Environment Bill

Viscount Trenchard Excerpts

Committee stage
Monday 5th July 2021 Lords Chamber

[Baroness Bennett of Manor Castle (GP) [V]]

My Lords, it is a pleasure to follow the noble Baroness, Lady Jones of Whitchurch, even after a five-day interval and in a debate truncated by a perhaps now unnecessary withdrawal of a number of noble Lords. For the convenience of the Committee, I remind everyone that we are speaking about amendments that are all about the long-awaited and much-delayed bottle deposit scheme for England, an area in which we are notably world leading in foot dragging.

I shall give a few statistics. Ten other countries in Europe are operating these schemes, with bottle-recycling success rates running from an outstanding 98.5% in Germany, where of course they have had lots of practice since they started in 2003. Even down at the bottom of the pack, Estonia has a very respectable—certainly by our standards—83.7% bottle return rate. That is why Amendment 133, which sets a deadline for implementation, is so important, and I would have attached my name to it had there been space. I agree with the noble Baroness, Lady Jones, that it should be earlier still; it could have been delivered years ago, but January 2023 is practical. It certainly should not be left outside the term of this current Government—assuming of course that they continue for that long.

I want to speak in support of all the amendments in this group, with the partial exception of Amendment 134B, which would exempt small brewers. That is not because I do not think we need to consider such small producers, but rather that Amendment 134A in the names of the same noble Lords, the noble Viscount, Lord Trenchard, and the noble Lord, Lord Berkeley, is broader and more useful, covering all kinds of producers. There clearly needs to be some easy and simple way for start-up businesses, such as brewers or soft drink or juice producers, to access the scheme. One route might be to require larger companies to allow smaller companies to piggyback on their schemes.

I will focus my contribution on Amendment 134, which appears in my name. I thank the noble Baroness, Lady Jones of Whitchurch, for her expression of support for the amendment. As with the earlier amendment on nappies, I declare the support from the aluminium industry association, Alupro, in preparing and discussing this amendment. I am sure that many noble Lords are aware that, for all the UK’s inadequate performance on recycling, it does relatively well in recycling aluminium compared to other materials, for reasons including the value of the material, with aluminium packaging recycling reaching its highest ever rate in 2020, with 68% of the material placed on the market being recycled. That includes 82% of all aluminium beverage cans. Of course, this is a material that can be recycled indefinitely, unlike most plastic.

We should not forget that the best option, at the top of the waste pyramid, is to reduce packaging materials and have no container at all, followed then by reusing packaging. But for recycling, aluminium is a good choice. Alupro put it to me—and I see the force of the argument—that a scheme with a flat deposit amount for all containers, regardless of the size of the material, would lead to switching from multipacks of aluminium cans to larger format plastic bottles, due to the cumulative cost of the deposit fee on multipacks. For example, a 20p flat deposit fee would add £4.80 to a 24-pack of cans, yet the deposit fee for the same volume of liquid in four plastic bottles would be just 80p. A 2019 poll of consumers found that a 20p flat deposit fee would encourage more than 60% of individuals to switch to large PET bottles at the expense of aluminium.

Alupro commissioned the research consultancy London Economics to look at consumer behaviour and the differential impacts of a flat or variable rate scheme. It found that the variable rate, as used in the successful Nordic schemes, would deliver significantly higher return rates in the first two years, while a flat-rate deposit would increase the amount of plastic sold and could lead to higher amounts of product wastage and increased portion sizes, which has an obvious impact on public health. It would also have a dramatic impact on the aluminium packaging sector, meaning up to 4.7 billion fewer cans, a very significant loss of revenue, and somewhere between 24% to 73% reduction in demand for aluminium cans in large multipacks. This is an industry with a case, and the practical sense of the bottle deposit varying according to the size of container is evident. Having seen such variable schemes in operation in various parts of Europe, with the scanning of bar-codes expected anyway to be part of the scheme, I think it presents no practical difficulties.

I know that the Minister, in the letter that he kindly sent to noble Lords on Friday afternoon, said—I paraphrase—“Let’s leave it to regulation and the implementation stage”. But why? Why not set out the basic ground rules now, in the Bill, to make sure that the scheme we get is fit for purpose and to give manufacturers time to prepare for implementation of the scheme as speedily as possible? That is what the very important Amendment 133, with which we started this group, seeks to attain.

[Viscount Trenchard (Con)]

My Lords, I declare my interests as stated in the register. I am pleased, as always, to follow the noble Baroness, Lady Bennett of Manor Castle, although I regret that the mover of the lead amendment, the noble Baroness, Lady Jones of Whitchurch, spoke five days ago; I had to look up Hansard to remember what she said. I have some sympathy with her Amendment 133, and agree that deposit return schemes should be introduced as soon as possible. I also believe that it is crucially important to get them right. It is worrying that Scotland has rushed ahead with its own scheme in an area where we definitely need UK-wide compatibility.

I support Amendment 133A in the names of the noble Baroness, Lady Jones, and the noble Viscount, Lord Colville of Culross, and others, that the scheme should, at a minimum, apply to PET, glass, aluminium and steel containers of volumes under 3 litres. I was a non-executive director of Lotte Chemical, at Wilton, on Teesside, for nine years, until the end of 2019, when the company was taken over by Alpek Polyester. It holds a 70% to 75% market share in the UK and Ireland as the leading supplier of polyethylene terephthalate. The plastics tax is likely to disadvantage PET producers in favour of glass and aluminium producers, with the unintended consequence that producers will switch from PET to glass and aluminium containers, which have a carbon footprint four or five times higher than PET.

The noble Baroness, Lady Bakewell of Hardington Mandeville, proposed exemptions from the plastics tax in her Amendment 141. The noble Baroness, Lady Jones of Whitchurch, expressed concern that the deposit return scheme might lead producers to switch from aluminium or glass to plastics. My concern is the reverse: besides the much lower carbon footprint associated with PET, does the noble Baroness really want to go back to the days when we cut our feet on discarded glass bottles on the beach?

The answer is not to penalise PET but to introduce a deposit return scheme as good as Germany’s, where 98% of PET bottles are collected for recycling. We have a long way to go. Germany is not often held up as an example of a unitary state with centralised powers, but the successful German deposit return scheme is a national scheme applied in all the Länder identically. If the United Kingdom is to prosper and global Britain is to succeed as we expect and hope, it follows that the leaders of our devolved authorities might be less impatient and more willing to work together to agree the details of one national scheme across the whole United Kingdom.

I will speak to Amendments 134A, 134B and 138A tabled in my name and the name of the noble Lord, Lord Berkeley, for whose support I am most grateful. These amendments take account of the needs of small producers, including small brewers, within the proposed deposit return scheme and recognise that the proposed measures will introduce significant, disproportionate costs and regulatory burdens for small businesses. I strongly support a deposit scheme such as that proposed in the Bill in principle, because it would help to tackle our waste and littering problems, but I ask my noble friend, is he mindful of the burdens on small businesses introduced by the Bill that may make it difficult for them to compete against much larger producers?

Many small brewers have had great difficulties surviving through the pandemic. With pubs closed, the only way that they could keep their products on sale has been to sell them in bottles and cans. It is very expensive for small brewers to make the necessary changes to packaging and labelling. It is likely that the four large brewers, which hold 88% of the beer market, will absorb the cost within their profit margin, thereby driving small challengers and craft beer manufacturers out of the market. Besides this, the costs and difficulties of participation in the scheme seem disproportionate for small brewers.

The fact that Scotland is ahead of the rest of the country is another problem. Brewers sell beer through wholesalers that sell in both England and Scotland. The brewers do not know how much beer their wholesalers sell in each part of the UK, yet the Scottish Government, in the operation of their scheme, have suggested that brewers will have to provide vast swathes of information that they do not currently possess. It is important that any deposit scheme adopted is completely interoperable with the Scottish one. Can my noble friend confirm that we will have, in effect, an identical scheme operating across the whole country? Is it not a problem that the Scottish scheme does not require recyclable products to be clearly labelled as such? There may well be unintended consequences if the schemes are not completely aligned.

Can my noble friend also say whether the Government accept the need for public education about the new scheme, which will be necessary to change public behaviour towards recycling? Does he agree that there is at least a strong case for exempting small breweries producing less than 900,000 pints a year from the new requirements? Indeed, the Government’s better regulation framework states that the default position

“is to exempt small and micro-businesses from … new regulatory”

requirements. While the Government have proposed in the recent consultation to allow small retailers to apply for exemptions under the deposit schemes, the same exception has not been extended to small producers.

In both the extended producer responsibility and the plastic packaging tax, the Government have included a de minimis threshold. In other areas, such as nutritional information, those with fewer than 10 full-time equivalent staff and a turnover of below £2 million are exempt. Therefore, I have tabled these amendments and ask my noble friend to consider how the Bill will support our small producers in a similar way to small retailers.

Under the proposed deposit scheme, small producers will have to redesign their labels to incorporate bar codes and logos at significant cost. They will have to pay a producer fee per container, which could cost the beer industry alone £200 million a year—the equivalent of a 6% increase in beer duty. They will have to collect and provide a great deal of additional information, which could lead to a delay of six weeks or more before they can bring new products to market and will impact innovative small brewers that produce seasonal and one-off beers.