UK businesses are paying some 3.5 times less than their continental counterparts to dispose of waste because of defects in the packaging recovery note (PRN) system, according to the National Audit Office (NAO).
That is among findings from a critical report by the NAO – Parliament’s spending watchdog – which said up to 4.5% of obligated companies were ‘free riding’ by failing to register with compliance schemes.
Auditors found that the PRN system had boosted recycling above targets but had become “a comfortable way of meeting targets without addressing the fundamental issues”.
The NAO report The Packaging Recycling Obligations was issued after a request by MPs on the Environmental Audit Committee (EAC).
It found that packaging recycling costs for UK firms were low compared with other countries because taxpayers met most of the costs.
Businesses paid £73m towards packaging recycling in 2017, but English local authorities spent £700m on collecting and sorting packaging waste – almost 10 times as much.
The NAO put compliance costs for UK firms at €13 (£11.60) per tonne compared with €48 in Germany, Belgium and the Netherlands, where companies fully fund collections of household packaging waste.
Auditors were also strongly critical of the Environment Agency’s (EA) grasp of the system.
They said: “Compliance inspections are a key part of the agency’s approach to tackling fraud and error, and these have fallen well short of targets and do not focus on exporters that the agency knows to be high risk.”
EA inspectors completed only 124 compliance visits against a target of 346 and made only three unannounced visits last year.
There were 1,889 companies that potentially indulge in ‘free-riding’ as they had failed to register with compliance schemes. If the proportion was like that of cases investigated then 331 or 4.5% of the total are doing so.
“The EA considers that it has prioritised the most significant potential cases, but we are not convinced that its analysis is strong enough for it to be confident in this conclusion,” the NAO commented.
Head Amyas Morse said: “If the UK wants to play its part in fully tackling the impacts of waste and pollution, a tighter grip on packaging recycling is needed.
“Twenty years ago, the Government set up a complex system to subsidise packaging recycling, which appears to have evolved into a comfortable way of meeting targets without addressing the fundamental issues.
“The Government should have a much better understanding of the difference this system makes and a better handle on the risks associated with so much packaging waste being recycled overseas.”
The NAO was also concerned that the system encouraged waste exports without any assurance that materials were recycled at their destination.
It was “concerned that the [EA] does not have strong enough controls to prevent the system subsidising exports of contaminated or poor-quality material” and had queried only four agencies’ registration documents last year compared with 53 in 2014.
“The PRN system should make producers pay to recycle their packaging.”
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EAC chair, Labour’s Mary Creagh (left), said the NAO’s findings showed the PRN system “has become a tick-box exercise”.
“Waste is exported with no guarantee that it will be recycled, producers are not made to pay to recycle their packaging, and the system is open to fraud and error,” she said.
“The Government must fix this broken system in its upcoming resources and waste strategy. The PRN system should make producers pay to recycle their packaging, encourage simpler packaging, support the UK recycling industry, and be open and transparent so people can be confident what goes in the recycling bin gets recycled.”
Consultant Phil Conran, of 360 Environmental, said export controls were “very lax and not well enforced”.
But he said it would be wrong to conclude that the UK was exporting waste for landfill – instead, low-quality materials increased process losses during recycling and it was those that were landfilled.
Recycling Association chief executive Simon Ellin said increasing the funding for recycling by producers could lead to more and better quality recycling: “Approximately 10% of the cost of recycling is funded by retailers and manufacturers via the PRN system. But we would like to see this increase to at least 80% and probably 90%.
“That would give the retailers and manufacturers a proper incentive to create packaging that is easy to recycle while also providing greater investment for UK recycling infrastructure.”
Local Government Association environment spokesman Judith Blake said: “Councils have long called for the packaging industry to get around the table with us to reduce the amount of unrecyclable material that goes into packaging.
“Manufacturers should take this opportunity and work with us to discuss ways in which we can make packaging more recyclable.”
Both the EA and Defra defended themselves against the NAO’s criticism.
An EA spokesperson said: “We have a strong track record of using enforcement to bring businesses back into compliance. Since 2011, we have brought 258 businesses into compliance by using civil sanctions, which has resulted in a combined financial payment of over £5m to environmental causes.
“Where we find any evidence of fraud or error in data reported to us, we remove that information from the overall packaging recycling data and calculations.”
A Defra statement said its packaging recycling rates “are robust and comply with strict standards set by the EU” and had significantly increased since the producer responsibility regime began.
It added that the system would be reformed in the forthcoming resources and waste strategy.
Key figures in the NAO report
- 64%: reported proportion of UK packaging waste recycled in 2017 against a target of 55%
- 11 million: Government’s estimate of tonnes of packaging waste used by UK households and businesses in 2017
- 7,002: UK companies registered as having packaging obligations in 2017
- £73m: amount raised by the system to help fund recycling of packaging waste in 2017
- Sixfold: increase in exports of packaging material for recycling abroad between 2002-17, with exports accounting for half of the packaging reported as recycled in 2017
- 124: compliance visits to recyclers and exporters carried out by the Environment Agency in 2016-17 against a target of 346
- 3: unannounced site visits carried out by the Environment Agency in 2017-18, covering 1.4% of accredited English recyclers and exporters