Producer Responsibility Obligations (Packaging and Packaging Waste) (Amendment) Regulations 2025 Debate
Full Debate: Read Full DebateLord Katz
Main Page: Lord Katz (Labour - Life peer)Producer Responsibility Obligations (Packaging and Packaging Waste) (Amendment) Regulations 2025
Lord Katz Excerpts
Lord in Waiting/Government Whip (Lord Katz) (Lab)
My Lords, these draft regulations were laid before this House on 3 November. They amend extended producer responsibility for packaging, or PEPR, across England, Wales, Northern Ireland and Scotland. They represent a major step towards a circular, resource-resilient economy—one where producers take greater responsibility for packaging, and waste is designed out from the start.
Extending producer responsibility for packaging is the cornerstone of the Government’s once-in-a-generation recycling reforms. These reforms will increase the quality of the recycling that local authorities collect, support sustainable growth in the UK waste management and reprocessing sector, and reduce our reliance on material imported from overseas. As a result of the reforms, the waste management sector has committed to creating 25,000 new jobs and investing more than £10 billion in the economy. UK circular industries—those keeping products and materials in circulation for as long as possible—now deliver £67 billion yearly to the economy, and growth in this sector is more than double the rate of the overall UK economy.
The original PEPR regulations, introduced in 2024, created a framework for managing household packaging waste. They shifted the financial burden of disposal from taxpayers and local authorities to businesses supplying packaging. Producers must now cover the costs of managing their packaging waste and ensure that a proportion is recycled, with evidence provided to the regulator.
I now turn to the new obligations. These amendments aim to improve fairness, clarity and operational efficiency, responding to feedback from producers, local authorities and stakeholders, while aligning with international best practice. I will highlight three key reforms. The first is the appointment of a producer responsibility organisation, or PRO. We are enabling the appointment of a producer responsibility organisation from 2026—a very significant development. The PRO will be an independent not-for-profit body, established with the support of producers, to take on core responsibilities for the operation of the PEPR scheme. This responds to industry requests and mirrors successful models in countries with mature extended producer responsibility systems. The PRO will operate under conditions agreed by the four Governments and work closely with PackUK, the scheme administrator. Sovereign functions, such as data ownership and fee-setting, will remain with PackUK.
Secondly, I speak to the expansion of offsetting provisions. Large producers operating closed-loop recycling systems for food-grade plastics—where they collect and reprocess their own food-grade plastic waste—can now deduct these tonnages from disposal cost obligations. Eligible producers may resubmit 2024 data and receive revised invoices for 2025. We are doing this because we want to increase the recycled content in food-grade plastics. Despite sorting techniques, it is currently difficult for local authorities to keep plastic that is intended for food contact separate from other types of plastic. The result is that food-grade plastics often get downcycled, so we lose this valuable material. Closed-loop systems preserve valuable material and reduce reliance on virgin plastics, supporting the UK’s move towards a circular economy.
Thirdly, there are technical amendments for clarity and enforcement. These include material definitions, with fibre-based composites with plastic layers of 5% or less by mass being treated as paper or card, simplifying reporting and fee calculation; producer class obligations, introducing clearer rules on responsibility transfers during mergers or ownership changes; and enforcement, giving stronger powers to tackle free riders—businesses meeting thresholds but failing to register or report. PackUK can now recover costs for historic non-compliance. Regulator fees are being updated to reflect inflation, increased activity and new services, such as the recyclability assessment methodology and digital infrastructure. Lastly, local authority cost modelling will be improved to ensure that payments deliver environmental outcomes.
Lord Katz (Lab)
I thank all noble Lords for their valuable contributions. I am glad to have the opportunity to close this important debate and to have heard a range of views. It is clear that we are all passionate about this topic and I acknowledge that the principles behind PEPR, which began in 2024 before this Government but which we are carrying on, are taken as a good thing across the Committee. We are trying to meet its aims with sincerity, working with industry, local authorities and waste collectors.
I turn to the comments and questions raised. The noble Baroness, Lady Redfern, asked about the impact on small businesses. It is worth noting that many PEPR schemes around the world offer no exemptions from their obligations for small businesses, whereas in the UK we have some of the most generous measures for small businesses across any packaging scheme globally. The exemptions that we are applying in this scheme will apply to approximately 70% of businesses supplying packaging in the UK, which recognises that we want to support small businesses rather than price them out of the market, as the noble Baronesses, Lady Redfern and Lady Grender, referred to.
A number of contributions focused on the concerns raised by the Secondary Legislation Scrutiny Committee, particularly around whether regulators would have sufficient resources to carry out their functions effectively. The charges in this scheme were calculated based on the expected activities required effectively to undertake regulatory duties, using assumptions on the time these would take based on the experience of regulating similar sectors and the fixed cost of delivery. As the system embeds, regulators will continue to review operational delivery costs to ensure that there is effective recovery. Environment Agency enforcement resource is covered by grant-in-aid funding from Defra.
As well as provision to increase charges by inflation with the consumer price index, there was additional regulatory provision to allow regulators to seek approval to supersede the charges by introducing a charging scheme made under the Environment Act 1995, the Waste and Contaminated Land (Northern Ireland) Order 1997 or the Waste Management Licensing Regulations (Northern Ireland) 2003. Defra will continue to work closely with regulators on this topic.
The noble Baroness, Lady Bennett, in particular raised the question of having sufficiently robust information on producers’ recycling to make a fair assessment. Draft guidance on reporting requirements will be published on GOV.UK before Christmas, ahead of the regulations coming into force. The regulator does not usually stipulate the specific documents required but will provide examples and principles, as every producer is different and may therefore have access to different evidence. Guidance will develop over time to reflect real-life examples presented by producers during compliance checks. For example, a producer could obtain written confirmation from their reprocessor outlining what percentage of the material collected and sent for recycling was actually recycled. This would need to outline the reprocessor’s method of determining this value and the regulators would expect the producer to have a documented process in place for validating this data. While these requirements apply only to the reprocessor and not the producer, these regulations put the burden of proof on producers as they are benefiting from the off-set.
In short, producers must maintain evidence that their closed-loop packaging waste has been recycled into food-grade plastic material under the closed loop system. There is no requirement for this evidence to be third party verified. Regulators will carry out their statutory duty to monitor compliance, as you might expect. I think the noble Baroness, Lady Redfern, raised that issue.
I turn to some of the wider comments of the noble Baroness, Lady Bennett, which she raised when we last discussed orders on plastic waste packaging and recycling in Grand Committee. She is right to hold the Government’s feet—indeed, everyone’s feet—to the fire on creating a true reuse circular economy. To be clear, when I spoke about once-in-a-generation reform, I was not talking specifically about this SI; this is a good SI, but this is not the be-all and end-all. I was talking about the system.
I want to be clear that the Government are committed to transitioning to a circular economy, and reuse will be an important part of that journey. To help make that happen, we will be launching a call for evidence early next year on reusable packaging. This will help us to understand what support and policies are needed to increase reuse. For instance, we are encouraging the glass industry to seek to reduce the cost impacts of PEPR through a transition to reuse and refill, something that used to be commonplace in the UK and continues to be in many other countries.
That brings me on neatly to some of the issues around glass and reuse. The noble Baroness, Lady Grender, and the noble Lord, Lord Roborough, both raised issues on dual-use packaging not being addressed in the SI. I want to reassure the Committee that the Government are taking this seriously. Minister Creagh met with leaders from industry groups affected by the dual-use issue earlier this year, and we recognise the strength of feeling. But we also acknowledge the need for a system that can be effectively monitored and enforced, given that the impact on the PEPR fees for packaging remains in scope of fees.
Workshops have been held over recent weeks to urgently and carefully identify options which address the issues, while maintaining the objectives of the scheme. Sector-specific working groups will test these proposals further. It is important to note that any amendment that exempts more packaging will increase fees for the material that remains obligated to the system. This is because the total cost producers need to cover collectively will not be affected by any such amendment. If there is less obligated packaging, the fee per tonne will increase.
Specifically on glass, there is a question about the problem of the cost in the scheme being calculated by weight, not unit. It is important to recognise that waste management costs are largely driven by weight. We have also taken account of other factors that influence collection costs, including the estimated volume of each material in bins and collection vehicles. It remains the case that glass is a heavy material with a low resale value. A unit of glass packaging costs more for local authorities to manage as waste than an item made of more lightweight and high-value materials.
On switching, major food and drinks producers have told us their view that there is little risk of short-term materials switching, owing to long lead times in changing packaging. Major supermarkets have categorically said that PEPR is not their main driver for changing packaging. Decisions on changes are likely to align with the policy objectives of moving to easier-to-recycle packaging, which, from year two of PEPR, will see a reduction in fees through eco-modulation.
There was a question from the noble Baroness, Lady Grender, on the impact of fees on differential sectors and an impact assessment. In October 2024 the Government published a full assessment of the impact of the PEPR scheme for packaging, including cumulative costs. This considered a wide range of different costs to businesses and included estimates of expected net annual cost to business for those obligated producers. This cost to business had not been split by the sector in which the producers and businesses engage in market activity, given the data’s availability, the commercial nature of data limits and the ability to provide a sectoral level assessment of impacts.
I assure noble Lords that the Government continue to work closely with industry to understand the impact of the upcoming fees on business as the scheme is implemented and rolls out. We are committed to the continuous improvement of the scheme and, where appropriate, will seek to adjust regulatory settings to address feedback from stakeholders.
That brings me to the end of most of the questions that were raised by noble Lords. The noble Baroness, Lady Bennett of Manor Castle, raised—I do not know what to call it—the atrocious illegal waste site on the A34. I want to reassure noble Lords, as it is obviously a topic of concern to many, that the Environment Agency is now working to ensure that the public and the environment are protected from potential impacts and to pursue the criminals responsible. Following new information on the risk of fire, planning work has begun to clear the site as soon as possible on a wholly exceptional basis. The Environment Agency and local partners are now working through the most effective way to manage this work. I confirm that a 39 year-old male was arrested on 25 November in relation to this and investigations are ongoing, so I cannot comment any further.
The noble Baroness, Lady Bennett, mentioned the situation in Wigan; I do not have anything about that in my notes, but I am happy to write to her with an update. This is of concern to those in Wigan and of as much concern to us as the situation in Kidlington, which was the case that, perhaps unfairly, attracted the most attention and news coverage. One awful and illegal fly-tip is as bad as another in my book, so I am happy both to write to the noble Baroness to update her on the situation and to ensure that we are able to keep noble Lords abreast of it. I hope that I have covered most of the issues—
Lord Roborough (Con)
I understand that this may be beyond the Minister’s notes today, but I asked whether there will be an opportunity to use technology more effectively in compliance and in enforcing these regulations. I am happy for the Minister to write to me on that, if he is willing, as well as on any broader opportunities for reducing the cost of both enforcement and compliance with technology.
Lord Katz (Lab)
I thank the noble Lord and apologise for missing out that question. Of course, as a principle, we are keen to use technology to make monitoring and compliance easier for everybody involved in the system. We are also keen to drive down the costs of compliance so that people can concentrate resources in the whole system on driving down waste and improving the reuse and recycling of materials. I do not have specific details, so I will undertake to talk to officials and perhaps write to the noble Lord with more detail about what we have in store there.
This amendment to the legislation is necessary to maintain the circular economy for packaging in the UK; to ensure that the key industry request for producers to be involved in running the scheme is taken forward; and, ultimately, to ensure that materials and products are kept in use for longer. I trust that noble Lords understand and accept the need for this instrument. Once again, I thank everyone for their contributions.