Retailers in England will be required to report details of their plastic bag charging schemes directly to central government, a new letter has revealed.

England’s plans to introduce a five-pence levy on single-use plastic bags from October 2015 were first announced in September 2013 by Deputy Prime Minister Nick Clegg in a bid to reduce plastic bag use and litter. Unlike similar schemes set up in other parts of the UK, however, (such as Wales’s plastic bag levy that has seen bag use drop by 76 per cent), the UK government outlined it would not include reusable ‘bags for life’ or paper bags, nor would the levy apply to organisations with fewer than 250 employees. Further, in the November 2013 consultation on the subject, government revealed that it would be exempting biodegradable plastic bags from the charge.

The plans were largely criticised by the Environmental Audit Committee (EAC), which wrote in its report on the scheme that the Department for Environment, Food & Rural Affairs (Defra) had made a ‘complete mess’ of the system and warned it was ‘unnecessarily complicated’ and based ‘more on wishful thinking than hard evidence’.

The report, and government’s subsequent response, were the topic of a Liaison Committee Debate last month (27 November), following which Resource Minister Dan Rogerson wrote to Joan Walley MP, Chair of the EAC to outline ‘further information regarding VAT [Value-Added Tax] and government meetings with the oxo-biodegradable industry’.

In the letter (marked 3 December), Rogerson revealed that the department had been ‘further developing the details of the charging scheme in England’, and that once the five-pence levy comes into effect in October 2015, retailers will need to report directly to Defra: the number of single-use plastic bags sold; the ‘reasonable costs deduced from the proceeds’; the VAT paid; and what the proceeds have been used for.

Defra will then ‘publish these details in one place so that consumers can more easily compare retailers’ performance against each other and drive the pressure on retailers to donate the proceeds to charity’.

SMEs will need to declare revenue from charge in VAT

As well as outlining the reporting requirements, Rogerson reiterated that if smaller retailers choose to voluntarily charge for a bag, it will ‘count towards their revenue stream’, and they will ‘have to declare VAT on those bags as with any other revenue stream’. However, he notes that the carrier bags regulations will not oblige them to report on how many bags they have sold or what they done with the proceeds, and neither will they be ‘under pressure’ from government to donate their profits to charity.

Rogerson also wrote that despite calls for it to spend VAT raised from the charge on new environmental programmes, and to cover the costs of monitoring the effectiveness of the scheme, ‘allocating revenues to particular spending programmes makes spending decisions inflexible and can lead to a misallocation of resources, with reduced value for money for taxpayers’.

Biodegradable bags

Touching on government’s decision to exclude biodegradable bags from the charge, Rogerson said that any bag seeking to qualify for the exemption must prove that it can degrade in ‘multiple settings’ (i.e. on land, in the sea, or in soil), but that government is ‘not aware that any such bag currently exists’.

He concluded that government has been meeting with members of the oxo-biodegradable industry since May 2010, including:

‘discussions concerning the peer review process of a report by the University of Loughborough (commissioned by Defra) on oxo-biodegradable technologies’; and

industry and stakeholder workshops with the ‘wider plastics industry’ to ‘help develop plan for a biodegradable exemption on a technology neutral basis.

Read Rogerson’s full letter to Joan Walley MP.