Budget: What green taxes could lie inside Hammond's red briefcase?

Mystery surrounds exactly when Philip Hammond will unveil the contents of his famous red briefcase. The Chancellor is said to want to bring forward the Budget to next month to avoid it being hijacked by the Brexit debate. But when he does step up to the dispatch box, it promises to be the greenest budget ever, to support Defra’s new post-Brexit agriculture bill and to tackle the thorny issue of plastic.

Plastic has given Brexit a run for its money in the headline count this year, ever since Hammond namechecked the BBC’s Blue Planet II in the last autumn Budget. He and other ministers have seemingly jostled for headlines with new titbits of policy emerging every week. Theresa May’s commitment in January to eliminate all avoidable plastic waste by 2042 was followed by Defra boss Michael Gove’s pledge that a bottle deposit return scheme would be brought in by 2020 (even though a consultation on the idea has not even been held yet). May then announced plans for a plastic straw ban in June and a 10p plastic bag tax in all stores last month, despite the 5p tax slashing bag use by 86%.

But it’s the Chancellor’s plans for a more sweeping tax on plastics that have most attracted the most backing from the public - and the most concern from industry.

Last month, the Treasury declared it had received an “unprecedented” response to a consultation launched in March on taxes to tackle ‘single-use plastic’. The vast majority of the 162,000 respondents backed taxes on non-recyclable plastic, from single use cutlery to black plastic packaging food trays.

Yet the consultation also drew industry concern about possible unintended consequences. These include a shift in demand towards materials that are more environmentally damaging and an increase in food waste because of the impact on packaging in the supply chain.

On top of that, more consultations are on the way, which will either knit things together or deepen the sense of chaos.

This autumn, Defra is due to release both its resources and waste strategy and a consultation on how Gove’s DRS system will work, including the extent to which it will dovetail separate proposals in Scotland.

The department will also launch a consultation on reform of the much-maligned Packaging Waste Recovery Note system (PRN). It may not make for juicy headlines, but reform of the system is universally seen as crucial to the war on plastic. Yet any system to replace it is likely to cost the industry millions extra to run.

“The vast majority of people who responded to the Treasury’s consultation probably don’t understand the other regulatory drivers, things like the current PRN system,” says Robbie Staniforth, policy manager at Ecosurety. “With all good intentions they are recommending taxes and bans on materials that already have a form of levy applied. That’s why it’s vital that any ‘packaging’ items must be omitted from measures, to ensure consistency of approach from the government.

“It’s very similar with DRS. Avoiding double penalisation is so important. All items for a potential DRS are already covered in the PRN system and if a new form of packaging producer responsibility is introduced, it needs to take account of material going through a DRS system. The new legislation needs to reference and complement each other.”

Smart solution required

Alice Ellison, environment policy adviser at the BRC, says the industry needs a “serious and thoughtful strategy” to tackle plastic pollution, which genuinely supports big, long-term change and “doesn’t chase easy headlines”.

“Plastic pollution needs to be tackled head-on but we need a comprehensive strategy that considers all materials and resources and sets out how the Government intends to shift to a circular economy where all resources are valued and reused when possible.

“Retailers are already removing it where possible and ensuring all packaging is recyclable,” she adds. “They know they have a responsibility to contribute more directly towards the costs of recycling and recovering packaging, alongside their work with suppliers in reducing packaging and removing plastics. We need a PRN system that incentivises best practice - one that rewards retailers who use packaging that is easily recycled and penalises those that don’t change.

“Likewise retailers want a smart DRS system that enables meaningful progress, one that focuses on ‘on the go’ plastics so that it complements rather than cannibalises local authority kerbside recycling collections.”

“It has seemed like everyone in the government wants a piece of the action,” adds one source. “But what we need is a joined-up approach that brings all the parts of the jigsaw together.

“Whilst fiscal measures may push brands and manufacturers to turn their backs on certain plastics, it doesn’t do anything to establish a circular economy.

“Taxes on plastics would not be hypothecated, they will just be a revenue generating measure.

“Would they go to prop up the NHS or something? That to me just doesn’t feel right.”

But campaigners have little time for the industry’s warnings and are calling for the stick not the carrot. “If we are serious about reducing our dependence and misuse of plastic, legislation and taxation are the only options,” says Sian Sutherland, co-founder of campaign group A Plastic Planet.

“The industry is moving at such a slow pace and only the fiscal stick will accelerate this.

“Many in the industry fear taxation will be complicated, that businesses will suffer and that in the end it will lead to consumers feeling the pinch. However, rather than raising these concerns, the industry should look at how they can reduce plastic and so avoid potential taxes while helping the environment. In food and drink there is a host of alternative materials that can be used and invested in, which will be free from taxation and not negatively impact the environment.”

Sutherland says the government has been “feeble” in its plastic policy so far.

“The measures so far portray a pretence of strong action when in reality they are tip-toeing around the problem. Banning plastic straws, plastic wet wipes and cotton buds are a good start but we continue to lag behind other countries in taking strong action to reduce our plastic. 

“Kenya has made plastic bags illegal. France has declared war on plastic while Belgium, Austria and The Netherlands have had sophisticated waste management plans to negate its impact in place for years. The Government claims to aspire to be one of the leading nations in tackling plastic pollution, but it hasn’t yet given a strong show of force to combat the problem.

“The UK is limping along with an inadequate under-funded waste system and no tokenistic sticking plaster strategy will be worth the recycled paper it’s written on. We need something seismic to show the public we are listening to their anger at being force-fed plastic and constant guilt as they know most of it isn’t being recycled.

“For years the onus has been placed on consumers rather than major brands,” she adds “The proposed 10p plastic bag levy is a prime example of something that will be felt in the pockets of customers and not by those who force plastic upon them. The Government should shift the responsibility on to producers who relentlessly churn out plastic for others to clear up.

“We all know recycling is not a solution to solving the plastic crisis - 85% of our plastic is exported, incinerated or land-filled. The UK’s recycling system is currently buckling under the weight of the plastic waste it is trying to process. We need to show leadership and deal with our own dirt.”

Unsurprisingly, the FDF does not share Sutherland’s enthusiasm for taxes. “This is not the time to put additional strain on a sector that is about to go through one of the biggest stresses it has ever faced,” says Helen Munday, the FDF’s chief scientific officer. “We don’t want to see undue burdens placed on food and drink manufacturers or our consumers. Any proposed changes to taxation or other charges need to be realistic to allow for the necessary evaluation and implementation.”

Yet after months of soundbites, campaigners and the industry do at least agree on one thing. It’s time for the talking to stop and the government to show us some policies.

It will be a nervous wait for the contents of that red box.