Plastic Packaging Tax (Descriptions of Products) Regulations 2021

Abena Oppong-Asare Excerpts

Monday 31st January 2022 General Committees

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Sharma, I believe for the first time. I thank the Minister for her comments about the regulations. As I have said before, the Opposition support the plastic packaging tax, as we believe that it is an important tool in tackling the crisis of plastic pollution that we face.

Before I come to the detail of the regulations and some of the concerns that we have about them, I will take the Minister back to the supposed aims of the plastic packaging tax. When the Government initially introduced the tax, in the last but one Finance Bill, they stated:

“The tax will encourage the use of recycled plastic instead of new plastic within packaging. It will create greater demand for recycled plastic, and in turn stimulate increased levels of recycling and collection of plastic waste, diverting it away from landfill or incineration.”

That is an important principle. The Minister just mentioned that the tax is supposed to incentivise the use of recycled plastic, and in turn reduce the overall amount of virgin plastic packaging being produced and consumed. Logically, the tax would have the greatest impact were it extended to as many items as possible. It is therefore somewhat concerning to see three new exemptions being introduced at this stage.

As I said during the passage of the original legislation, we supported common-sense exemptions such as for medical packaging but believed that the list of exemptions should be kept as short as possible. I want to take the new exemptions in turn, and ask the Minister some questions about each. The first is about packaging products designed primarily for storage, such as video game cases and toolboxes. In the explanatory notes, the Government say that those products

“do not typically contribute to plastic pollution.”

Can the Minister explain? Surely they are thrown away at some point and end up as plastic waste. The explanation also ignores the upstream environmental impact of producing the plastics. The Government have not said that they intend the tax to apply only to single-use items, so why is that justification now being used to exempt certain products?

The second exemption is for plastic packaging integral to the product being sold; the Government give examples such as printer cartridges, tea bags and mascara brushes. The Minister mentioned the encouragement of long- term storage of those goods, but will she give a further explanation, other than that, as to why they are being exempted—a bit more about the justification? We are concerned about whether the Government want greater use of recycled plastic in those products. They seem to be lowering their ambition significantly in this area.

Finally, the Government are exempting packaging used primarily for presentation. I make the same point as I did about storage items: it is not clear how these products do not contribute to plastic pollution through their production and disposal. Does the Minister not think that including them in the tax would encourage the use of recycled plastic or alternative materials?

The regulations add a new category to the scope of the tax: single-use plastic items used as packaging within the home, such as bin bags and disposable plates. We are happy to support that addition, but it takes us back to the point I made earlier. With these amendments, the Government seem to be changing the focus of the measure from encouraging recycled plastic and reducing plastic waste in general towards a narrower focus on single-use plastic. Is that correct? What assessment has the Treasury made about whether the changes will lead to more plastic waste being produced and how much?

The Minister mentioned that the definition was introduced to reduce the burden on businesses; I take this opportunity to raise a couple of points made by the British Plastics Federation and the Food and Drink Federation on behalf of their members, who will ultimately be subject to the tax. First, they say that there is confusion among businesses about exactly what products are eligible for the tax. Hopefully, the regulations will be helpful, but will the Minister consider whether HMRC needs to issue further detailed guidance?

I appreciate that the Minister mentioned that there has been a lot of consultation with relevant organisations, particularly with this SI, but there is an issue about the recycled content verification system, which ensures that imported packaging is subject to the same level of scrutiny as packaging produced in the UK. What is being done to ensure that UK producers are not being treated unfairly?

There are also concerns that, due to the lack of recycled materials in the UK, producers may struggle to meet the 30% threshold even when they wish to. There are specific issues in the food packaging sector, where there is limited regulatory approval for recycled products to be used, which the Food and Drink Federation has raised. Finally, it also raises the issue of chemical recycling and a potential problem whereby the mass balance approach to certifying chemically recycled products will not be accepted for the purposes of the plastic packaging tax in April 2022. Can the Minister respond to those practical points from the industry? If she is unable to do so today, will she write to me?

I have said before that we want to see a plastic packaging tax that is ambitious and makes a real impact in reducing plastic pollution. Just last week, the Environmental Investigation Agency released a report saying that plastic pollution is now a global emergency nearly equivalent to that of climate change itself. It has shown that the toxic pollution resulting from over-production of virgin plastics and their lifecycles is irreversible, and that it directly undermines our health, drives biodiversity loss, exacerbates climate change and risks generating large-scale harmful environmental changes. For those reasons, we cannot afford to slow down the fight against plastic pollution. We hope that the plastic packaging tax can be part of that fight, but we need reassurances from the Minister that these changes will not undermine its impact.

--- Later in debate ---

[Helen Whately]

I will briefly respond to some of the points from the shadow Minister, the hon. Member for Erith and Thamesmead. I welcome her support for the tax and her overall support for the legislation, and I thank her for reminding us of the objectives, including our ambition to increase the use of recycled plastic over virgin plastic.

The hon. Lady raised concerns about some of the exemptions that I have outlined today, or about the targeting of the tax. Overall, we agree on the ambition to limit exemptions to ensure that the tax achieves its objective. The Government are determined to be pragmatic, but also to ensure that the tax achieves its objective of targeting those plastics that are particularly harmful to the environment. As I said in my opening speech, we carried out a huge amount of consultation and engagement with industry and those interested in this tax and legislation in order to get the targeting of the taxation right. That has led to the details of this statutory instrument, with the very specific exemptions that I outlined and the inclusion of certain single-use plastics that are used for disposal, for instance—bin bags and so on.

I say to the hon. Lady, who suggested that this was too narrow a focus, that this is a hugely ambitious tax, which sets out to change the incentives so that we see much greater use of recycled plastic and more plastic being recycled into the plastic supply chain, leading to—this picks up on her point about what assessment of impact there has been—our expectation that we will see a 40% increase in the use of recycled plastic following the introduction of the tax.

To pick up on the hon. Lady’s point about whether there are concerns or confusion about the clarity of the regulations, I should say that substantial guidance has been set out on which products are in the scope of the tax and how it should be applied; the Government have worked closely with the sector and industry on preparing the details of that. Businesses that are concerned or uncertain can indeed contact HMRC, which will lead on the implementation.

[Abena Oppong-Asare]

Will the Minister give way?

[Helen Whately]

Let me cover the comments that the hon. Lady made, if she will give me a moment. She asked about imported packaging. I assure her that we are determined that there should be a level playing field, so the tax will apply equally to packaging manufactured in the UK and that imported into the UK.

The hon. Lady then asked about food packaging. We have consulted with the sector on that; we recognise some of the challenges but also the progress already being made to increase the use of recycled plastic in food packaging. We would not want to disincentivise further progress along those lines so we very much include that consideration, as with other examples of when it is more challenging to use recycled plastic.

Finally, the hon. Lady asked about chemical recycling; I am absolutely aware of questions from that part of the recycling sector. We are keen to see the use of chemically recycled plastic, which is really important for increasing the supply and quality of recycled plastic—especially some types of plastic that are hard to make with mechanically recycled plastic. The Government are investing in chemical recycling facilities to support the development of the technology. This legislation allows for chemically recycled plastic to contribute towards the 30% recycled plastic threshold for the purposes of the tax. I know that some have argued that that is not enough, but the mass balance approach that they are arguing for is a significant shift; it is about a chemically recycled plastic being attributed to packaging rather than contained in packaging. That is quite a fundamental change. We are looking at that but it would require new legislation, and we will not rush into that at this point.

In conclusion, this is an important piece of legislation, which will help this country fight the scourge of plastic pollution and cut carbon emissions by boosting recycling rates. Ultimately, it will play a part in unlocking economic benefits through the encouragement of green growth and innovation. Equally, the instrument will make sure that we tackle plastic waste in a proportionate and effective way, for the benefit of consumers and businesses alike.

[Abena Oppong-Asare]

I thank the Minister for answering the points I raised. I welcome the fact that detailed guidance will be provided by HMRC, particularly in relation to businesses. I appreciate that the Government have done extensive consultation with a number of stakeholders, but the ones I have engaged with represent quite a number of businesses. What are the timescales when it comes to HMRC’s publication of the guidance? There has been confusion about what businesses are eligible to do, and it is important that we get the issue right.

[Helen Whately]

I am happy to respond briefly. Guidance has in fact already been published; this particular guidance first came out in November, and the most recent update was just a couple of days ago. I hope that answers the questions put by the businesses that the hon. Lady referred to; they can, of course, follow up with HMRC if they have any further questions.

Question put and agreed to.