Draft Producer Responsibility Obligations (Packaging and Packaging Waste) Regulations 2024

The Committee consisted of the following Members:

Chair: Mark Pritchard

† Akehurst, Luke (North Durham) (Lab)

† Arthur, Dr Scott (Edinburgh South West) (Lab)

† Brash, Mr Jonathan (Hartlepool) (Lab)

† Chamberlain, Wendy (North East Fife) (LD)

† Creagh, Mary (Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs)

Farron, Tim (Westmorland and Lonsdale) (LD)

† Fox, Sir Ashley (Bridgwater) (Con)

† Hudson, Dr Neil (Epping Forest) (Con)

† Josan, Gurinder Singh (Smethwick) (Lab)

† Macdonald, Alice (Norwich North) (Lab/Co-op)

† McEvoy, Lola (Darlington) (Lab)

† Myer, Luke (Middlesbrough South and East Cleveland) (Lab)

† Osborne, Tristan (Chatham and Aylesford) (Lab)

† Paul, Rebecca (Reigate) (Con)

† Robertson, Joe (Isle of Wight East) (Con)

† Simons, Josh (Makerfield) (Lab)

† Smith, Jeff (Lord Commissioner of His Majesty's Treasury)

Natalia Janiec-Janicki, Committee Clerk

† attended the Committee

Ninth Delegated Legislation Committee

[Mr Mark Pritchard in the Chair]

Draft Producer Responsibility Obligations (Packaging and Packaging Waste) Regulations 2024

16:30:00

I beg to move, That the Committee has considered the draft Producer Responsibility Obligations (Packaging and Packaging Waste) Regulations 2024. It is a pleasure to serve under your chairmanship, Mr Pritchard. The regulations, which were laid in draft before the House on 24 October 2024, introduce extended producer responsibility for packaging, referred 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 returns scheme and the simpler recycling programme in England. It will overhaul the packaging waste system, introducing the biggest change to policy in a generation—since the last Labour Government introduced the landfill tax. Collectively, the packaging reforms are estimated to deliver carbon savings of more than 46 million tonnes of carbon dioxide-equivalent by 2035, which is valued at more than £10 billion in carbon benefit. The new system established under the 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 businesses that supply packaging, thereby applying the “polluter pays” principle. The regulations implement the international best practice exemplified by the mature systems of our European neighbours, including Belgium and Germany, where comprehensive pEPR schemes have been in place for some time. This is a foundational pillar of our transition to a circular economy, moving away from the linear take, make and throw model, which we know harms our environment and society, to an economic model that keeps valuable material resources in use for longer. The revenue raised by the new system will generate more than £1 billion a year to support local authority collection, recycling and waste disposal services, which will benefit every household in the UK and stimulate much-needed investment in our recycling infrastructure. It will make a substantial contribution to the benefits of the packaging reforms which together—those three pillars of the DRS, simpler recycling and today’s regulations—are estimated to support 21,000 jobs across nations and regions, and to 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 to local authorities to improve the household kerbside collection system across the UK. In England, the 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, the reforms will support this mission-driven Government’s ambition to kickstart economic growth and create the foundations that are required to transition towards a circular economy for packaging in the UK, ensuring that resources are used for longer. It is a critical first step towards meeting our manifesto commitment to transition to a resource-resilient, productive circular economy that delivers long-term sustainable growth. Let me draw hon. Members’ attention to the new obligations in the statutory instrument. First, the regulations introduce an obligation on businesses that supply household packaging, referred to as “producers”, to pay the costs incurred by local authorities in managing that packaging once it has been discarded. Producers will also be obligated to meet the cost of providing public information about the correct disposal of packaging. Producers will start incurring fees from April 2025, and invoices will be issued from October 2025 for the 2025-26 scheme year. Additionally, from the second year of the scheme, producer fees will be adjusted to incentivise producers to make more sustainable decisions at the product design stage, including decisions that make it easier for products to be reused or recycled at their end of life. That will mean that a producer that uses packaging that is not environmentally sustainable, such as packaging that is not widely recycled, will incur higher fees. Conversely, those using packaging that is sustainable and readily recyclable will incur lower fees. It is right that businesses bear the costs of managing the packaging they place on the market, but we must also protect small businesses, which are the lifeblood of our high streets and the backbone of our economy. That is why only businesses that have a turnover of more than £2 million and that supply over 50 tonnes of packaging a year will have to pay disposal fees under the new system. To administer the system, the regulations require the appointment of a scheme administrator jointly by the four nations. This body will be responsible for the implementation of pEPR, including the setting of producer fees, and the apportionment and payment of those fees to local authorities to fund their waste management services. The scheme administrator will initially be hosted by the Department for Environment, Food and Rural Affairs. Let me turn to the detail of the obligations retained from the current producer responsibility system. The instrument revokes and replaces the Packaging Waste (Data Reporting) (England) Regulations 2023, along with the equivalent regulations in Wales, Northern Ireland and Scotland. The requirement for packaging producers to collect and report data on the amount and type of packaging they supply is carried over from the 2023 regulations, as amended. The data is used to calculate producers’ recycling and fee obligations. The instrument also revokes and replaces the Producer Responsibility Obligations (Packaging Waste) Regulations 2007 and the equivalent regulations in Northern Ireland. As was the case under those regulations, the draft instrument places obligations on producers to ensure that a proportion of the packaging they supply is recycled and requires them to provide evidence of that to the regulator. Those requirements apply to all packaging, not just packaging likely to be disposed of in local authority household collections. To meet that obligation, producers must demonstrate compliance by obtaining packaging recovery notes and packaging export recovery notes from recycling facilities, or from those that export packaging waste for recycling. Finally, the instrument provides the four national regulators with enforcement powers and a duty to monitor compliance. It contains strong enforcement measures, including criminal offences and powers for regulators to impose civil sanctions in cases of non-compliance. As is currently the case, the monitoring and enforcement activity for the producer responsibility regime will be funded by the associated charges in the draft regulations, such as those for registration and accreditation. The charges operate on a cost recovery basis. They have therefore been increased from the levels in the 2007 regulations to reflect the new duties placed on the regulators and the increased level of monitoring and audit activities. To conclude, there is no such place as “away”; everything that we put into the planet we put into our environment and, ultimately, into ourselves. It is therefore critical that we create the foundations to transition to a circular economy for packaging, ensure resources are kept in use for longer and secure vital carbon savings. As we look at the global plastic pollution treaty negotiations in Busan, South Korea, we certainly hope to play our part in that work.

16:39:00

It is a great pleasure to serve under your chairmanship, Mr Pritchard, and to be a member of this Committee opposite the Minister, for whom I have huge respect. I thank the Minister for bringing to the Committee these important regulations to enhance our strong record on environmental protection. I am happy to put everyone’s mind at rest: we, His Majesty’s loyal Opposition, have no opposition to these regulations, and we appreciate the current Government’s effort to build on the strong Conservative track record of increasing recycling and waste disposal. The system of packaging producer responsibility has been in place for many years and will continue to play a role in reducing packaging waste. An initial consultation held in 2019 by the last Conservative Government showed strong support for the proposals from respondents. In response to the consultation, we adapted the amendments, leading us to many of the proposals we are discussing. I am appreciative of the important fact that charities and the voluntary sector will be excluded from these regulations, as that ensures that they are not adversely impacted. I politely encourage the Labour Government to consider applying similar exclusions to their more controversial proposals on the charitable status of independent schools and on national insurance contributions increases, which will have a significant effect on the charitable sector, including hospices and the like. I am extremely pleased that the instrument aligns with the Windsor framework and will be adopted nationwide. Although Conservative Members offer no objection to the regulations, we will ensure that there is proper scrutiny of any further Government proposals. I would like to point out some wider issues for the Minister to address. First, can she elaborate on what the Government are doing to assist businesses in general to recycle more so that we protect our environment? Secondly, can she explain what the Government plan to do to support businesses to reach the recycling target rate of 75% by 2030? Finally, what consultation or conversations will the Government have with businesses and other relevant stakeholders to ensure that businesses are on board with any future changes that may be coming down the line? This crucial issue affects us all on this precious planet. I am happy to work with the Minister to ensure we continue to do all that we can to create a cleaner environment and cleaner communities, to increase our recycling efforts and, ultimately, to protect our precious environment.

16:42:00

It is a pleasure to serve under your chairmanship, Mr Pritchard. Along with my Liberal Democrat colleagues, I welcome these regulations. They are a distinct step in the right direction for recycling packaging, and I am glad to see that they will be UK-wide. There are a lot of things that are rightly decided in Scotland, but I know that producers, certainly those in my own constituency, want to be able to sell their products in Scotland and the rest of the UK without worrying about multiple sets of legislation and different reporting requirements. Indeed, we know that from the difficulties that Scotland’s individual deposit return scheme ran into. We have all sorts of fantastic producers in North East Fife. Kettle Produce provides pre-cut packaged vegetables, which can be found on the shelves of many supermarkets, and the boxes and packages for Quaker Oats porridge come from just outside of Cupar. It is not always easy to navigate the needs and interests of different parts of the UK, and I hope that these regulations are the result of positive engagement between the Governments of the four nations that will benefit all our constituencies. I welcome the fact that these regulations provide clarity to businesses. In the run-up to this Committee, I spoke to a producer who told me that they have to comply with two sets of rules and report on two datasets. I am sure we all appreciate how complex and time-consuming that is, so that producer and others will benefit from the certainty provided by having only one scheme in place. I have a couple of questions for the Minister. First, the regulations place the onus on producers to assess the recyclability of their packaging. What support and guidance will there be for this, and what checks will be in place to ensure that the process is well regulated? Will that require more funding, and have the Government planned for that? Can the Minister confirm that the system administrator will be properly funded and confirm how it will be managed on a cross-border basis? I think we would all welcome any steps to remove the costs of handling recycling from our local authorities, but I would not want to see that offset by poor administration. These regulations are vital steps in the right direction, which I and my constituents welcome as we move towards a greener and less wasteful future.

16:44:00

I thank hon. Members very much indeed for their kind and constructive words. We are seeing today an outbreak of unity on the basis of a project of seven years’ gestation. I remember the then Secretary of State for Environment, Food and Rural Affairs telling the Environmental Audit Committee, which I then chaired, that they would introduce a DRS scheme back in 2017. Here we are, and it falls to a Labour Government to introduce it. Once we pull one thread out of the packaging bin, we affect the income streams on which councils depend—I have a little joke in the Department that simpler recycling is actually hellishly complex recycling. It is a very complex project. There were issues with it during the covid pandemic and there have been four consultations on these reforms, so it has certainly taken a long time to see the light of day. I would gently say to the shadow Minister that when we left Government in 2010, the recycling rate was more than 40%. It is now at 44%, and kind of going backwards. The original target in 2002 was for us to be at 50% recycling by 2015. The real lesson for all of us as lawmakers of whatever party is that, if we do not continually update policy, encourage behaviour change and give business certainty, these things do not happen on their own. The shadow Minister asked me about taxes; I welcome his constructive comments on charities, but obviously he knows that taxes are a matter for the Chancellor. I believe that the Finance Bill is still being debated in the main Chamber and I am sure he will have an opportunity, should he want to intervene there. We talked about support for businesses. My officials have worked incredibly closely with businesses on this scheme. I met with a very large bottled drinks manufacturer yesterday in the Department, and I met with other businesses this morning as part of an all-party parliamentary group. We are not getting any comments from businesses that they have not been heard. There has been a consultation. There have been some philosophical questions about where glass should sit, and glass is now in pEPR. We want anyone involved in the production of packaging, such as the great Quaker Oats brand that the hon. Member for North East Fife has near her. That is an example of absolutely perfect cardboard packaging. It is sort of the perfect recycled package—wholesome on the inside and wholesome on the outside. Most people know that the hard-to-recycle packaging is the plastic films. That is the really tricky stuff. If we look in our waste bins, by the time we have taken out the cardboard, plastic bottles, milk bottles and cans, what is left is food waste—collected in some areas, but not others, and the main source of methane in our landfill—and then the plastic film. Similarly, coffee cups have a plastic liner a few microns thick and then the thick cardboard around it, but they need the plastic to hold the drink. It is a question of product design and innovation. None of this is new, and a lot of it is happening, with pEPR happening in around 30 other countries in the world. Industry and representative groups have actively engaged with Government on developing these schemes and have offered support by sharing their data on recycling. I take the point from the hon. Member for North East Fife about the two schemes. In a way, it is a bit like Brexit—we have the old regulations, the new regulations, and there are costs. What was supposed to be a bonfire of legislation actually ends up causing more regulation. We also have a number of industry representative groups taking part in the co-design of the future of scheme administration, including consideration of greater value chain involvement in the scheme. Nobody has a monopoly on wisdom—this is the first time we as a nation are doing this.

I note that the Minister is saying that businesses are feeding in, but my earlier point was that, with changes coming down the track, dialogue needs to go both ways. What plans do the Government have to talk to businesses and sectors in future? They are taking in information, but it is important that information goes the other way, so that people can plan and put measures in place.

That is a valid point. We have had to collect the data, but the data is not 100% there yet. Illustrative base fees were shared in August and we did new base fees in September to reflect some of the comments from business. We are looking at 2024, which has not ended yet, so we need to look at the tonnage and packaging for 2024 before we publish the final, definitive fees from April. We have tried to share illustrative fees with people, because we know there are long supply chains and they need six to 12 months to plan properly. Further iterations will follow up to the summer next year, when we will share those final fees. They will be invoiced in October 2025, which will cover the period from 1 April 2025 to March 2026. At that point there will be absolute clarity and certainty. If there is anything that we feel is not working or that is driving behaviour in the opposite direction from what we want to see, we will not hesitate to change things further. As a new Government—we have been in power for only five months—this has been a big elephant to digest, one bite at a time. The hon. Member for North East Fife asked me about producer obligations in the two schemes. The regulations carry over the obligation on the Environment Agency to publish a list of large producers from the 2023 data regulations, as amended. That should help producers to reduce the risk of double obligation, because we do not want people to be obligated under two separate schemes. If a producer discovers that it has reported packaging that it was not required to report, the regulations enable it to make a resubmission to correct any errors. We will continue to review the reporting requirements and engage with industry to ensure that the regulations operate effectively. The payments will also apply to online marketplaces, something that is important for all of us as constituency MPs. We have seen the displacement of traditional high street businesses by online retailers, where it is usually cheaper to buy something. These regulations try to reset the level playing field. We have legislated for that by creating the online marketplace producer class to address the rising prevalence of products imported into the UK as a result of sales on a third-party website. Where that happens, the operator of an online marketplace established in the UK must now take responsibility for that packaging under pEPR. At the same time, we do not want to unnecessarily burden small producers, so we are retaining the current de minimis thresholds. We will use the data gathered in the first year of the scheme to review the approach to small producers after that first year. We need to see if it is working as intended. I hope I have covered most of the questions raised by hon. Members. The legislation is necessary to kick-start the circular economy, drive up our recycling rates, drive down our carbon emissions and change our approach to packaging in the UK, to ensure that materials and products are kept in use for longer. I hope that hon. Members understand and accept the need for the instrument, and I am grateful for the Committee’s time. Question put and agreed to.

16:53:00