This is the latest information we have received from the House of Commons regarding the plastic bag tax in England. It is important to stress this is as it stands now and it could change in the future.
Plastic Bag Charge
This information is provided to Members of Parliament in support of their parliamentary duties and is not intended to address the specific circumstances of any particular individual. It should not be relied upon as legal or professional advice, or as a substitute for it. A suitably qualified professional should be consulted if specific advice or information is required.
Subject to Parliamentary approval, a 5p charge will be introduce on all single-use carrier bags in England on 5 October 2015. The charge will apply to any ‘unused bag made of lightweight plastic material with handles, other than an excluded bag’, and takes effect from that date.
Biodegradable bags are included in the charge from 5 October. These bags had previously been exempt from the charge in England, but following a recommendation from the Environmental Audit Committee, the Government decided to remove the exemption and include them in the levy. The announcement that biodegradable bags would be removed was made on 17 June 2014, so any information the business provided to its customers about their product being exempt was correct up to that date.
The Government is continuing to work with the industry to develop a biodegradable bag which meets its own high standard for biodegradability. If this was developed, it could be exempt from the charge.
Small and medium-sized enterprises (SMEs), that is, retailers with less than 250 employees, are exempt from the charge. So it is possible that not all of the clients of the business Mr Lancaster is enquiring on behalf of will be affected by the charge.
Although the charge is mandatory, there are no regulations specifying what retailers must do with the proceeds of the charge (although they are encouraged to donate it to good causes). The business in questions could suggest to retail clients that they use some of the proceeds to cover the cost of any inconvenience or loss caused by the inclusion of biodegradable bags.
The UK Government laid a draft Statutory Instrument on 17 December 2014 to introduce a 5p charge on single-use carrier bags in England. Subject to Parliamentary approval, this will come into force on 5 October 2015. This follows the implementation of a similar levy introduced by the Welsh and Northern Ireland Government’s in 2011 and 2013 respectively. The Scottish Government introduced their own plastic bag charge in October 2014.
The draft Statutory Instrument which the Government laid on 17 December 2014 is still subject to approval by Parliament. It is subject to an affirmative procedure, which means it will be considered in either a Delegated Legislation Committee (DLC) or on the floor of the House (a DLC is more likely). If it is considered in a DLC, then a motion will still be needed to be taken on the floor of the House after it has been reported from the DLC to approve the instrument. This would take place before the adjournment debate. Any Member wishing to oppose the instrument could do so at this point. If the question is taken after the moment of interruption (which is usually the case) then a vote would be called, although this would be a deferred division (taking place the next Wednesday).
3 Which bags are liable?
Under the terms of the 5p charge in England, a single-use carrier bag is defined as ‘an unused bag made of lightweight plastic material with handles, other than an excluded bag’. The Government’s Explanatory Memorandum on the draft legislation offers further clarification on the definition of a single-use carrier bag under the terms of the legislation:
The single use carrier bags to be charged for are made of lightweight plastic material with handles and a thickness of 70 microns or less. This covers the vast majority of single use plastic bags given out by English retailers. 70 microns has been chosen to ensure all bags given out by high street retailers as single use bags are covered, with a specific exemption for those designed and sold as reusable “bags for life”.
The UK Government’s website for the 5p single-use carrier bags charge states that a number of types of bag will be exempt from the charge. Subject to Parliamentary approval, these are expected to include the following:
- bags for life,
- bags without handles
- woven plastic bags
We also expect the charge to exempt bags containing only the following items:
- unwrapped food
- unwrapped goods contaminated with soil (eg loose seeds)
- unwrapped blades
- prescription-only medicines
- live aquatic creatures
- uncooked meat
The Government also expect that bags distributed in places of transit (eg boats, trains and airports) will be exempt from the charge.
4 Biodegradable bags
The UK Government had initially proposed an exemption for biodegradable bags (and paper bags) from the charge in England. In its call for evidence in November 2013, the Government stated that ‘a biodegradable plastic carrier bag that meets defined criteria will be exempt from the charge’. This was in contrast to the charges introduced in Wales, Scotland and Northern Ireland, which all included biodegradable bags in their own levies.
However, in 2014 the Environmental Audit Committee held an inquiry into the proposed carrier bag charge in England. During this inquiry, DEFRA told the Committee that there is currently no bag that meets its own ‘ambitious standards’ for a biodegradable bag. The Committee also received a variety of evidence relating to the proposed biodegradability exemption, which showed opposing views on which particular materials might be safely recycled, as well as about potential harm in the natural environment.
Many recycling organisations also expressed concern that an exemption from the charge would lead to an increased use of biodegradable bags, and that this might threaten the viability of the UK recycling industry. British Polythene Industries stated that they are:
totally opposed to any exemptions for biodegradable bags, this would be environmental madness. Far from benefiting the environment, any exemption would inevitably lead to an increase in the use of carrier bags containing a degradable additive, these bags would—after use—enter and contaminate the plastic films waste stream. This contamination would cause huge damage to the UK plastic films recycling industry and inevitably lead to a reduction in the amount of waste plastic films recycled in the UK.
The Committee concluded that the Government’s proposed exemption for biodegradable bags appeared rushed, and recommended in its report that the exemption be remove from the 5p charge in England. In its response to the Committee, published in June 2014, the Government agreed to this recommendation:
We are therefore looking to develop standards with industry, for a biodegradable bag that has fewer environmental impacts across its life cycle not just its end of life impacts. The exemption for biodegradable bags will not be included in the legislation until standards for the bags have been finalised. This means the exemption will not come into effect with the legislation for the 5p charge in October 2015. We will continue to work with the industry to develop the standard.
The Committee also recommended removing the exemption for paper bags from the charge in England, although the Government did not agree with this recommendation, and paper bags therefore remain exempt.
The Government has stated that they are working with industry experts to review existing standards of biodegradability. The Government will report to Parliament in October 2015 on whether there are suitable standards that could be applied to biodegradable bags for them to be exempt from the 5p charge. Any exemption for biodegradable bags would be introduced by amending the law. The business concerned about the charge and its impact could contact DEFRA for further information on this.
5 Exemptions – Small and medium-sized enterprises
It is possible that the 5p charge may not apply to all of the customers of the business in Mr Lancaster’s constituency. Small and medium-sized enterprises (SMEs) will be exempt from the 5p charge in England. For the purposes of this charge, the Government has defined an SME as a retailer with 250 employees or less.
The Environmental Audit Committee has suggested that the exemption for small retailers is unnecessary and should be removed. However, the Government did not accept this recommendation and has continued to argue that the exemption should and will apply to SMEs. In a debate on the plastic bag charge in November 2014, the Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs confirmed that:
Small and medium-sized businesses will be exempt from the charge in England. We recognise that some wanted SMEs to be included, but we concluded that we need to avoid administrative burdens on start-up and growing businesses in England at a time when we want to support new growth in the economy. It is also worth bearing in mind that the current UK retail market is dominated by a relatively small number of large stores run by companies with more than 500 employees—they employ 65% of the people working in retail and have 69% of all annual turnover of retail businesses. Any retailer who is not covered by the legislation will of course be able to charge for bags voluntarily.
6 Proceeds of the charge
Although retailers will be required to charge 5p per single-use carrier bag from 5 October (subject to parliamentary approval), there is no regulation on what retailers do with the money raised from the 5p charge (other than paying VAT totalling less than 1p per bag, which will go to the Treasury). As in Wales and Scotland, the UK Government is encouraging retailers to donate the proceeds of the charge to good causes, particularly environmental ones. However, retailers are not obliged to do this (although they will have to record how the proceeds of the charge have been spent). The Environmental Audit Committee looked at this particular issue, and said:
Whilst we support the use of funds for good causes, such as environmental charities, we are concerned about potential abuse of the scheme. The Government should set clear rules for transparent reporting and for retailers to publicise prominently in store where the funds are going. It should ensure tough sanctions exist to prevent retailers having conflict of interest about which charities are supported and ideally shoppers should decide which local charity the funds go to, as already happens in some stores. If there is evidence of retailers abusing this approach, the Government should follow the example of the landfill tax and plastic bag tax in the Republic of Ireland by centrally collecting and allocating funds for environmental projects.
The Government responded:
24. As in Wales, the Government intends to require retailers to publicise the number of bags sold and how the proceeds of the charge have been spent. The exact details of the scheme are currently being drafted and will take into account responses to the Call for Evidence.
25. Retailers will be expected to give the proceeds of the charge to good causes and we are looking into developing a voluntary agreement with retailers to cover this. (Page 5 of the Government response).
One possible option for the business in Mr Lancaster’s constituency might be to suggest to retailers that they keep some or all of the proceeds from the 5p charge to cover the cost of any inconvenience or loss at the inclusion of biodegradable bags. The Government has calculated that the impact on retailers is expected to be £26m over 10 years. However, its explanatory memorandum states that retailers are ‘able to retain a portion of the proceeds to cover this so overall the impact on retailers should be neutral. There will be significant benefits to charities and good causes from the remainder of the proceeds’.
A draft impact assessment of the charge, carried out by DEFRA, might also be of interest to the business in Mr Lancaster’s constituency. It is available here.