National Audit Office warns potential fraud and errors could be undermining the UK's packing recycling figures
The UK's current packaging recycling regime is "not sufficiently robust", with undetected fraud and errors potentially rendering recycling rates inaccurate, the government's public spending watchdog will warn today.
In a startling report, the National Audit Office (NAO) concludes the government has failed to face up to underlying issues with the UK's packaging recycling obligation system, even though it has now been in place for 20 years.
The UK's packaging regulations create a complex market-based system to meet annual packaging recycling targets, which in 2017 saw more than 7,000 companies registered to the scheme paying a total of £73m towards the cost of recycling packaging.
The regulations require companies which handle more than 50 tonnes of packaging a year with a turnover higher than £2m to demonstrate they have recycled a certain amount of their packaging by obtaining recovery evidence notes. These packaging recovery notes - or PRNs - are purchased from accredited UK recyclers and companies exporting waste for recycling abroad.
The Department for the Environment, Food and Rural Affairs (Defra) estimates the UK has exceeded its overall packaging recycling target every year since the system began in 1997, reaching a recycling rate of 64 per cent for packaging in 2017.
However, concerns over fraud have dogged the system since it began 20 years ago, fuelled by the risk of companies over-claiming for the amount of packaging they have recycled. In one of the more high profile cases, two employees from now-defunct glass recycling firm Nationwide Recycling in Wales were handed suspended prison sentences for their part in a £2m PRN fraud in 2013.
In addition, there are concerns about how exported waste is treated once it arrives at destination countries, giving rise to fears that packaging sent abroad ends up in landfill or is incinerated and contributes to pollution, rather than being recycled.
Defra recently acknowledged the need to reform the system as part of its planned new waste and recycling strategy. A Department spokesperson said the packaging producer responsibility regime had helped push up recycling rates significantly since it was introduced, but conceded there was still "much more to do".
"We don't recycle enough waste, and we export too much of it," Defra said in a statement. "That's why we have already committed to overhaul the system, and we will set out our reforms in the Resources and Waste Strategy later this year."
Nevertheless, NAO's damning report today concludes that as it stands the UK's packaging recycling figures do not adequately account for the risk of undetected fraud and error.
Moreover, the watchdog said it has found no evidence that the packaging obligation system has encouraged companies to minimise the use of packaging or make it easier to recycle, despite this being a long-running and key objective of the system.
Amyas Morse, the head of the NAO, urged the government to improve its approach to calculating packaging recycling rates, and to do more to tackle the risks associated with waste being exported for recycling overseas.
"If the UK wants to play its part in fully tackling the impacts of waste and pollution, a tighter grip on packaging recycling is needed," said Morse. "Twenty years ago, the government set up a complex system to subsidise packaging recycling, which appears to have evolved into a comfortable way of meeting targets without addressing the fundamental issues. The government should have a much better understanding of the difference this system makes and a better handle on the risks associated with so much packaging waste being recycled overseas."
The Environment Agency is responsible for policing the PRN system in England, but today's report claims the body has "fallen well short" of its targets for inspections. In 2016-17, the EA only carried out 40 per cent of planned compliance visits to recyclers and exporters to check that they accurately report the amount of packaging recycled, it states.
A large number of companies - almost 2,000 - have also been identified as potential "free-riders", which means they produce enough packaging to pay into the PRN system but have not yet registered with the scheme. The NAO said the shortfall showed the EA "does not have a good understanding of how significant the financial risk could be".
In response, the EA said it had a "strong track record" of using enforcement to bring businesses back into compliance, explaining that it takes a risk-based approach through which it targets businesses likely to have the biggest impacts.
"Since 2011, we have brought 258 businesses into compliance by using Civil Sanctions which has resulted in a combined financial payment of over £5m to environmental causes," the EA said in a statement. "Where we find any evidence of fraud or error in data reported to us, we remove that information from the overall packaging recycling data and calculations."
The Local Government Association, which represents almost 400 local authorities in England and Wales, said the report demonstrated the issues councils face in attempting to crack down on unrecyclable packaging. "Councils have long called for the packaging industry to get around the table with us to reduce the amount of unrecyclable material that goes into packaging," said LGA's environment spokesperson Cllr Judith Blake. "Manufacturers should take this opportunity and work with us to discuss ways in which we can make packaging more recyclable."
The report's findings were also welcomed by waste and resources trade body the Environmental Services Association, although its recycling policy advisor, Jakob Rindegren, stressed that the "vast majority" of packaging collected for recycling is recycled. "We should absolutely seek to recycle more of our waste here in the UK but lack of domestic capacity means the export market will continue to be important for the foreseeable future, not least for paper and board where quality requirements for material going to China are very strict," he said.
The British Retail Consortium (BRC), also backed eform of the PRN system. "Retailers want to do the right thing and know they have a responsibility to contribute more directly towards the costs of recycling and recovering packaging, alongside their work with suppliers in reducing packaging and removing plastics," said BRC's head of sustainability Alice Ellison. "We need a PRN system that incentives best practice; one that rewards retailers who use packaging that is easily recycled and penalises those that don't change."
With waste and recycling increasingly under the spotlight thanks to Sir David Attenborough's powerful documentaries, the government and the private sector have made a lot of noise about upping their game on recycling. Yet while Defra's commitment to overhaul the PRN system seems to have been widely welcomed, NAO's findings today expose worrying gaps in the existing regulatory regime, just as the UK faces further uncertainty about the future of waste and recycling regulations thanks to Brexit.
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