Defra has no plans to abolish PRN system

But, the department has indicated that it may be focusing more on voluntary rather than legislative means to help encourage the recycling of packaging waste.

Under the PRN system, packaging producers have to pay towards the cost of recycling the packaging they place on the market by buying packaging recycling evidence from reprocessors, known as Packaging Waste Recovery Notes (PRNs). The producers are set targets each year under the Packaging Regulations which they must meet.

Two weeks ago, producer compliance scheme Valpak which holds a 50% share of the packaging compliance market – wrote to members proposing a management-buyout (see letsrecycle.com story). The reason it gave for this was ongoing uncertainty surrounding the PRN system, which it said would require it to diversify and raise funds, thereby requiring a change in structure.

The document sent to members says: There is considerable doubt as to whether the current system of Recovery and Recycling Targets and purchasing of PRNs will continue to be the method by which producers are required to meet their producer responsibility obligations.

Valpak even went so far as to say it would be putting aside 1.125 million to cover the potential costs of closing its packaging compliance scheme business should the PRN system be terminated.

However, a spokeswoman for the Department for the Environment, Food and Rural Affairs (Defra) told letsrecycle.com yesterday (August 15) that there were no plans to bring the PRN system as the means by which producers meet their legal packaging recycling obligations to an end. But, she did stress that the government was very keen on voluntary means of encouraging packaging recycling.

She said: There are no plans to abolish the PRN system as the way in which producers meet their legal obligations to recover and recycle packaging waste. As announced in the Waste Review we will be working with industry to develop new responsibility deals aimed at recycling more packaging and reducing its overall impact on the environment.

In the Waste Review, which was published in June 2011 (see letsrecycle.com story), the government said that voluntary action was an important driver for behavioural change on packaging and said it would be encouraging the use of recycled content in new packaging.

With regards to targets, ministers said they were planning to consult on the case for higher packaging recycling targets for some materials from 2013-17 but stressed that the scale of the increase would be dependent on affordability to business. A final decision is due to be made in the 2012 Budget.

Buy-out

A vote is set to take place at Valpaks headquarters in Stratford-upon-Avonthis Thursday morning (August 18) to determine if the proposed company management buy-out goes ahead.

Each of Valpaks 4,141 members who include retail giants such as Sainsburys and Tesco – can vote in person or in proxy and are each entitled to one vote. In order for the buy-out to go ahead, a majority of them must agree, representing at least 75% of the total vote.

Since the proposal became public, some in the sector have suggested that the price which Valpaks senior management is offering for the company consisting of an initial cash consideration of 170 per member with a further potential consideration of 270 appears to be quite low. This has prompted suggestions that a counter-offer for the company could be made, which would then have to be considered by Valpaks non-executive directors.

If the buyout is approved, the business of Valpak will be transferred to a newly-formed company, Valpak 2011, and then this will be acquired by a business formed by Valpaks senior management, known as Hamsard.

Valpak will have to re-register its packaging, WEEE and batteries compliance schemes in Hamsards name with the Environment Agency – but Valpak said it expected the process to be straightforward.

A spokeswoman for the Environment Agency confirmed: “We are currently talking to Valpak about the legalities of the proposal.”

As Valpak was subject to competition scrutiny by the Office of Fair Trading when it was first set up in 1997, some in the packaging sector have questioned whether the proposed change in structure brought about by the buy-out would require it to be looked at again.At the time, the OFT said it was satisfied that there were no competition issues with the companys compliance scheme but that it would continue to monitor the market.

Speaking to letsrecycle.com this week, a spokesman for the OFT said: We have been interested in the market in the past and if there are any concerns about the operation of the market we would be willing to consider any submissions made to us.

Commenting on this, Valpaks director of sales and marketing, Duncan Simpson, said that the operation of Valpaks compliance schemes in the market would not be affected by the buy-out.

He said: The make-up of the company in terms of the market in which it operates in will remain the same. All the way through this process we havebeen doing everything by the book.

Mr Simpson said that not much would change if the buy-out went ahead. He commented: Valpak is a very well known brand so it will remain our main name, our members can expect the same service and as far as possible it will be business as usual.