The British Plastics Federation (BPF) has warned the Treasury that plans for a tax on plastic products with less than 30% recycled content could lead to job losses in the industry.
The BPF also claims more virgin plastic could end up being used in some circumstances as a result of the tax, and warned of difficulties arising from a lack of recycling capacity in the UK.
The claims were made in a meeting between the BPF and Treasury on 8 May, ahead of a consultation deadline on the tax.
The BPF presented data collated on its behalf by accounting firm EY. Details of the meeting and the EY report were leaked by the Greenpeace Unearthed blog, which presented the BPF as trying to ‘water down’ the tax.
The report also claimed 18% of the plastics packaging sector will not be able to reach the required 30% level or be substituted by alternative materials. This would lead to a rise in cost of some products, including those in the health and food categories.
Assuming a tax of £500 per tonne is imposed in 2022, EY said employment at companies that would have to pay it could reduce by 52%.
The EY report argued that a lack of UK capacity to supply recycled material would force businesses to “source from overseas and import recycled content”.
It said it would take at least two-and-a-half years for any new recycling facility to be built in the UK, adding: “There is not enough investment to be able to source recycled content by the designated timeframe of April 2022.”
But EY’s analysis showed the tax would lead to an increase in the use of recycled plastic in products. BPF survey data revealed that 25% of all plastic packaging produced in 2017 already meets the 30% recycled content criteria.
If no tax is introduced, this was projected to rise to 55% in 2022. But should the tax go ahead, the figure would leap to 75% by 2022.
The BPF said its consultation response will be submitted on 12 May after “lengthy discussions with packaging suppliers, recyclers and the wider supply chain”.
A spokesperson said: “The plastics industry wants to increase the amount of recycled content in its products, and we are working to overcome the numerous technical challenges to introducing 30% recycled content across all plastic packaging formats.
“These are due to food safety laws and the need to keep packaging as resource-efficient as possible.
“In certain cases, including recycled content can result in using more plastic, not less. In some cases, increasing recycled content could make a product extremely difficult to recycle at the end of its life.
“It is for these reasons that the plastics industry is providing detailed information to the Government to ensure the best outcome for the environment, and that the money raised is reinvested in improving our national collection and recycling infrastructure.”
The Treasury’s tax proposals have been backed by the majority of the recycling industry.
Ray Georgeson, chief executive of the Resource Association, said: “We broadly support the Government’s proposals on plastics packaging tax and, while we recognise that there may be short-term challenges in sourcing recycled content in some sectors, this should not be a reason to abandon the policy measure.
“Market signals are important, as is legislation. No doubt the Government will listen to the industry on the question of timeframes, but the policy driver on recycled content should be seen as an opportunity to embrace, not a problem to stop.”
Jacob Hayler, Environmental Services Association executive director, said: “The plastics packaging tax is exactly what the recycling industry needs to help support our investment.
“The announcement of the tax has already boosted demand for recycled plastics here in the UK, and provides a strong signal that the Government is committed to doing the right thing.
“The point of the tax is to create a strong demand for recycled plastic that will stimulate innovation and investment in reprocessing infrastructure.
“While producers may not be able to meet the recycled content threshold from day one, the tax can be set at a level which underpins the investment that will enable them to do so in the future.”