Environment secretary Emma Reynolds has ordered PackUK to dock millions of pounds from local authorities if they fail to spend money raised from the government’s controversial extended producer responsibility (EPR) packaging tax on improving recycling, The Grocer can reveal.
The move comes as the government yesterday laid draft regulations which will give producers major new powers to oversee the way the funds are spent, at the same time as PackUK began the formal process of choosing a producer-run organisation (PRO) to administer the strategy.
Defra has brought forward a raft of regulations in parliament aimed at tackling producer concerns over the accountability for the £1.4bn a year tax.
It said the new regulations were aimed at driving improvements in the efficiency and effectiveness of managing packaging waste, revealing that Reynolds has urged PackUK to withhold money from councils that don’t spent the EPR cash the way it is intended.
“We have been clear across the four nations that the EPR payments have been introduced in order to meet the costs associated with the efficient and effective management of packaging waste by local authorities, recognising the specific legal purposes for which these payments are being introduced,” said a statement from Defra director of circularity Emma Bourne and her counterparts from the devolved nations.
It added: “In England, the Secretary of State for Environment, Food and Rural Affairs has further instructed PackUK to exercise its existing regulatory powers to ensure that EPR funds are spent exclusively on household packaging waste management and recycling. “Although considered unlikely, if an English LA does not spend the funds as specified, PackUK may then use its powers to deduct funds accordingly for the following year’s payment.”
Defra said it would work with PackUK to help it enforce the rules, which come after the Local Government Association (LGA) last month came out in opposition to strict ringfencing of EPR funds, accusing the government of allowing an “private sector takeover” of local services.
However, the new regulations confirm that a new not-for-profit PRO will be given control over the vast majority of elements of overseeing EPR, which the government said would “give industry greater influence over the scheme” and “demonstrates commitment to working in partnership with businesses and recognises cost pressures facing industry.”
Last month The Grocer revealed Bourne had told delegates at a packaging conference Defra wanted to “get out of the way” and let the industry run EPR.
The battle to run the PRO it is believed to be a three-horse race between UK Packaging PRO, an FDF-led bid backed by The Industry Council for Packaging and the Environment (INCPEN) and the BRC; a bid by packaging database giant Valpak; and a third contender led by the Packaging Scheme Forum, representing dozens of different packaging scheme organisations.
The application process is expected to take six weeks and Defra says it expects the new PRO to be appointed by March next year
Jim Bligh, director of corporate affairs and packaging at The FDF, described the government’s moves yesterday as a “major breakthough”.
“Producers are investing more than £1.4bn every year in improving our recycling system, so we expect to see value for money and ever more efficient and effective services.
“It’s imperative that local authorities commit the money they receive from EPR to recycling services and infrastructure, so we can finally turn the tide on our flatlining recycling rates. Just as producers do in PROs around the world, we’re ready to help councils to improve recycling across the board and implement best practice to support poorer-performing councils.
Karen Graley, head of UK Packaging PRO said: “It’s great to see the four nations open the process to become a PRO.
“FDF and INCPEN have convened a broad, cross-sector coalition of companies to design a best-in-class EPR scheme for the UK, one that delivers value for money and helps build the circular economy we all want and need.
“UK Packaging PRO will submit a strong proposal to become the not-for-profit, producer-led, and representative PRO the governments are seeking to appoint. We are open to working with all obligated producers to deliver the strongest possible scheme for the UK.”
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