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Producer Responsibility Obligations (Packaging Waste) Regulations 1997 (As amended)

CHAPTER THREE

REGISTRATION AND DATA ISSUES

This Chapter discusses changes to the registration requirements, including approval of schemes, group registration, special producers and data issues

REGISTRATION ISSUES

Approval of Schemes

3.1 Under the Regulations, the approval of the relevant Minister must be obtained by a scheme operator in order for a prospective scheme to be registered by the relevant Agency. The main matter examined by Ministers in the approval process is whether the scheme is likely to continue to subsist, and continue to contribute to the achievement of the UK's Packaging Directive targets. There is also an examination of whether the relevant Agency is likely to be satisfied with the operational plan.

3.2 Hitherto, and particularly at the outset of the development of the UK system, the approval process has provided a useful additional method of ensuring that all aspects of a compliance scheme and its operator are examined before a scheme can be registered, rather than just the scrutiny of its operational plan by the relevant Agency. However, there is no requirement in the Regulations for approval to be renewed, even though certain aspects of a scheme may have changed, including its operator.

3.3 The intention behind the approval requirement was that Ministers could assure themselves that a scheme would continue to contribute as expected to the UK's ability to meet Directive targets.

3.4 After six years' experience, it may be worth considering whether there is still a need for Ministers to approve compliance schemes, whether there are other reasons for requiring Ministerial approval or whether approval can be dispensed with.

3.5 If Ministers are to continue to approve compliance schemes the Government believes that they should do so in a structured context. If approval of schemes is to continue, it is proposed to set down in the Regulations any provisions relating to the approval process. Although currently, the Regulations require a scheme to be approved, and they clearly envisage the withdrawal of approval (see regulation 13(g)), they do not provide a mechanism for the renewal, review or withdrawal of the approval once given.

3.6 The case for continuing Ministers' approval function is that it allows Ministers to take into account matters which the Agencies are unable to do since their scrutiny is restricted to the scheme's operational plan and to certain policies they are required to have, (currently set out in regulations 12-14 and Schedule IV to the Regulations). There is no avenue, other than the Ministerial approval process, for ensuring that a scheme has a constitution which will enable it to avoid being held to ransom by one member acting fraudulently. The approval process looks at the establishment of the scheme itself and not at its proposed operating plan for achieving members' recovery and recycling obligations.

3.7 The case for dispensing with Ministers' approval function is that in some cases, e.g. where an appeal is to be launched, it may mean that Ministers both consider the approval of a scheme and have an appellate function in respect of an Agency's decision to de-register a scheme. Although there have as yet been no appeals under the Regulations, if there were, the respective lines of responsibility between these two functions may be blurred and an appeal decision taken in those circumstances may be vulnerable. Dispensing with this provision would also reduce the regulatory burden.

3.8 Against that is the potential for a failing or failed scheme to hinder the UK's ability to meet Directive targets. Schemes exist only to discharge the obligations of producers; and producers' obligations are, under regulation 3(6), to enable the UK to meet its targets in the Directive. Faced with a failing scheme, Ministers might wish to take action by, say, withdrawing their approval and so effectively forcing the scheme's members to sign up with stronger schemes more likely to deliver the reprocessing needed to meet targets.

3.9 If Ministers were to continue to exercise an approval function, it might be more effective if it were exercised on an ongoing basis, to take account of changes in the scheme. One way would be for the scheme to be required to re-apply for approval after a period of time - say, annually or every two or three years. However, annual approval would be burdensome for the scheme and resource-demanding of the relevant Government Department; and it is unclear that there would necessarily be benefits in approval having to be sought every two or three years.

3.10 It might make more sense for approval to have to be sought again if, during the year there were a change of operator. (Changes in operational approach should already be taken into account in the annual renewal of operational plan that is required).

3.11 Even if Ministers were to adopt a largely passive role in the approval/registration process it is likely that they would wish to retain a power of intervention to pre-empt a potential risk to the UK's ability to meet Directive targets from developing into an actual problem. A halfway-house between a complete hands-off approach and continued affirmative approval would be for the relevant Minister to have the power to direct the Agency to reconsider the scheme's registration or even to de-register the scheme forthwith. The former might arise if Defra or the relevant devolved administration had reason to be concerned that a scheme was not performing in such a manner as to secure the Directive's objectives; the latter if it had actual evidence that a scheme's actions were leading to the UK's failure to comply. Section 40 of the Environment Act 1995 already confers the power of direction on Ministers.

3.13 If we were to retain the approval procedure, an affirmative approval regime might, for example, -

i. as now, require new schemes to seek approval from the Secretary of State or relevant devolved administration Minister before they can be registered; and

ii. require registered schemes to seek to renew approval from the Secretary of State/Minister where the operator of the scheme has changed; and

iii. require a registered scheme to seek to renew approval from the relevant Minister by 1 February in the year which follows a year in which the scheme is not going to comply with its recovery and recycling obligations in that year (i.e. no longer contribute to the achievement of Directive targets) or where the operator has faced enforcement action by the Agency.

3.14 Option (iii) would allow Ministers to give a second chance to a scheme, but to remove approval if it has failed to comply or if the operation has faced enforcement action. A combination of (i) and (iii) would mean that a scheme that failed to achieve compliance with recovery and recycling obligations in a year would automatically have to seek renewal of approval for the following year. Point (ii) above would take account of the fact that a change of operator can usher in changes to the operation of the scheme, and would give Ministers a chance to consider whether they continue to regard the scheme as likely to contribute to the achievement of the UK's targets. If the approval process is retained, the criteria for approval are shown in the Annex to Chapter Three.

3.15 Irrespective of the nature of Ministers' role, scheme members whose scheme has had approval withdrawn during a year will be greatly concerned about their position. Under the Regulations, such businesses would need either to join another scheme, or sign up as individual registrations with the Agency. It is always possible, however, that schemes, who will be operating on the basis of an operational plan designed to meet a specific aggregate obligation, will not be able to take in a number of additional members mid-year. Individual registration would therefore be the most likely option for such businesses. It might therefore, be appropriate, where the withdrawal of approval occurs, and depending on the circumstances, for this to take effect only at the end of the calendar year, so as not to jeopardise the discharge of members' obligations in that year.

Q6: Given the possible difficulties for businesses who were members of a scheme that had had its approval withdrawn, should withdrawal of approval only take effect at the end of a year for example ? are there other options?

Q7: Views are sought on whether the requirement of Regulation 12(4) for a compliance scheme to obtain Ministers' approval should be retained or repealed. In particular:-

(i) Do you agree that the approval process should be retained ?

(ii) If so, do you agree with the regime proposed in paragraph 3.13 (i), (ii) and (iii) above ?

(iii ) Are there additional benefits or safeguards which Ministers' approval could secure ?

(iv) Could the Agencies determine those matters instead ?

(v) Do you think the approval process should be repealed ?

(vi) If so, should the Regulations lay down any standards or requirements for the setting up of a scheme or its operation?

(vii) If yes, what do you think these should be.

(viii) Should Ministers retain a power of strategic intervention or should they not be involved at all (i.e. there would be no approval process (but this would not affect Ministers' appellate function).

Time allowed to consider appeal

3.16 In regulations 18-21, provisions are set down which allow a scheme to appeal against a decision by the relevant Agency to refuse or cancel registration. Schedule 5 sets out the procedure on appeals. Paragraph 2(1) of Schedule 5 provides for a scheme to give notice that it intends to appeal within 6 months of the decision against which it is appealing. This timing means in practice that there can be a long period of uncertainty where it can be unclear whether a scheme (and therefore its members) is, or is not, registered. It is proposed that, in the interests of resolving any such situation more quickly, the period of 6 months in the Regulations should be reduced to a period of 2 months. This should provide ample time for a scheme to determine whether it is, or is not, going to appeal against an Agency decision.

Q8: Do you see any difficulties connected with this proposal to give schemes 2 months rather than 6 to decide whether or not to appeal ?

Change of date for submission of updated compliance or operational plans

3.17 Under regulation 12(3)(e) and regulation 14(2), schemes must, when they apply for registration, provide an operational plan to the relevant Agency, and thereafter they must update this each year. The same applies, under regulation 6(4)(dd), to producers who are registering individually with an Agency rather than joining a compliance scheme, and who have turnover in excess of 5,000,000. Currently, the date for the updated plan to be provided is 'on or before 30 June'. This date was chosen to enable schemes and businesses to concentrate on data provision before that, but it would appear that, in practice, it would be more efficient and more consistent with the registration timetable, if the Agencies could scrutinise updated plans, particularly those from schemes, earlier in the year so that they can consider registration in light of updated plans (and see paragraph 3.34 below). Plans run, in any case, in relation to obligation years, i.e. calendar years from 1 January. It is therefore proposed that a change be made to require compliance schemes, and the larger businesses, to submit their updated operational plans on or before 31 January each year.

Q9: Do you see any difficulties associated with this proposed change of date ?

Group Registration Provisions

3.18 Currently, the provisions of the Regulations allow groups of companies to register in one of three ways (regulation 29 and Schedule 8). This was intended to provide maximum flexibility but, in practice, it would seem that there can be significant confusion. For example, some subsidiary businesses in a group do not appear always to know who else is in the group, or what approach other subsidiaries are thinking of taking. Some subsidiaries are left out of group registrations, or subsidiaries believe that they are registered when they are not. This leads to a situation in which the reported data are not as accurate as they could be and the Agencies' monitoring of, for example, free riders, can be made more complicated than it need be.

3.19 A further difficulty is that the monitoring of the subsidiaries in a group of companies often requires as much Agency time and resource as the monitoring of an individual business, although the group will usually only have paid one fee in relation to one registration, despite that registration comprising a number of subsidiary businesses. For example, under the present system a group of companies with 100 subsidiary businesses can register once, pay a fee of 950 (or 460 to a compliance scheme), yet the relevant Agency can find that it has to spend a significant amount of time monitoring the data from a number of these subsidiaries. These costs are not covered. To some extent, therefore, this means that single registrations subsidise the costs of monitoring large groups of companies. It is also a further reason for which the present Agency fee is spread too thinly. In order to ensure that there is no such cross-subsidy, to ensure better data where possible, and to take account of the ACP recommendation that the Agencies should ensure adequate levels of resource, the Government proposes that changes should be made.

3.20 One obvious approach might be to remove the three registration options for groups and place all businesses, whether holding company, subsidiary business or other, on the same footing. This might be seen as appropriate in terms of simplifying the present provisions relating to group registration, and take account of the fact that the Agencies are not covering their monitoring costs fully under the present arrangements.

3. 21 With this approach, however, there would be two areas of concern: first, that where a group of companies has a significant number of subsidiaries, this approach could mean a relatively significant increase in the fee payable to the relevant Agency. A group with 100 subsidiaries currently paying one fee to a scheme (460) could find that with such a provision, they would instead be paying 46,000 on the basis of the present fee. Second, with this approach, a significant amount of packaging currently obligated through the present group registration arrangements, would no longer be obligated because a number of companies would fall below the thresholds. A reduction in obligated packaging at this time would be undesirable in face of the increasing targets to be met over the next few years.

3.22 There is an alternative approach that could be taken to achieve better group data and ensure the fair application of the fee. This approach would address possible concerns about significant increases in fees for some groups, and concerns about the loss of packaging. This approach would be to leave group registration arrangements as they are now, but would add an additional fee element for each subsidiary business in order to fully cover the costs of monitoring, particularly data monitoring. For example, a group with 20 subsidiary businesses, all of which are producers, that chose to join a compliance scheme, would have an Agency fee (currently 460), but also an additional 'group subsidiary monitoring premium' designed to cover the costs of monitoring all subsidiaries. This premium might be in the region of 180 per subsidiary and would not apply to the holding company (the Agencies' fees are discussed fully in Chapter Six).

3.23 The Government does not believe that the first approach described in paras. 3.20-3.21 above is a valid option since, in addition to the cost increase for the groups concerned, the loss of obligated packaging could be significant. It is difficult to estimate this, but the Agencies believe that as much as 65% of group subsidiaries could be lost. However, the second approach is simple, in that the registration arrangements would not change, which would be easier for business. It would mean a fee increase for groups but this cost increase would be lower than it would have been had the alternative approach described above been taken further. The proposed approach would also be advantageous in that it would mean that single registrations would no longer be subsidising the costs of large groups of companies; and this option would also have the merit of not causing obligated packaging levels to fall. The Government believes that this option is the better way to go forward on group registration fees, but would welcome views.

Q10: Do you agree that the registration options for groups of companies should remain as now, but should be accompanied by a fee premium per subsidiary business to cover monitoring costs ? Do you think the alternative approach described in paragraph 3.20- 3.21 has merit? If so, what would the benefits be ?

Changes to mid-year change requirements

3.24 In the Regulations, Part II paragraphs 12- 8 of Schedule 9 make provision for mid-year changes affecting businesses that are in a group of companies. Industry comments suggest that the present provisions cause a great deal of difficulty and also complicate the data to be provided. The Advisory Committee have also recommended that these provisions should be simplified. To do this, it is proposed to make a change as follows: where a group of companies owned a producer in the year in which the activity on packaging was carried out by the producer (e.g. 2002), it would retain the obligation of that producer in the following year (e.g 2003), i.e. the obligation year, whether or not at some stage in 2003 that producer was sold to another group of companies.

3.25 Thus, if in 2003 the producer was sold to another group of companies, then in 2004, the group which purchased the producer in 2003 would have the whole obligation for that producer -which would be calculated on the basis of all activity on packaging carried out by the producer in the previous year (i.e. 2003), regardless of the fact that the producer was owned by another group for part of that year.

3.26 The intention is to avoid placing on business a requirement to have to determine proportions of obligation for different businesses to carry out as a result of mid-year changes.

Q11: Do you agree that these mid-year change provisions need simplification ? Do you think that the proposal in paragraph 3.24 is appropriate ? Do you have alternative suggestions for simplifying this?

Removal of 'Special Producers

3.27 The Regulations currently provide that producers of packaging that will become 'special waste' once discarded have no recovery and recycling obligations on that packaging (although the tonnage of special packaging must still be included when assessing whether the 50 tonne packaging handed threshold is exceeded and must also be included in annual data submission to the Agencies - regulation 4.4 and Schedule 3). It is considered that the exemption from recovery and recycling obligations on 'special packaging' should be reviewed since, in terms of the objectives of the Directive and "the polluter pays" principle, there is no justifiable reason for its continued exclusion. Packaging that is a "special producer's packaging is placed on the market and contributes to the total tonnage flowing into the waste stream to which the Directive targets apply. A minimisation objective applies to all waste going to landfill and the aim of increasing reuse and/or recycling of packaging placed on the market applies as much to "special" packaging as to any other.

3.28 In 2002, the total amount of 'special' packaging placed on the market by registered producers was around 57,000 tonnes ¹⁵. This packaging can be reused (under certain conditions) and recycled or recovered like any other packaging once it has become waste. In light of the higher target levels of recovery and recycling that will have to be achieved over the next 5-year period, it would seem to be equitable that those handling "special packaging" should carry recovery and recycling obligations based on the total tonnage they handle rather than only on the packaging which is not 'special producer' packaging. It is also the case that producers do not have to recycle the same packaging that went through their business but need only recycle an equivalent tonnage; they are not being asked to take an additional requirement. Clearly, if the 'special producer' provisions were removed, businesses currently classified as "special producers" are likely to see an increase in their tonnage obligation as a result. However, it is considered that this would result in a fairer placing of obligations.

3.29 In terms of assessing impact, with a total of some 12,000 businesses obligated, the average increase would be in the region of 4.7 tonnes or around 119 if the average PRN price were 25. An additional benefit would be a simplification of data provision as all data could be provided on one form, and would no longer have to be separated out and entered on two data forms; the additional "special producer" data form could be eliminated. Overall data might improve since businesses would no longer have to assess, sometimes with difficulty, how much of their packaging ended up as 'special producer packaging' and how much did not. The Agencies' data monitoring would also be more straightforward. Since, in addition, there is little room for manoeuvre in terms of meeting targets, any addition to the obligated tonnage is to be welcomed as this helps to keep targets down. The Government is minded to remove the 'special producer' provisions from the Regulations.

Q12: Do you agree that the 'special producer' provisions should be removed from the Regulations ? If not, why not ?

Changes to the registration fee

3.30 At present, producers face an Agency registration fee of 950 when they register individually with an Agency, or 460 if they register through a compliance scheme. This applies whether or not the data provided by producers and scheme members are accurate and provided on time. Currently, where data have to be returned for correction and re-submission, or are late, the cost of the additional work carried out by the Agencies is not being covered. This means that the Agencies' resources are more thinly spread than they should be. See Chapter Six for further detail about the Agencies' fee.

3.31 Some 25% of the data provided by producers are not provided on or around the deadline of 7 April. As a result, the aggregate national figures that the Agency compiles have to be recalculated as each late submission is received (e.g. the Agency is still expecting further data provision for 2003 at the time of publication of this paper). This results in considerable delays to publication of annual figures on reported packaging. This is inconvenient for industry and for Government, quite apart from being out of line with the requirements in the Regulations. It also means that the Agencies can not finalise the data work and move to other monitoring activities.

3.32 The ACP in its advice to Ministers, also recommended that there should be a late registration fee. The Government is minded to alter the structure of the fee so that only those incurring late and re-submission costs pay the extra. It is therefore proposed that there should be a change to the way the Agency fee is calculated. This might be as follows -

i. a fee for routine registration, data collation and monitoring, calculated on the basis of the work necessary to receive and process accurate data provided by the deadline; and

ii. additional fee costs, calculated on the basis of the time and resources needed by the relevant Agency to process the data into the system, for businesses and schemes whose data returns are late, and which have to be returned for revision and re-submission and require additional Agency time. A further cost element would be associated with each return of data and cost incurred.

3.33 The Advisory Committee has recommended that the Agencies should ensure that adequate levels of resources and expertise are available and to indicate what implications this would have for the fee. The approach above would allow the Agencies' registration fee to reflect the real costs of the work carried out, and places it on those incurring the extra costs. It should be noted, however, that the Agency is expected to be firm in not accepting late registrations and so the late registration costs referred to in (ii) above will generally apply to producers who are joining a scheme.

Q13: Do you agree that the Agencies' registration fee should be calculated as proposed above to enable additional costs to be borne by those who cause the Agency to incur these additional costs ?

Annual Registration

3.34 At present, under regulations 5 and 8, producers' registration continues from one year to the next provided that the requisite fee and updated packaging data are provided to the relevant Agency by the deadline each year. The current provisions in regulation 11(3), however, require the Agencies to formally de-register businesses who do not renew their registration for one reason or another. It is not clear that there is a need for a requirement in Regulations for the Agencies to take this step. Unless an Agency sees a way to use this step for other monitoring purposes, it can take up Agency time and resources which could be better deployed on other monitoring duties at this time of year. Also, in the Government's view, the onus for a producer to be registered under the Regulations lies with the producer.

3.35 The 'continuation of registration' provision has also resulted in some ambiguity with respect to the submission of operational plans. For example, paragraph 11(d)(iv) requires compliance schemes to include, in their operational plan, details on the amount of packaging waste to be recovered and recycled in the three years following registration (see Part IV of Schedule 4). However, it is not clear whether 'registration' in this case applies only to the initial application for registration that was made by the scheme when first registered or whether it applies to registration as continued each year. If the latter applies then schemes must provide the required information every year; if the former applied then schemes would no longer need to provide this information once they have been registered for more than three years. This ambiguity also has implications in other areas of regulation. The policy intention here is for all the relevant requirements to apply to any operational plan that is being submitted whether on first registration or when being updated.

3.36 For both these reasons, it may be simpler, more transparent and more efficient for the Regulations to require producers and schemes to register annually. The costs and benefits of this proposal are discussed in the accompanying Regulatory Impact Assessment but since, at present, technically, registration continues subject to certain provisions, in practice, it is the case that producers already take annual steps to deal with this requirement, in that they must each year submit a fee and data to the relevant Agency. A change to annual registration would deal with the lack of clarity noted above, while at the same time not imposing any difference to what producers and schemes have to do in practice each year. The Government does not envisage any additional costs for business from this change.

Q14: Do you see any difficulties associated with a change to annual registration ? Are there any potential additional costs associated with this proposal ?

Alignment of regulations 7 and 13

3.37 Regulation 7 sets out the requirements for producer registration and regulation 13 sets out the conditions of registration of a scheme. The Government takes the view that, where possible, requirement should be the same for producers and schemes. A technical change is proposed to bring regulations 7 and 13 into line. In regulation 7, the reference is that the appropriate Agency " may require the applicant to undertake that he will….", while regulation 13 refers to " registration of a scheme " shall be subject to the following conditions".

3.38 If the Regulations can be simplified by other technical changes (e.g. the removal of references to previous years etc.) such changes will also be made to the amending Regulations.

DATA ISSUES

The present data system

3.39 Currently, the packaging waste recovery system requires three broad sets of data:

i. data on obligated packaging, i.e. packaging handled by producers which is required either directly, or through a compliance scheme, by April each year;

ii. data on levels of packaging waste recovered and recycled which is provided to the Agencies by accredited reprocessors on a quarterly basis;

iii. estimates of the total amount of packaging flowing through to the UK waste stream, estimates for which are generally provided by the Materials Organisations ¹⁶.

Purpose of data collection

3.40 Data are collected to provide industry, the Agencies, Government, and through it the European Commission with information -

i. to enable producers to calculate their recovery and recycling obligations (see Schedule 2 to the Regulations) which, as provided by regulation 3(6), are to enable the UK to meet the recovery and recycling targets placed on it by the Packaging Waste Directive;

ii. to enable industry to be provided with the aggregate data on packaging handled, by material, reported by UK obligated businesses. This gives them the national obligation for each year; also, to provide figures on the amount of recovery and recycling being achieved each quarter and the amount of packaging placed on the market and flowing into the waste stream.

iii. to enable the UK to provide packaging data and data on packaging waste recovery and recycling to the European Commission as required under article 12(3) of Directive 94/62/EC, in the format set down in the Commission Decision on Formats for Databases (97/138/EC);

iv. to enable the Agencies to monitor compliance with the producer responsibility obligations in the Regulations;

v. to enable the Department to calculate the business targets to be set in the Regulations and enable all parties to assess progress towards targets.

Changes to the present data provision system

3.41 The Government wishes to simplify the data provision requirement where possible, consistent with meeting the requirements set out above. At the same time, the Government is keen to ensure that the data that are collected are as accurate as possible and so this paper also includes options designed to have the effect of tightening up timeliness and accuracy of data provision; and at ways of ensuring efficient monitoring of data. Better, timely data is in everyone's interest if we want a smoothly functioning, efficient system, and if targets are to be assessed on the basis of the most accurate data. However any changes in data provision would need to be such that the Government could be confident that the system would still deliver the Directive targets. As noted in the introduction to this paper, work is continuing on possible ways of simplifying the data provision requirement for smaller businesses, but no proposals are included in this paper.

Separate data collection for aluminium and steel ?

3.42 As discussed in Chapter Two, the revised Directive is likely to set a material specific recycling target of 50% for "metals". The Advisory Committee on Packaging has suggested that a combined "metals" target should be considered as well as the present separate targets for aluminium and steel in the Regulations. This consultation paper seeks industry's views on this in Chapter Two. Were there to be just one target for metals (i.e. instead of separate targets for aluminium and steel) this would raise the question of whether we should continue to collect data for both aluminium and steel or just collect data for metals combined.

3.43 The materials concerned, although both metals, are quite different, and when industry was last consulted on whether to have either a metals target or an aluminium and a steel target (and thus separate data collection), it was the latter that industry preferred. Discussions with the relevant Materials Organisations suggest that a separate approach is still preferred, although perhaps only to some extent, and that there is a need to take account of the market and competition elements of the UK system which also allow for competition between materials. Pending a decision following analysis of the responses to this consultation paper later this year, therefore, the Government discusses targets in terms of aluminium and steel separately, aggregating the two to see whether the likely Directive metals target is met in the deadline year (see Chapter Two), and will continue for the present to address data issues in terms of both aluminium and steel data being provided. However, the Government would welcome views from industry on the data point raised here.

Q15: If the UK Regulations were to include one target for "metals" as opposed to separate targets for aluminium and steel, do you think that producers should still provide data on both steel and aluminium separately or should producers just provide figures for "metals" combined ?

Estimated total tonnage of packaging flowing into UK waste stream 2002-2008

3.44 The Material Organisations' (MO) estimates for the total tonnage of packaging flowing into UK waste stream 2002-2008, has been derived from the charts in Chapter 1 of the Report of the ACP Task Force 2001, together with updates from some MOs or, in the case of 'other' materials, the Department. The latest figures are shown in Table 2 in Chapter Two above and this table is repeated here.

Table 2: Estimated total tonnage of packaging flowing into UK waste stream 2003-2008

Table repeated

Comment on figures:

Derived from figures and growth rates in material-specific text and flow charts in Chapter 1 of the Report of the ACP Task Force Nov 2001. Wood figures from 2003 revised by Timcon May 2003. From 2004, Aluminium figures revised May/June 2003 but see footnote 17; Steel includes 11,500 t of small containers used for hazardous packaging and excluded from ACP report; 'other' figures revised by Defra May 2003 to bring obligated/as percentage of total into line with other materials. Years after 2004 changed according to MO estimates.

Wood

3.45 The wood Material Organisation, Timcon, was asked to provide a revised estimate for wood packaging waste flowing into the UK waste stream from 2002 onwards. This was particularly important in light of the investigation into allegations of inappropriate issue of PRNs in a number of materials in 2002 including wood ¹⁸. Wood reprocessing was looked at, and at the same time, the wood packaging waste arising figures were looked at because there have been suggestions that the estimates for the amount of wood packaging in the UK waste stream were too low. Timcon has provided Defra with the new figures for wood which are shown below.

Table 6: Wood in the waste stream (Table repeated)

Aluminium and Steel

3.46 As with wood, there have been suggestions that the estimate of 122,000 tonnes of aluminium in the waste stream was too low, particularly given the level of reported aluminium packaging handled (over 129,700 t). Discussions between the relevant Materials Organisation (Alupro), the ACP and Government are continuing as further work is in hand to review the aluminium figures. Interim estimates are shown in Appendix 2.

Table 7: Aluminium in the waste stream

Figures for "other packaging materials"

3.47 The figures for "other packaging materials" which includes materials such as hessian, jute, ceramics, textiles etc. have also been revised since the ACP report in 2001. The Department has reviewed the reported figures over the past two years and compared this to other materials, looking particularly at the amount of reported packaging as a proportion of the total.

3.48 It is difficult to get actual figures for the total of "other" and since the average level of obligated tonnage for each of the materials was around 86% this proportion has been applied to the obligated tonnage for "other" (19,003 / 0.86 = 22,096). A figure of 22,000 is therefore taken to be the total of "other" flowing into the waste stream as of 2004, with no growth over the period 2004-2008.

Plastic

3.49 Allegations of inappropriate issue of PRNs were also made in respect of plastic recovery in 2002, and there are doubts, including amongst the plastics industry, about the reported 22.7% plastics packaging waste recycling reported in 2002 - up from 16% in 2001. The industry and the Department believe there is insufficient evidence to support this level of increase on the ground, even when some additional capacity is taken into account. There will need to be work done to look further at the plastics figures but it has been agreed with the industry that the working figure we should use is 19% or 333,600 tonnes recovery for 2002 ¹⁹.

On-line data provision

3.50 The Advisory Committee has recommended that an on-line registration and reprocessor returns system should be developed, together with a central data management system, in time for use in the 2005 data round.

3.51 The Committee concluded that a national on-line database could play an essential part in operating the Regulations more efficiently. They suggest that such a mechanism would be interactive, would enable all obligated parties to submit data on-line and would allow for the rapid aggregation and cross checking of national information. The system could include information from reprocessors and be expanded to hold data on the performance of the collection industries. The ACP suggests it would be a benefit to all parties involved in the management of the process. Clearly, the management of such a system would be crucial given the need for confidentiality but any system would have to be designed to respect commercial confidentiality and it is envisaged that the system would be Agency owned and operated ²⁰. See also paragraph 6.5 in Chapter Six.

3.52 The ACP's recommendation in respect of on-line data provision from producers, schemes and reprocessors has the support of the Government. The Government agrees that there could well be overall advantages to introducing an on-line data system, both for the agencies and for industry, although there may be a need to provide, too, for some exclusions for certain small businesses. Under the current data collection system, there is a great reliance on paperwork and it is expected that an on-line system would reduce the reliance on this, speed up the data collection process and provide opportunities for earlier detection of some errors. Funds to carry out a scoping exercise have been obtained, the project will start soon and it is expected that this matter will now be taken forward by the ACP in close liaison with the Agencies and the relevant government Departments.

Q16: The Government wishes to gauge interest from industry on the possible introduction of an on-line data system. Do you have any comments on this issue and in particular on the likely costs and benefits?

Removal of the optional table on composite packaging/ packaging materials

3.53 On the data form, producers are asked to fill in various optional tables. Very little information has been provided through these tables in the past five years, and it is proposed that the optional table on composites should be deleted.

Inclusion of a compulsory table for on reusable packaging

3.54 One of the objectives of the current Directive is to encourage reuse and the UK Regulations have introduced incentives to reuse packaging where possible. The question of reuse, and how best to further increase the reuse of packaging where possible, is likely to be an item of discussion in the second phase of the review of the Packaging Directive next year and this issue is going to need to be given increased attention over the next period.

3.55 The Regulations require producers to take an obligation on reusable packaging when it is on its first trip; packaging that is being reused is not liable for obligation. There have been some difficulties reported by industry in assessing how much of the reusable packaging that they use is on its first trip, and how much is "being reused" and is therefore not liable for obligation. It is for consideration whether there could be some simplification offered. At the same time, judging from the reported data, there appears to have been a tendency to say that all such packaging is "being reused" and is not liable for obligation. It is very unlikely that no reusable packaging is on its first trip. If this is assumed, the result is data on packaging handled that is out of balance with the waste arising in the waste stream.

3.56 Taking all the points on reuse, including the need, increasingly as the second phase of the review of the Directive gets closer, to know more about levels of reuse in the UK, the Government proposes to remove the optional table 5, which asks for information on tonnages of packaging reused by material, and replace this with a compulsory table asking for information on reusables as shown below -

(i) data on all reusable packaging handled, whether reused or not;

(ii) the proportion of (i) which is imported;

(iii) the proportion of (i) above which is reused; and

(iv) the proportion of (ii) above which is reused.

Producers might be asked to provide the above information in a table in relation to all materials e.g.-

3.57 At the same time, there may be an approach which could simplify the exercise that business has to go through to determine how much of the reusable packaging they handle is either on the first trip, or being reused. It might be helpful to set down an approach under which the Environment Agencies would, after discussion with the relevant industries, set down in a protocol the percentage of certain items that are to be deemed to be on their first trip. Thus, if it were deemed that 10% of wooden pallets are, at any given time, on their first trip, while 90% are being reused, businesses using or importing pallets would be expected to declare how many overall they handle (i.e. first trip and subsequent trip), and declare 10% of these to be on the first trip and liable to obligation; the resulting tonnage would then be included in the calculation of obligation.

Q17: (i) Do you see any difficulties connected with the proposed new, compulsory table to require information on reusable packaging?

(ii) Do you think it would be helpful to obligated parties to set down some agreed percentages for the amount of certain reusables which are deemed to be on their first trip ?

Introduction of a 'signing off' requirement

3.58 In some companies, the data provision exercise is left to relatively junior staff who frequently change. This means that there can be an absence of continuity in firms' approach to data; and no senior responsibility for the data that are provided. This situation may contribute to less than robust data being provided to the relevant Agency, with negative effects for the overall achievement of targets. In a situation where under-reporting is still an issue, it is therefore proposed that, for each firm, a senior Director, such as the Company Secretary or Finance Director, should confirm that they have verified the data to be submitted to the Agency and that they are as accurate as possible and truly represent the packaging and packaging materials handled by the firm in the previous year. It is proposed that the person signing off should be the same as the "approved person" under regulation 27 and it is considered unlikely that this will have a significant cost effect on businesses; this is likely to provide the business, and the Agencies, with greater confidence in the data they are providing.

Q18: (i) Do you think that having a senior Director sign off the data in this way might be beneficial ?

Scheme members' responsibility for data accuracy

3.59 At present, while the Agencies can take enforcement action against a producer that is individually registered with an Agency if it supplies inaccurate data, it cannot do the same with either the compliance scheme, (where the only sanction is currently de-registration) or the scheme member because, under Regulation 4, the business has passed its legal obligations to the scheme. This means that scheme members can currently supply false data with no risk of sanction and this jeopardises the collection of accurate UK data. As a further step to ensure accurate data is provided to underpin the Regulations, which has also been a particular concern of the ACP, the Government believes a change to the Regulations is needed so that although, as now, the scheme would be responsible for checking the data it supplies to the agency on behalf of its members, the Agencies could pursue a scheme member if it knowingly or recklessly supplied false information.

3.60 Thus, the Government proposes that the existing offence of furnishing false or misleading information to an Agency should be expanded to include furnishing such information to a scheme operator.

Q19: Do you think that the offence of knowingly or recklessly providing false or misleading information to an Agency should be expanded to include furnishing such information to a compliance scheme operator?

ANNEX TO CHAPTER THREE

Approval of Schemes

Criteria for Approval

1. As a basis for the Department's scrutiny of their application for approval, scheme operators are asked to provide copies of the scheme constitution and any related rules and regulations for members. Their request for approval will be considered against the following criteria -

i. whether there is any reason to suppose that the scheme will not subsist and continue to assist the UK in achieving the objectives set down in articles 1(1) and (2), and the recovery and recycling targets set down in article 6(1) of the EC Directive on Packaging and Packaging Waste and in the Regulations;

ii. whether there is any reason to suppose that the scheme's operator will not act in such a way as to secure the achievement of the objectives referred to in (i) above;

iii. the scheme's rules and regulations, in particular, whether procedures are available to the scheme's operator(s) to enforce the performance of members' obligations under the scheme and its rules and regulations, and to expel recalcitrant members.

2. In order to determine whether the scheme is likely to subsist, the Secretary of State will want to be satisfied as to the following points:

i. whether there are measures which take account, as need be, of the sometimes differing interests of the different sectors in the packaging chain;

ii. whether the scheme's objectives are clearly set down, and the costs and obligations of Members are clearly stated in the rules and regulations.

iii. considering the rules and regulations, whether the continued registration of a scheme could be jeopardised by the recalcitrance of one member; and therefore whether the scheme operator has procedures available to enforce members' obligations under the scheme and its rules and regulations, and to expel recalcitrant members.

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