The Budget, announced yesterday (30th October 2024), offered the recycling and waste treatment sector renewed clarity and commitment from Government over the Collection and Packaging Reforms programme, but the ESA believes it misses an opportunity to stimulate plastics recycling.

Of most relevance to the sector, highlights from the budget announcement include:

• The Government will implement the Collection and Packaging Reforms Programme. Extended Producer Responsibility for packaging will bring in over £1 billion per annum in revenue to improve recycling outcomes.
• Local authorities are expected to receive around £1.1 billion of new funding in 2025-26 through the implementation of the Extended Producer Responsibility scheme to improve recycling outcomes from January 2025, equivalent to a further c.1.6% real-terms increase in local government resources.
• Plastic Packaging Tax rates – the government will increase the Plastic Packaging Tax (PPT) rate for 2025-26 in line with CPI inflation. The new rate of PPT will be £223.69 per tonne and will apply to plastic packaging containing less than 30% recycled plastic that is manufactured and imported into the UK from 1 April 2025.
• Businesses will also be permitted to use a mass balance approach to evidence recycled content in chemically recycled plastic for PPT. 
• The government confirmed the previously announced adjustment to Landfill Tax rates from 1 April 2025, which maintains the incentive to manage waste more sustainably. The government will announce future Landfill Tax rates at the fiscal event immediately before, so those applicable from 1 April 2026 will be announced at Budget 2025.

Responding the the announcement, Jacob Hayler, Executive Director of the ESA, said: “We are pleased that the Chancellor took the opportunity to restate the Government’s commitment to implementing the Collection and Packaging Reforms Programme, which includes Extended Producer Responsibility (EPR) for packaging.  This means that packaging producers will support local authorities with over £1bn of funding each year to help drive up national recycling rates while ensuring that the ‘polluter pays’ for the management of packaging waste.

The ESA also welcomes the continuation of previously announced adjustments to Landfill Tax rates from April 2025, which will ensure they continue to rise and maintain the incentive to drive waste material further up the waste hierarchy. 

However, we were disappointed that the Treasury has ignored advice from the recycling and waste treatment sector to escalate the Plastic Packaging Tax (PPT) over the next five years to £500 per tonne and a 50 per cent recycled content threshold in order to drive up recycling rates for plastics – instead opting only to raise it in line with CPI in 2025-26. This is a missed opportunity and will continue to constrain markets for recycled plastic, which in turn will damage Labour’s circular economy ambitions while leaving councils exposed to unavoidable costs when the Emissions Trading Scheme is applied to residual waste treatment from 2028. 

At its current levels, the Plastic Packaging Tax is not driving plastic recycling performance or creating markets for recycled polymers. Domestic reprocessors have to compete with both cheap imported recycled content and virgin material when oil prices drop. To correct this, the UK needs stronger regulation and enforcement around imported material, alongside the aforementioned escalator on the PPT. The ESA recognises the announcement in the budget that businesses will be permitted to use a mass balance approach to evidence recycled content in chemically recycled plastic, which should support recycling for lower grade films and flexible plastics, but this needs to be implemented sensitively to ensure that the waste hierarchy is maintained.”