Jeremy Hunt must spend Plastic Packaging Tax windfall wisely - here's how: Carol Cox

The ambitions set out by the Chancellor during the Autumn Statement to focus on energy, infrastructure and innovation are positive, but the Government needs to get to grips with providing the detail for businesses on exactly how it will deliver on their targets.

On October 31, the Government will have received another windfall of approximately £68 million from the UK’s Plastic Packaging Tax – that figure is based on estimations following a Freedom of Information (FOI) request that Duclo Recycling’s parent company, Duo UK, submitted to HMRC in September.

The tax was introduced on April 1, 2022 and FOI data shows that for the period April – June 2022, over 347,000 tonnes of plastic packaging used in the UK didn’t contain at least 30 per cent recycled plastic. With a levy of £200 per tonne, this generated over £68 million in tax.

It’s logical to assume approximately the same number of businesses, 2,600, will have submitted returns again on October 31 for the second period (July – September 2022), potentially generating another £68 million in tax revenues.

Yet, six months into this new levy, the Government has still not shown how the new tax revenues are being spent. When the tax was first introduced, the main policy objective outlined was to create greater demand for recycled plastic, which urgently requires large-scale investment here in the UK.

Since the tax was introduced, demand has increased yet there’s been a major shortage of recycled plastic content in the UK. This has left businesses with little option in the short-term other than to import more recycled plastic from overseas where suppliers are able to meet the demand, or pay the levy because they cannot obtain or produce their product using recycled content to meet the 30 per cent minimum threshold required.

The FOI data shows there’s huge demand for recycled plastic pellets that simply isn’t being met. This demand is likely to increase as more companies comply with the Plastic Packaging Tax and respond to growing calls for more resourceful packaging.

Closed-loop recycling is the most effective way of keeping this valuable material in the economy.

Yet closed-loop recycling infrastructure is severely lacking in the UK and it’s imperative if we want to reduce use of virgin resources long-term. Plastic Packaging Tax revenues should be reinvested to help fund this, and businesses paying levies are entitled to know how taxes are being reinvested in sustainable policies and practices.

There's a significant opportunity to improve how much post-consumer plastic content is recycled. This could be a viable area of focus for the Government’s proposed regional ‘innovation clusters’, where revenues from the Packaging Tax could be used to fund locally focused and commercially driven R&D programmes into circular strategy.

The value of optimising recycling processes here in the UK to minimise the amount of material being lost to waste would make a real impact, both to the economy and the environment.

Plastic Packaging Tax revenues should be invested in driving innovation and forging partnerships with industry that will increase the recovery of post-consumer plastic waste, deliver true long-term sustainability gains and support economic growth in the regions.

Carol Cox is managing director of Leeds-based Duclo Recycling