Plastic Packaging Tax reforms – 3 questions we should be asking


Plastic bottle recycling

As the UK government considers reforming the UK’s Plastic Packaging Tax (PPT), Zoe Brimelow director at packaging manufacturer and consultancy, Duo, considers three key questions that need answering.

It’s positive to see HM Revenue & Customs (HMRC) is looking at a mass balance approach for chemically recycled plastic in the PPT. I’m a huge advocate of processes and innovations that encourage the availability of recycled plastic and firmly believe that the mass balance approach can benefit recycling and circularity in the UK.

The HMRC consultation about chemical recycling and mass balance opened on 18 July 2023 and provides a great opportunity over the coming months for industry to share valuable insights about practically developing the PPT.

As part of this, we must avoid the temptation to run before we walk. While there’s so much enthusiasm for being more resourceful, it can sometimes skew judgements and considerations – the widescale demonisation of plastic packaging is a case in point.

Instead, we must take the time to properly challenge ourselves about exactly where we are in terms of efforts to be more sustainable. It’s with this in mind that possible PPT reforms must prioritise three crucial areas if we are to effectively evolve a policy designed to encourage greater use of recycled plastic packaging.

1) What about bio-based plastics? 

Biodegradable plastic bag

If the consultation is going to look at the composition and measurement of packaging material content, then it must look at bio-based plastics. The existing PPT arrangements do not make sufficient allowances for bio-based plastics unless they contain at least 30% recycled plastic.

This means that companies are being financially penalised for the usage of packaging material which can prove a more sustainable alternative to fossil-based, non-biodegradable plastics.

The EU has recognised that bio-based plastics can contribute to a sustainable plastics economy and has developed a policy framework to improve understanding and provide guidance on these alternative materials. Mandatory recyclate policies within the EU, similar to the PPT, are also considering the inclusion of these materials. 

PPT reforms must look at how the current levy impacts demand for bio-based plastics, and whether changes are required to support the use of materials that can be derived from sustainable resources which are 100% recyclable.

2) How has the PPT performed to date?

Plastic packaging

It’s worth remembering that the PPT is still quite new. The tax was only introduced on 1 April 2022 and data is required to determine its exact impacts and to inform practical reforms. Since its launch, Duo has submitted Freedom of Information (FOI) requests to better understand the tax’s performance. 

The FOI data shows that around £260 million was generated in revenues during the first year of the PPT. This is around £25 million ahead of HMRC forecasts. On average, 2,800 organisations submitted a PPT return each quarter and, overall, a higher volume of 1.9 million tonnes of declared plastic packaging was tax-exempt during the first 12 months. 

It’s difficult to determine how positive or negative these figures are. There is only one year’s worth of data to consider, which can’t be meaningfully compared against many other data sets. The tax is so new and unique in the UK, that it’s complex to draw comparisons with other policies.

We’ve been aware of a significant lack of high-quality recycled plastic pellets in the UK for years.

The consultation must delve deeper to clearly determine business attitudes towards the tax, how it’s impacting packaging strategies and whether companies can take the steps they want to use plastic packaging containing 30% recycled content.

We’ve been aware of a significant lack of high-quality recycled plastic pellets in the UK for years and years. The situation is so challenging that we’ve invested in creating our own recycling business, Duclo Recycling, to help improve availability.

Has PPT performance been impeded by a lack of recycled plastic? Does more focus need to be placed on this part of the plastic value chain if we’re going to truly appreciate the benefits of mass balance? Reforms must focus on closed-loop plastic recycling and what’s required for this to meet the UK’s demand for recycled post-consumer waste.

3) Is the PPT creating greater demand for recycled plastic in packaging?

Plastic packaging

The need for PPT performance data extends beyond what can be gleaned from PPT returns. We must be able to consider UK recycling rates in the UK before and after 1 April 2022, when the tax came into effect. 

The most recent Government data from the Department for Environment, Food & Rural Affairs (Defra) shows that plastic packaging waste recycling rates in the UK stand at 44.2%. The percentage shows the rate of tonnes of waste that is being recycled across 12 months. For comparison, the recycling rates for other materials were 76% for metal, 70.6% for paper and cardboard and 73.6% for glass.

Any meaningful reforms must explore any changes in these rates during 2022 – 2023. However, other factors in play affect packaging material usage, waste and recycling, and it may not be possible to accurately track all variables during analysis.

Any meaningful reforms must explore any changes in these rates during 2022 – 2023.

However, taking stock of recycling rates following the introduction of the PPT would provide wider context and useful insights into the impacts of the tax. The challenge here is that the most recent available Defra statistics on packaging waste and recycling are for 2021.

The PPT consultation is most welcome but we must ensure that logical factors surrounding the impacts of the PPT, advances in bio-based plastics and the status of UK recycling are not overlooked.

These are points that can help us to make the most of strategies such as mass balance, and ensure reforms remain practical for businesses to support increasingly sustainable and circular packaging strategies.

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