Plastic Packaging Tax on Imports: HMRC Enforcement

James Murray Excerpts

Tuesday 17th October 2023 Westminster Hall

[James Murray (Ealing North) (Lab/Co-op)]

It is a pleasure to speak with you in the Chair, Mr Davies.

I congratulate the hon. Member for Amber Valley (Nigel Mills) on securing this debate on HMRC’s enforcement of the plastic packaging tax on imports. I am pleased to respond on behalf of the Opposition.

As Opposition Members made clear throughout the introduction and implementation of the plastic packaging tax, we support it as a tool to tackle plastic pollution. The tax was introduced in April last year to provide an economic incentive for businesses to use recycled plastic in the manufacture of plastic packaging. By applying a tax on products that contain less than 30% of recycled plastic, the tax was expected to create greater demand for recycled plastic, which in turn would stimulate increased recycling and collection of plastic waste, diverting it from landfill or incineration.

Of course, today’s debate has focused on the enforcement of the tax on imported plastics by HMRC. I understand that in 2022-23, the first year in which the tax applied, 48% of the plastics declared as being subject to it were flagged as plastics imported into the UK, so I would be very interested to hear the Minister’s response to the points made by the hon. Member for Amber Valley about ensuring that the tax is applied correctly to imports and making sure that there is a level playing field for UK businesses.

More widely, as we make the transition to more sustainable plastics, we know that concerns have been expressed in the agricultural sector, among domestic manufacturers and in the wider business community about how they will adapt to the changing policy context. Indeed, I know that the hon. Member for Amber Valley has spoken before about his concerns about the way in which silage film was unexpectedly added to the list of items caught by the plastic packaging tax in guidance published in late 2021. He pointed out at the time that that meant that industries had not prepared for the change and that the cost would fall directly on farmers at a very difficult time for them. That point was also made by the National Farmers Union, which successfully secured a change of course by the Government, with HMRC concluding early in 2022 that silage film fell under an exemption from the tax.

Clearly, it would have been less disruptive if the Government had taken their ultimate position in the first place, rather than publishing guidance and then changing their mind. I would be grateful if the Minister could set out some detail about what the Treasury and HMRC have learned from the experience, and what they are doing more widely to work with the agricultural sector and businesses in the broader economy to assist with the transition to more sustainable plastics.

Furthermore, although it is important to tackle less sustainable packaging products from overseas, it is also important that we build resilience here in the UK and have a clear, stable policy environment to encourage investment in our country. I was therefore concerned to note that, in response to the Government’s recent announcement that they would consult on a new, mass-balance approach to chemical recycling, the British Plastics Federation noted that a

“lack of clarity to date has prevented companies from investing in the UK and some have looked elsewhere to build facilities.”

As the shadow Chancellor, my right hon. Friend the Member for Leeds West (Rachel Reeves), set out last week, we believe that Britain must rebuild its domestic resilience across the economy. We must make more here in Britain while developing robust supply chains so that we are less exposed to global shocks. A clear, stable policy environment is critical to encouraging companies to invest in productive capacity here in the UK, and it is therefore crucial in securing the jobs and economic resilience that such investment would bring, so I will be grateful if the Minister can explain what the Government are doing to support private investment in the production of sustainable plastics here in the UK.