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Hammond opts for plastic packaging tax

Chancellor Philip Hammond is to impose a tax on plastic packaging that has insufficient recycled content.

But in his Budget speech he stopped short of introducing a tax on disposable plastic drinks cups, but signalled the possibility of an incineration tax in future.

The chancellor (pictured) said: “There will be a new tax on the manufacture and import of plastic packaging which has less than 30% recycled plastic content.”

He is to consult on the scheme’s detail and timetable, and said he had acted because the UK should “lead work to rid oceans and environment of plastic waste”.

He said he had been urged to impose a levy on disposable plastic cups but had concluded “in isolation would not deliver a decisive shift from disposable [cups] to reusable”.

The Government will monitor action taken by the take-away drinks industry and return to the levy idea “if sufficient progress is not made”. Environment secretary Michael Gove will “address reform of the packaging producer responsibility scheme”, he added.

A Treasury briefing issued with the Budget said incineration played a significant role in waste management but, in the long term, the Government sought to maximise the amount of waste sent to recycling instead of incineration and landfill.

It said: ”Should wider policies not deliver the Government’s waste ambitions in the future, it will consider the introduction of a tax on the incineration of waste, operating in conjunction with landfill tax, taking account of the possible impacts on local authorities.”

The Budget also included an extra £10m for local authorities to deal with abandoned waste sites.

Hammond signalled the demise of the private finance initiative (PFI), which was launched by the Conservatives in the early 1990s but used mostly by Labour administrations, with the intention that they would give better value and shift risk to the private sector in providing infrastructure.

There have been numerous examples of its use in the waste industry, mainly for MRFs and incinerators.

The chancellor said: “I’m committed to public-private partnership where it delivers value for taxpayers and transfers risk. But there is compelling evidence that PFI does neither. We will honour existing contracts but the days of the public sector as a pushover must end.”

He said a ‘centre of excellence’ would be created to manage existing PFIs in the taxpayer’s interest, but he would not sign off any new ones.

In industry reaction to the Budget, the Environmental Services Association’s executive director Jacob Hayler said: “The industry has long been calling for measures to support end markets for recycling.

“Today the chancellor has listened, and we welcome proposals to introduce a new tax on plastic packaging that contains less than 30% recycled content. Without stimulating the demand for recycled material, higher recycling rates will be unachievable.”

But Hayler said he deplored the possibility of an incineration tax, saying this “would only burden local authorities and industry without doing anything to support greater recycling”.

Suez Recycling and Recovery UK chief executive David Palmer-Jones said: “The chancellor signals a much-needed change to the way we produce and consume plastics and packaging.

“It is right that, as a society, we tackle the scourge of single-use items by taxing a throwaway culture and rewarding a reuse and recycle economy.”

But he said that to realise a circular economy, “we must look comprehensively at the whole system” and not just plastic.

Palmer-Jones added that reform of the packaging recovery note system “is overdue, we look to extended producer responsibility schemes to deliver on the ambition of a reuse and recycle economy”.

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