Producer Responsibility Obligations (Packaging and Packaging Waste) (Amendment) Regulations 2025
Lord in Waiting/Government Whip (Lord Katz) (Lab)
My Lords, these draft regulations were laid before this House on 3 November. They amend extended producer responsibility for packaging, or PEPR, across England, Wales, Northern Ireland and Scotland. They represent a major step towards a circular, resource-resilient economy—one where producers take greater responsibility for packaging, and waste is designed out from the start.
Extending producer responsibility for packaging is the cornerstone of the Government’s once-in-a-generation recycling reforms. These reforms will increase the quality of the recycling that local authorities collect, support sustainable growth in the UK waste management and reprocessing sector, and reduce our reliance on material imported from overseas. As a result of the reforms, the waste management sector has committed to creating 25,000 new jobs and investing more than £10 billion in the economy. UK circular industries—those keeping products and materials in circulation for as long as possible—now deliver £67 billion yearly to the economy, and growth in this sector is more than double the rate of the overall UK economy.
The original PEPR regulations, introduced in 2024, created a framework for managing household packaging waste. They shifted the financial burden of disposal from taxpayers and local authorities to businesses supplying packaging. Producers must now cover the costs of managing their packaging waste and ensure that a proportion is recycled, with evidence provided to the regulator.
I now turn to the new obligations. These amendments aim to improve fairness, clarity and operational efficiency, responding to feedback from producers, local authorities and stakeholders, while aligning with international best practice. I will highlight three key reforms. The first is the appointment of a producer responsibility organisation, or PRO. We are enabling the appointment of a producer responsibility organisation from 2026—a very significant development. The PRO will be an independent not-for-profit body, established with the support of producers, to take on core responsibilities for the operation of the PEPR scheme. This responds to industry requests and mirrors successful models in countries with mature extended producer responsibility systems. The PRO will operate under conditions agreed by the four Governments and work closely with PackUK, the scheme administrator. Sovereign functions, such as data ownership and fee-setting, will remain with PackUK.
Secondly, I speak to the expansion of offsetting provisions. Large producers operating closed-loop recycling systems for food-grade plastics—where they collect and reprocess their own food-grade plastic waste—can now deduct these tonnages from disposal cost obligations. Eligible producers may resubmit 2024 data and receive revised invoices for 2025. We are doing this because we want to increase the recycled content in food-grade plastics. Despite sorting techniques, it is currently difficult for local authorities to keep plastic that is intended for food contact separate from other types of plastic. The result is that food-grade plastics often get downcycled, so we lose this valuable material. Closed-loop systems preserve valuable material and reduce reliance on virgin plastics, supporting the UK’s move towards a circular economy.
Thirdly, there are technical amendments for clarity and enforcement. These include material definitions, with fibre-based composites with plastic layers of 5% or less by mass being treated as paper or card, simplifying reporting and fee calculation; producer class obligations, introducing clearer rules on responsibility transfers during mergers or ownership changes; and enforcement, giving stronger powers to tackle free riders—businesses meeting thresholds but failing to register or report. PackUK can now recover costs for historic non-compliance. Regulator fees are being updated to reflect inflation, increased activity and new services, such as the recyclability assessment methodology and digital infrastructure. Lastly, local authority cost modelling will be improved to ensure that payments deliver environmental outcomes.
Baroness Redfern (Con)
My Lords, I thank the Minister for his introduction to these regulations and also declare that I am a vice-president of the LGA and a past leader of a local authority. I welcome and note this statutory instrument creating an obligation on businesses that supply household packaging and managing the packaging once it has been discarded, to enhance to environmental protection, and for producers to demonstrate how they can work with the general public so that more products can be recycled and, importantly, to make packaging environmentally sustainable and, we hope, more easily recyclable—with, inevitably, lower fees charged.
Importantly, the instrument also mandates producers to make more sustainable decisions at the product design stage. That means more costs for businesses to take in, so, on the counter side, what support will His Majesty’s Government undertake to incentivise employers, helping them to increase their recycling target rates to deliver more carbon savings? Will this amendment refer to small, medium and large businesses on a sliding scale, or for any exemptions? I make a request in particular for extra support for our small businesses, as they are a lifeline in our supply chains to our economy.
Another point to make is: what assessment is being designed of how the household definition could be refined to capture fewer items of packaging disposed of by businesses? How are producers to offset fees for packaging that they produce when they collect and recycle packaging themselves? In particular, the amendments allow producers to offset fees for closed-loop packaging, easier on top of the existing exemptions. How will this be truly monitored? What acceptable range of evidence must producers provide for closed-loop packaging waste, which has been recycled before fees for packaging can be offset? I look forward to the Minister’s reply.
Baroness Bennett of Manor Castle (GP)
My Lords, it is a pleasure to follow the noble Baroness, Lady Redfern, and to thank the Minister for his introduction. I broadly welcome this statutory instrument, which is at least a baby step towards polluter pays—that those who profit from the production of packaging that causes such damage in our communities should at least deal with the costs of dealing with the waste, which is of course only one small part of the total environmental and public health costs of the packaging overall.
I will start with a couple of specific questions, following on from the noble Baroness, Lady Redfern, and then ask a broader, bigger question. As the noble Baroness said, a lot of the concern around this SI has been about the trade-off between closed-loop recycling systems, turning things back into food-grade recyclate, and how that will be monitored and audited. I note that a joint submission from the Wildlife and Countryside Link, the Environmental Investigation Agency and Everyday Plastic expressed concern about this and said that there was an absence of stringent and auditable evidence requirements, which could be a serious loophole.
We have to look at this in the context of how much sheer corruption and fraud we have in the waste sector. I can see one noble Lord frowning at me in puzzlement, but of course there is the 10,000-tonne waste mountain beside the River Cherwell in Kidlington in Oxfordshire and the 25,000-tonne one in Bickershaw in Wigan, which are believed to be illegally dumped waste. There are widely thought to be huge problems of lack of control and oversight.
In that context, I note the concerns expressed by our Secondary Legislation Scrutiny Committee about the resources available to the Environment Agency in England. It also refers to the other agencies, but I will refer just to England as that is within our purview. I note that the committee suggests that we press the Minister on whether Defra is confident that the regulators will have sufficient information—and, I would add, whether they will have the resources to process and deal with that information. We all know how incredibly stretched the Environment Agency is. Is it actually being given more resources to deal with this SI? That is my very specific question.
I have another specific question. I spoke about the corruption in the UK waste management sector, but significant quantities, particularly of plastics, have been shipped overseas. They are not being recycled at all and are causing huge environmental and public health issues, often in global South countries. So my specific question is: will companies be able to use a closed-loop recycling system that operates overseas, and how do the Government expect the Environment Agency in England in particular to manage that overseas information?
I turn to my second set of questions—it is one big question, really. The Minister said in his introduction that this was a once-in-a-generation action. I really hope that that is not true because, as I said, this deals only with the producers paying for the disposal of the waste. It does not cover all the environmental, social and public health damage done by the creation of that waste in the first place: by the resource extraction, the use of energy and climate emissions.
I am not sure whether the Minister is aware of a WWF UK report from 2021, Packaging Unwrapped, which spells out in great detail the different forms of packaging and what we know—and, importantly, do not know—about the damage they do. Looking at aluminium and steel, it talks about the lack of data on the damage done by mining and the energy use in their production, very often of course in the global South. On paper packaging, it talks about how much paper is imported from Indonesia and the potential, though little-documented or undocumented, links to deforestation there.
Right along the line, there are public health issues with the many thousands of chemicals added to plastics, all of which have public health implications. I hope the Minister will acknowledge that none of that is included if you just make companies pay for the waste disposal. Are the Government looking at further ways to make sure that the genuine full cost of the packaging is indeed paid by those who are profiting from its use?
Baroness Grender (LD)
My Lords, I thank the Minister for setting out these regulations and the noble Baronesses, Lady Redfern and Lady Bennett, for their important and interesting contributions. These regulations mark the next step towards the vital circular economy that many of us have advocated for over many years, rightly shifting the cost burden for packaging waste away from council tax payers and local authorities and towards those who place that packaging on the market in the first place. That direction of travel is welcome, but there are serious concerns about how the transition will work in practice, especially given the speed of the introduction, and especially for small producers and the already stretched hospitality sector.
The aims of extended producer responsibility—to reduce waste, increase recyclability and make the “polluter pays” principle real—are ones that the Liberal Democrats strongly support. The moves to refine the 2024 framework and establish a clearer role for a producer responsibility organisation can, in principle, help to deliver a more coherent and efficient system. However, from the outset, there have been calls from across the industry for a more phased, proportionate transition that recognises the very different capacities of large brands and small producers to absorb new costs and navigate complex reporting requirements. For smaller producers, this is not a marginal administrative adjustment; it is a potentially significant new cost arriving on top of energy bills, wage pressures and squeezed demand. Many smaller producers do not have in-house compliance teams, but my understanding—unless the Minister can correct me—is that they will be expected to collect detailed packaging data, interpret nuanced recyclability rules and manage new fee structures that still remain, in part, uncertain.
The concern is that, if this instrument’s timetable is implemented in its current form, some smaller producers and niche food and drink producers may find themselves priced out, not because they are unwilling to play their part but because they lack the capacity to manage the complexity and volatility of the new regime. For instance, this scheme has been described, in the voice of hospitality, as
“a well-intentioned environmental policy that’s become a margin killer for hospitality businesses”.
Indeed, the hospitality sector illustrates the risk starkly. Pubs, cafés, hotels and restaurants report feelings as if they are paying twice: once through higher prices, as suppliers pass on their producer obligations, then again through existing commercial waste contracts for exactly the same packaging. This flows from the way in which household packaging is defined, which can sweep in materials that never go near a household bin and are handled entirely as commercial waste.
As I think will be clear from all noble Lords’ speeches, we all desperately want these aims to succeed, but we hope that the Government recognise the concerns about implementation. May I ask the Minister some specific and, I hope, helpful questions? First, what changes, whether through the threshold, fee modulation or phased implementation, will the Government consider to ensure that small producers are not driven out, driven to worse packaging decisions, lowest common denominator options, or forced to consolidate solely because of the cost and complexity of compliance under these regulations?
Secondly, what steps will be taken, and on what timescale, to address the issue of paying twice issue—especially for the hospitality sector—so that operators are not charged both through their supply chains and through existing commercial waste arrangements for the same packaging?
Thirdly, will the Minister commit to publishing a clear, segment-by-segment impact assessment covering small producers and hospitality businesses specifically; and to reviewing the scheme after its first full year of operation, with a view to adjusting it where disproportionate burdens become evident?
Finally, on the evidence given to the Secondary Legislation Scrutiny Committee by the Wildlife and Countryside Link, the Environmental Investigation Agency and Everyday Plastic, as described by the noble Baroness, Lady Bennett, what consideration have the Government given to piloting—in the first instance, with some of the larger producers—to ensure confidence that the information streams and the system are robust, that the reporting is robust and that the loopholes are closed, before rolling this scheme out to the smaller producers I described earlier? I look forward to hearing the Minister’s responses to these questions.
Lord Roborough (Con)
My Lords, I too thank the Minister for introducing these amended regulations. I begin by acknowledging that they make a number of sensible technical adjustments to the extended producer responsibility scheme. They show some movements in response to concerns raised by industry, and they are broadly welcomed on that basis. However, the underlying concerns repeatedly voiced by stakeholders have not yet been fully addressed. This is particularly acute in two areas: the treatment of glass within the cost recovery model; and, as also highlighted by the noble Baroness, Lady Grender, the emerging problem of double-charging in food, drink and hospitality businesses.
Lord Katz (Lab)
I thank all noble Lords for their valuable contributions. I am glad to have the opportunity to close this important debate and to have heard a range of views. It is clear that we are all passionate about this topic and I acknowledge that the principles behind PEPR, which began in 2024 before this Government but which we are carrying on, are taken as a good thing across the Committee. We are trying to meet its aims with sincerity, working with industry, local authorities and waste collectors.
I turn to the comments and questions raised. The noble Baroness, Lady Redfern, asked about the impact on small businesses. It is worth noting that many PEPR schemes around the world offer no exemptions from their obligations for small businesses, whereas in the UK we have some of the most generous measures for small businesses across any packaging scheme globally. The exemptions that we are applying in this scheme will apply to approximately 70% of businesses supplying packaging in the UK, which recognises that we want to support small businesses rather than price them out of the market, as the noble Baronesses, Lady Redfern and Lady Grender, referred to.
A number of contributions focused on the concerns raised by the Secondary Legislation Scrutiny Committee, particularly around whether regulators would have sufficient resources to carry out their functions effectively. The charges in this scheme were calculated based on the expected activities required effectively to undertake regulatory duties, using assumptions on the time these would take based on the experience of regulating similar sectors and the fixed cost of delivery. As the system embeds, regulators will continue to review operational delivery costs to ensure that there is effective recovery. Environment Agency enforcement resource is covered by grant-in-aid funding from Defra.
As well as provision to increase charges by inflation with the consumer price index, there was additional regulatory provision to allow regulators to seek approval to supersede the charges by introducing a charging scheme made under the Environment Act 1995, the Waste and Contaminated Land (Northern Ireland) Order 1997 or the Waste Management Licensing Regulations (Northern Ireland) 2003. Defra will continue to work closely with regulators on this topic.
The noble Baroness, Lady Bennett, in particular raised the question of having sufficiently robust information on producers’ recycling to make a fair assessment. Draft guidance on reporting requirements will be published on GOV.UK before Christmas, ahead of the regulations coming into force. The regulator does not usually stipulate the specific documents required but will provide examples and principles, as every producer is different and may therefore have access to different evidence. Guidance will develop over time to reflect real-life examples presented by producers during compliance checks. For example, a producer could obtain written confirmation from their reprocessor outlining what percentage of the material collected and sent for recycling was actually recycled. This would need to outline the reprocessor’s method of determining this value and the regulators would expect the producer to have a documented process in place for validating this data. While these requirements apply only to the reprocessor and not the producer, these regulations put the burden of proof on producers as they are benefiting from the off-set.
In short, producers must maintain evidence that their closed-loop packaging waste has been recycled into food-grade plastic material under the closed loop system. There is no requirement for this evidence to be third party verified. Regulators will carry out their statutory duty to monitor compliance, as you might expect. I think the noble Baroness, Lady Redfern, raised that issue.
I turn to some of the wider comments of the noble Baroness, Lady Bennett, which she raised when we last discussed orders on plastic waste packaging and recycling in Grand Committee. She is right to hold the Government’s feet—indeed, everyone’s feet—to the fire on creating a true reuse circular economy. To be clear, when I spoke about once-in-a-generation reform, I was not talking specifically about this SI; this is a good SI, but this is not the be-all and end-all. I was talking about the system.
I want to be clear that the Government are committed to transitioning to a circular economy, and reuse will be an important part of that journey. To help make that happen, we will be launching a call for evidence early next year on reusable packaging. This will help us to understand what support and policies are needed to increase reuse. For instance, we are encouraging the glass industry to seek to reduce the cost impacts of PEPR through a transition to reuse and refill, something that used to be commonplace in the UK and continues to be in many other countries.
That brings me on neatly to some of the issues around glass and reuse. The noble Baroness, Lady Grender, and the noble Lord, Lord Roborough, both raised issues on dual-use packaging not being addressed in the SI. I want to reassure the Committee that the Government are taking this seriously. Minister Creagh met with leaders from industry groups affected by the dual-use issue earlier this year, and we recognise the strength of feeling. But we also acknowledge the need for a system that can be effectively monitored and enforced, given that the impact on the PEPR fees for packaging remains in scope of fees.
Workshops have been held over recent weeks to urgently and carefully identify options which address the issues, while maintaining the objectives of the scheme. Sector-specific working groups will test these proposals further. It is important to note that any amendment that exempts more packaging will increase fees for the material that remains obligated to the system. This is because the total cost producers need to cover collectively will not be affected by any such amendment. If there is less obligated packaging, the fee per tonne will increase.
Specifically on glass, there is a question about the problem of the cost in the scheme being calculated by weight, not unit. It is important to recognise that waste management costs are largely driven by weight. We have also taken account of other factors that influence collection costs, including the estimated volume of each material in bins and collection vehicles. It remains the case that glass is a heavy material with a low resale value. A unit of glass packaging costs more for local authorities to manage as waste than an item made of more lightweight and high-value materials.
On switching, major food and drinks producers have told us their view that there is little risk of short-term materials switching, owing to long lead times in changing packaging. Major supermarkets have categorically said that PEPR is not their main driver for changing packaging. Decisions on changes are likely to align with the policy objectives of moving to easier-to-recycle packaging, which, from year two of PEPR, will see a reduction in fees through eco-modulation.
There was a question from the noble Baroness, Lady Grender, on the impact of fees on differential sectors and an impact assessment. In October 2024 the Government published a full assessment of the impact of the PEPR scheme for packaging, including cumulative costs. This considered a wide range of different costs to businesses and included estimates of expected net annual cost to business for those obligated producers. This cost to business had not been split by the sector in which the producers and businesses engage in market activity, given the data’s availability, the commercial nature of data limits and the ability to provide a sectoral level assessment of impacts.
I assure noble Lords that the Government continue to work closely with industry to understand the impact of the upcoming fees on business as the scheme is implemented and rolls out. We are committed to the continuous improvement of the scheme and, where appropriate, will seek to adjust regulatory settings to address feedback from stakeholders.
That brings me to the end of most of the questions that were raised by noble Lords. The noble Baroness, Lady Bennett of Manor Castle, raised—I do not know what to call it—the atrocious illegal waste site on the A34. I want to reassure noble Lords, as it is obviously a topic of concern to many, that the Environment Agency is now working to ensure that the public and the environment are protected from potential impacts and to pursue the criminals responsible. Following new information on the risk of fire, planning work has begun to clear the site as soon as possible on a wholly exceptional basis. The Environment Agency and local partners are now working through the most effective way to manage this work. I confirm that a 39 year-old male was arrested on 25 November in relation to this and investigations are ongoing, so I cannot comment any further.
The noble Baroness, Lady Bennett, mentioned the situation in Wigan; I do not have anything about that in my notes, but I am happy to write to her with an update. This is of concern to those in Wigan and of as much concern to us as the situation in Kidlington, which was the case that, perhaps unfairly, attracted the most attention and news coverage. One awful and illegal fly-tip is as bad as another in my book, so I am happy both to write to the noble Baroness to update her on the situation and to ensure that we are able to keep noble Lords abreast of it. I hope that I have covered most of the issues—
Lord Roborough (Con)
I understand that this may be beyond the Minister’s notes today, but I asked whether there will be an opportunity to use technology more effectively in compliance and in enforcing these regulations. I am happy for the Minister to write to me on that, if he is willing, as well as on any broader opportunities for reducing the cost of both enforcement and compliance with technology.
Lord Katz (Lab)
I thank the noble Lord and apologise for missing out that question. Of course, as a principle, we are keen to use technology to make monitoring and compliance easier for everybody involved in the system. We are also keen to drive down the costs of compliance so that people can concentrate resources in the whole system on driving down waste and improving the reuse and recycling of materials. I do not have specific details, so I will undertake to talk to officials and perhaps write to the noble Lord with more detail about what we have in store there.
This amendment to the legislation is necessary to maintain the circular economy for packaging in the UK; to ensure that the key industry request for producers to be involved in running the scheme is taken forward; and, ultimately, to ensure that materials and products are kept in use for longer. I trust that noble Lords understand and accept the need for this instrument. Once again, I thank everyone for their contributions.