OPINION: While the Chancellor gears up to deliver a tricky Autumn Budget, the UK’s plastics recycling industry continues to face significant challenges caused by rising production costs; depressed commodity prices, and unfair competition from poorly regulated low-cost imports.
Without intervention, the prevailing situation will ultimately undermine the efficacy of the Government’s Collection and Packaging reforms; progress against waste reduction targets and the credibility of the (delayed) Circular Economy Strategy. After all, if we can’t sustain a functioning domestic circular economy for basic plastic packaging, then more complex material streams don’t stand a chance.
The Plastic Packaging Tax was designed as a demand-side intervention to support increased UK plastic recycling, but it is unfortunately not working, as we can see from the recent record of plant closures, mothballed capacity and jobs lost in the sector. To address this in the Budget, the Chancellor should introduce a progressive escalator of the Plastic Packaging Tax threshold rising from 30% to 50% recycled content over this Parliament – with consideration also given to the long-term trajectory of the tax rate. This would give the market certainty and create stronger demand for high-quality UK-reprocessed plastics.
However, the issues run deeper than the threshold alone. Restricting the tax solely to plastic packaging ignores enormous opportunities in other sectors. For example, construction products, automotive components and a wide range of household goods are just some of the categories where recycled plastic content requirements could support domestic circular-economy growth – so consideration should be given by The Treasury in future to broadening the scope of the tax to include other plastic production.
At the same time, current export incentives undermine investment in UK recycling infrastructure. The ESA believes this could be addressed by introduced new rules which require recycled plastics to be, as a minimum, washed and flaked prior to export. Packaging Export Recovery Notes (PERNs) should then only be issued where this standard is met. Anything less perpetuates a system that disadvantages UK recyclers; plays into the hands of export fraudsters and exports the economic opportunity associated with reprocessing activity.
Finally, we need urgent action to create a level playing field on polymer imports (either as goods or raw materials) which claim to be made using recycled plastics. Without more rigorous verification (the current regime allows for simple self-declaration) the UK market is exposed to fraud, undermining the domestic market for recycled plastics and defrauding HMRC of tax that would otherwise be due. Proper scrutiny of imported material is essential to safeguard both fair competition and environmental integrity.
The UK plastics recycling sector shares the Government’s ambitions for a more circular and resource efficient economy. With the right policy and tax framework – one that rewards genuine recycling, ensures fair competition, and stimulates demand for recycled content – we can deliver green jobs, lower emissions and greater resource security, while also closing potential loopholes for tax fraud.
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