in England, Northern Ireland and Scotland, glass will not be part of the DRS scheme. The Government’s position is that glass would add considerable upfront cost and create complex challenges to the delivery of DRS, particularly for the hospitality and retail sectors—as mentioned by the noble Lord, Lord Blencathra—as well as disproportionately impacting small breweries and being inconvenient for customers.
Glass drinks bottles will instead be part of pEPR. We have been engaging with industry as part of the development of our illustrative base fees, and further engagement is planned over the coming months. To ensure that heavier materials such as glass are not disadvantaged in our model, where weight is not a limiting factor, costs are apportioned according to the volume of collected material rather than the weight. PEPR provides a strong incentive to move towards reuse, to which the glass sector is well placed to respond. Given the carbon intensity of glass recycling and its durable nature, reuse is the goal. PEPR will incentivise the reuse of glass, as fees will be charged only the first time a product is placed on the market and producers will be able to offset what they recycle.
Regarding the Welsh aspect of this, the UK Government, the Department of Agriculture, Environment and Rural Affairs—DAERA—in Northern Ireland and the Scottish Government are not including glass, as I said, but the timing and the scope of the Welsh DRS scheme have not yet been confirmed. While this remains the case, there is no justification for extending the temporary pEPR disposal fee exemption on plastic and aluminium drinks containers to include glass. We will continue to work closely with the Welsh Government; once we have finally confirmed the details of their scheme, we will consider whether any amendments to the EPR regulations are needed.
I think it was the noble Baroness, Lady McIntosh, who asked whether material switching would happen because of this. Decisions on the use of packaging materials are complex and driven by a range of individual, business and market factors. At the moment, we have no robust evidence that switching would occur. As part of our illustrative base fees webinar on 3 October, we requested that the industry provide detailed evidence to support its claim; we also talked to other government departments. We have not yet received any substantial evidence. Having said that, we are planning further engagement with different sectors in December to discuss any findings and their implications. As part of this continuous engagement, we will aim to share as much detail as possible relating to pEPR fee calculations at these sector-specific round tables.
I was asked about the evidence that will be required from producers to show that packaging waste they have collected has been recycled. The regulator would not usually stipulate specific documents in relation to this requirement but would provide examples and principles acknowledging that every producer is different and may therefore have access to different evidence. A producer could obtain written confirmation from their reprocessor outlining what percentage of the materials that were collected and sent for recycling was actually recycled, but this would need to outline the reprocessing method to determine this value and the EA could expect the producer to have a documented process in place to validate this data. So it is quite complex.
The noble Baroness, Lady Bakewell, asked about single-use cups, including whether we are still committed to introducing the mandatory cup take-back scheme; I think she referred to that. We very much welcome the efforts of UK producers to lead the way on the take-back of single-use cups through voluntary initiatives, such as the National Cup Recycling Scheme. The collection and recycling of fibre-based composite cups is eligible for offsetting against pEPR fees. The Government recognise the urgent need to limit the environmental impact of single-use packaging, including fibre-based composite cups, and are considering the most effective ways to meet this challenge. I am more than happy to meet the noble Baroness to discuss this further, if she wishes.
The noble Baroness also asked about targets, PERNs and what is happening to deal with fraud in the system. The new regulations will increase the volume and frequency of data reported by packaging reprocessors and exporters to enable greater transparency right through the system. The regulations include new conditions of accreditation, and regulator fees will also increase to fund additional compliance monitoring of operators. As I mentioned earlier, there are also new civil sanctions to address non-compliance, including the ability to issue uncapped penalties.
Local authorities were mentioned by a number of noble Lords. In November, local authority chief executives were sent indicative estimates of their year 1 extended producer responsibility for packaging payment. Those estimates will cover the April 2025 to March 2026 financial year, so they will have some idea of the costs. The first payments for EPR packaging will be made by November 2025. I hope that that is helpful.
The noble Lord, Lord Blencathra, raised a number of issues around business and costs. The figures that were widely quoted in the press that it would cost industry £2 billion a year are inaccurate. Our estimate shows that the reforms will cost around £1.4 billion a year. This amount will cover local authority costs to manage household packaging waste, as well as scheme administrator costs. Individual producers will be able to reduce their bill by placing less packaging on the market—that is what the legislation is designed to do. Further, any smaller businesses are likely to be excluded due to the de minimis threshold, although it is assumed that the majority of producers will be liable. Hence, the fees will largely represent an industry-wide cost increase, with all firms facing a small increase in cost. For the average producer, cost increases due to pEPR are less than 1% of total revenue.