Will general election end environmental policy shambles?

It’s just as well PM Rishi Sunak and Labour leader Keir Starmer weren’t given 45 seconds to say how they would fix the food industry’s environmental policies.

As they exchanged tetchy soundbites on more mainstream issues in their first televised debate this week, food and drink leaders had another topic on their mind: how to rescue flagship policies in the war on plastic and address flatlining recycling rates.

So how bad is the situation, and what can the next government do?

Extended producer responsibility (EPR) is one key area of concern. Plans to make the industry responsible for the full cost of recycling have already been delayed until at least the end of next year, but even that timeframe now looks optimistic.

As revealed by The Grocer last week, about 2,500 of the 6,000 large companies expected to have provided data for the scheme by the end of last month had failed to do so.

Even major companies have complained the paperwork involved is a bureaucratic nightmare. EPR has the potential to unravel further if, as some fear, a vast tail of smaller companies fail to submit data.

Meanwhile, Defra has yet to publish crucial details of fees for the system, which are expected to cost the industry £2bn a year.

“Products are on the production line now and we don’t know the full cost because we don’t know the fees and we’re a year out from invoices landing on CFOs’ desks,” says one major supplier source.

“We don’t have a clue what the scale of those invoices will be and for many companies it will be very large, so as soon as possible after the election Defra must publish their fees.”

Recent moves by the department – including submitting its regulations to the EU and WTO last month, and the launch of an industry-led “shadow” group to pave the way for the actual scheme administrator – have lifted despondency somewhat, but insiders are crying out for strong government leadership.

“It’s vital EPR ‘base fees’ are published within the first few weeks of the government,” says a leading sustainability figure. “These fees have been ready to publish for months and brands and retailers cannot predict the cost impact for FY 2025 without them.”

 

Ringfencing funds

Industry is also keen for government to set out how – and more to the point, if – the £2bn in fees a year will be ringfenced for improving local authority recycling.

“We need to know that money is going to be spent on building a circular economy,” says the supplier source.

“What we’re missing in the packaging reforms jigsaw is how we’re going to do that – how we can turn a crisp packet or a yoghurt pot back into food-grade packaging.

“That needs a focus on infrastructure investment, on chemical recycling and alternative forms of advanced recycling.”

Creating a circular economy is “an enormous marketing opportunity for Britain worth billions of pounds, which will create thousands of jobs, but we need the government to step up and provide the leadership”, the source adds.

Yet a senior supermarket source believes such hope is wildly optimistic, and claims the election could not have come at a worse time for the policy. “The shadow administrator that was set up has been making progress, but not enough and not quickly enough,” the source says.

“Now, because of the election, it has had to suspend its activity just at the time it was supposed to be putting out vital information such as the fees.

“As for the chances of ringfenced investment in recycling and a better circular economy, that’s frankly for the birds,” they sum up.

DRS omnishambles

Cynics say the industry faces not one £2bn-a-year tax but two, thanks to the planned deposit return scheme (DRS), supported by both Labour and the Tories.

In May, the government finally acknowledged implementation would be delayed until the end of 2027 – a date also viewed as impossible by many, given the Welsh government’s unilateral insistence on including glass in its scheme.

Labour’s shadow food minister Daniel Zeichner vows Labour will fix the DRS “omnishambles”, and party allegiances should give it an advantage in persuading Wales to cave in on the issue. But Wales has long been wedded to keeping glass in scope.

“What we’d ask Welsh politicians is, don’t’ throw the baby out with the bathwater on this,” says the supplier source.

“Wales recycles more than 75% of glass. That’s a success. Let’s not change the rules for what is ultimately 6% of all drinks containers.

“A political commitment right at the start of the new government for one interoperable UK approach would be a huge boost.”

The source points to the fiasco of what was to be the UK’s first DRS, in Scotland – postponed at length to join the wider UK rollout, following industry pushback – as a lesson for the next government in the importance of working with industry.

“What we need, as well as all working to the same system, is an absolutely cast iron guarantee that the rules won’t be changed at the last minute,” the source adds.

A leading drinks supplier source cites the Republic of Ireland, which pressed ahead with launching its DRS earlier this year, as an example of how to do things right.

“They’ve had teething problems but it seems to be going from strength to strength and consumers are buying into it. Our message to the next government is simple: let’s just get on with it.”

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But anyone familiar with the history of DRS plans in the UK will not bank on that, and The Grocer understands a significant minority of retailers would be happy for the scheme to either bite the dust completely or at least be delayed until EPR has been shown to work.

“There’s no avoiding the huge cost and disruption of installing a DRS network,” says the retail source. “The government may say it’s coming in 2027 but until that actually happens it’s just a date on a piece of paper. It means nothing if it can’t be done by then.”

Labour is said to have held “frank and honest” discussions on DRS and EPR with the industry. But there are doubts over the commitment of both parties to wider sustainability policy.

Plans for a mandatory approach to eco-labels and regulations on consistent local authority collections are among the policies that have either been dumped or delayed by the Tories, alongside an apparent u-turn on mandatory food waste reporting.

At the same time, “Labour has pulled back from their big net zero splurge”, says the drinks industry source.

“The economy is fragile, and sadly either party will be toning down their ambitions.” It will be a drag on progress, “especially where the industry is divided” on issues, the source believes.

If one thing unites the industry, it is a call for a consistent approach from ministers. And at least one key plank of Defra’s strategy looks like it might survive a change of government.

The Food Data Transparency Partnership (FDTP), which has been drawing up plans for a common system of Scope 3 reporting across the supply chain, has achieved “unparalleled” co-operation between different sectors, say senior industry figures.

“Establishing this common ruleset for Scope 3 reporting is something we very much welcome,” says Jason Barrett, CEO of carbon footprinting platform Mondra. He says it is up to ministers to create a collaborative environment where farm-level data can be accessed on a far greater scale, as farmers bear the brunt of the cost of living crisis, supply chain disruption and supermarket demands for lower prices.

“There is a critical need for the government to work together with industry on this challenge.”

Both parties have promised to work closely with business on sustainability, including through Sunak’s recent Farm to Fork Summit, and Labour’s initial talks with industry.

Only after 4 July will we see if words turn into action, or whether such hopes are – as our retail source puts it – “frankly for the birds”.