Packaging (Hansard, 7 May 1996)

§ Mr. Gummer

As part of its commitment to achieve sustainable development, it is Government policy to encourage the recovery of value from waste wherever that is practicable. To this end it is desirable that more of the real environmental costs of waste production and disposal should be borne by the producers of that waste directly. This creates a stronger market incentive for companies both to reduce waste in the first place, and then to find cost effective ways of recycling or otherwise recovering unavoidable waste. The Government's objective should be to establish a policy framework within which the efficiency and innovativeness of the market can be harnessed to solve environmental problems. Producer responsibility does that; it makes the market work to the benefit of the environment.

Industries concerned with packaging—those who manufacture and use the packaging which ends up as waste, including retailers—have been particularly resourceful in their response to the challenge of producer responsibility. Eight million tonnes of packaging waste are produced each year, and in response to the Government's invitation the industry's producer responsibility group put forward its own proposals to recover and recycle 58 per cent. of United Kingdom's packaging waste by 2001. It proposed that this should be achieved through the creation of one or more industry financed and managed organisations which would invest in a variety of waste recovery projects. The prototype recovery organisation is now being established as VALPAK. However the industry made clear that these schemes would be established only if there were effective legislation to deter free riders. The Government accepted this industry view and invited comments on a range of possible legal obligations which could achieve a framework in which competing companies could operate and which would enable the Government to implement the EC directive on packaging and packaging waste.

In responding to the different options for a legal obligation, the great majority of business organisations indicated a strong belief that the primary objective of meeting the UK's recovery and recycling targets could be secured only if all the major players had an incentive to 74W co-operate through a shared legal obligation. This would also create the most favourable conditions for formation of cross-sectoral collective industry schemes, which many businesses have indicated is their preferred approach to meeting these targets.

Further work took place to develop a form of shared approach which could both provide assurance to Government that the necessary targets would be met while also providing an acceptable basis for apportioning the obligation between the different stages of the packaging chain. Final agreement on such a basis and its supporting principles was achieved on 15 December 1995 at a meeting chaired by Sir Peter Parker and attended by 30 of the leading businesses involved.

This has not been the approach in some other EU member states. Some have proposed a packaging tax and others have legislated for a "take back" requirement upon shops and business premises to receive back from consumers all of the sales packaging around products sold. These approaches provide less flexibility for affected businesses and do little to create the new markets for recycled materials which is essential in the long term. Indeed some schemes in some other states have had a damaging impact on reprocessing and manufacturing activity in the UK and the rest of the Union and it was for that reason that industry pressed for a single market framework which we then successfully negotiated in the form of the directive.

By contrast with some of these other approaches, the UK Government place a high priority on implementing producer responsibility in a way which the UK industry itself feels can be operated effectively. This will help to minimise the burden upon individual companies, maximise their freedom to choose how to meet their targets, and thereby make our environmental objectives more readily attainable.

I am therefore announcing today that the Government have accepted the industry view that a shared legal obligation is the right way forward. I am now satisfied that this approach will enable us to meet the environmental standards which people increasingly expect industry to adopt, which our national commitment to sustainable development requires of us, and which would achieve the flexible targets which we successfully negotiated within the EU' s packaging directive. In the near future I propose to publish draft regulations under the Environment Act 1995 that will give effect to 15 December agreement and to guide this process I recently asked Sir Peter Parker to chair an advisory committee comprising some of the senior business representatives most closely involved in developing producer responsibility for packaging. I am announcing separately the terms of reference, membership and initial tasks of the advisory committee and its future role in monitoring and reviewing the operation of the regulations.

In the light of the work already undertaken by the committee on implementation of the 15 December agreement, I propose to include in the draft regulations the following elements:

(i) A method of calculation of individual business or scheme obligations. Any business covered by the regulations will need to be able to work out what its recycling and recovery obligation would be, so as to decide whether to perform that 75 on its own or join a collective scheme. The business would need to measure the tonnage of packaging which it manufactures or fills or sells or supplies. It would then apply the following percentages which, on current data and assumptions, are consistent with the 15 December agreement.

	Per cent.
Packaging raw material manufacture	6
Conversion	11
Packing and filling	36
Retailing/supplying	47
Importers would be treated on a comparable basis.

(ii) A phased approach to meeting the targets:

an initial requirement, from 1996, for businesses or collective schemes to provide data and information to the Environment Agency;
a second stage requirement, from 1998, to provide evidence that recycling and recovery is being achieved, initially to 1998 targets and then the full directive targets in 2001.

(iii) A cut off by which businesses using less than 50 tonnes packaging a year would be exempt from the quantified legal obligation (it is estimated that 90 per cent. of businesses—which account for less than 10 per cent. of total packaging—would be below this threshold). Further consideration is being given to other means by which such businesses could help to contribute to higher levels of recycling and recovery.

This approach is intended to give businesses as much flexibility as possible, particularly in the early years, and create confidence that the targets will be achieved. In consulting on the regulations we will be seeking further business views on costs and practicality of the systems proposed so as to minimise compliance costs and limit the regulatory framework to the minimum.

The industry now needs to turn its attention to developing more detailed plans for the formation of industry-led collective exemption schemes, such as VALPAK. Such schemes will need to satisfy UK and EC competition criteria. Many, if not most, businesses will no doubt continue to feel that participation in such schemes provides the simplest and cheapest means of meeting their obligations.

The producer responsibility initiative marks important new ground in environmental policy-making and provides a remarkable example of effective Government-industry collaboration. A shared approach to our national war on waste will boost recycling across the country, foster many new ways of putting waste to work and maximise our recovery of scarce resources. A new market will be created, and the environment will be a chief beneficiary. I pay tribute to the many individuals and companies from all sectors of the packaging chain who by rising to this demanding challenge have played an important part in putting the nation on the path to sustainable development.