Official Report 253KB pdf
Good morning. I welcome members, witnesses who join us by video link from Ireland, and members of the public and press. I remind everyone to make sure that mobile phones, BlackBerries, pagers or any other electronic kit are switched off. We have no apologies.
One of the questions that has been raised with us is why we are considering legislating on plastic bags if we seek to take action on waste, given that other litter contributes more to the waste stream. Why were plastic bags chosen as a focus for the effort in Ireland, as opposed to more substantial waste streams?
One of the other points that has been put to us is that all we are going to do is persuade people to use paper instead of plastic bags. Did you consider placing a levy on both?
There was no concern about paper bags. A viable alternative was made available to the public in the form of what is called a bag for life. It is a heavier-duty bag. Such bags, which cost the public at least 70 cents, are exempted from the levy and are what members of the public generally use as an alternative to plastic bags. According to surveys, reusable bags are used by 90 per cent of shoppers. Only 4 per cent use disposable plastic bags. Some people use alternatives, such as cartons or boxes.
Good morning, gentlemen. I will carry on from where Nora Radcliffe left off and ask you about the non-food retail sector. Evidence that we have received suggests that the non-food sector—clothes shops, fashion shops and so on—has gone heavily into upmarket paper bags, rather than plastic bags, which has implications for the waste stream. Is that so?
The purpose of the levy was to control a specific problem. We have no evidence that the paper bags that are used in the non-grocery sector are causing a problem.
Have you looked at how packaging in the food retail sector has developed? We received evidence that vegetables and fruit that used to be sold loose are now being heavily packaged, because people cannot access a free plastic carrier bag at the checkout. We have been given figures showing, for example, that four apples that used to be packaged in 1.8g of plastic are now being packaged in 8.11g of plastic. That information came from one of the packaging firms that gave evidence to us last week. Do you have any comments on those figures?
Pre-packaged and loose fruit and vegetables have always been available, and continue to be available. Plastic bags up to maximum dimensions are exempt from the levy if they are used to carry unpackaged fruit, vegetables or confectionery. There is also an exemption for bags that are used to hold unpackaged cooked meat, and uncooked meat, regardless of whether it is pre-packaged. All supermarkets make plastic bags available at the counter where loose fruit and vegetables are sold. Bags up to the dimensions specified in the regulations are exempt from the levy.
Perhaps John Curran could give us the retailers' perspective.
We have not measured whether there has been an increase in packaging as a result of the levy. Packaged fruit and vegetables have been a factor in retailing for some time. There is a shift towards more presentation packaging for such items, but we are not convinced that that is a direct result of the levy.
Did you consider exempting degradable plastic bags from the levy?
No, because regardless of whether a bag is degradable or not—and regardless of whether it is dropped deliberately or by accident—it still causes a litter problem. The purpose was to control a specific litter problem.
Retailers here, such as the Co-op, use degradable plastic. Do any retailers in Ireland use degradable plastic?
Musgrave started using biodegradable bags, but we had storage difficulties with them because they had often begun to degrade by the time they were distributed. As Seàn O'Súilleabháin said, the overall aim of the legislation was to reduce littering and that is why we supported it. In that context, whether the bag is biodegradable or non-biodegradable was of no consequence.
Can the panel inform us whether any confusion arose in the public's mind about the liability to pay the levy?
Under the regulations, the retailer is specifically obliged both to collect the levy for any bags that it issues and to charge members of the public the 15 cent levy for each bag. Giving bags away free is not an option as the retailer is prohibited from absorbing the cost and remitting that to the Office of the Revenue Commissioners. The purpose behind that requirement was that it was believed that if retailers in a competitive retail sector absorbed the cost and continued to issue bags for free, public behaviour would not change in the way that it has because of the obligatory imposition of the levy at the point of sale.
If the levy applies to all bags, does that mean that it applies also to the second-hand bags that might be issued by, for example, charity shops? Was any thought given to exempting categories of shop?
No, there is no exemption for any category of shop. There is an exemption for heavier-duty bags that are designed for reuse, provided that the member of the public is charged at least 70 cents for the bag. People usually find that the bags that they have bought in the previous two or three years are still usable. The second exemption is for foodstuffs, such as confectionery, fruit and vegetables and meat.
To amplify on that, I should mention that we have some other exemptions, such as for bags that are used in the provision of a service. For instance, when someone collects dry-cleaning or a pair of shoes that have been left in for repair, any bags that are provided are not subject to the levy because they are provided in connection with the supply of a service rather than with the supply of goods.
I have two short questions. First, what has been the levy's impact on the plastics industry? Have there been any job losses as a consequence of the levy? Secondly, has the levy resulted in a net gain for the environment or just in a straightforward displacement, for example to the production of plastic for use in other forms, such as in additional packaging?
We are not aware of any job losses. I have come across one publication—I cannot recall the source—about the closure of one company, but the author of that report was not able to state that the closure was on account of the introduction of the levy. On the other hand, there is anecdotal evidence that the use of bin liners has increased. One company in the state was quoted in one of the national newspapers as saying that its output had increased substantially. There is no evidence for job losses. It was estimated that only 25 per cent of plastic bags were manufactured in the state before the introduction of the levy. If the market has changed because of the levy so that people are not reusing plastic bags as bin liners, it is up to industry to adjust. I know from anecdotal evidence that at least one company reacted to that change and benefited from it.
Has there been a net gain for the environment? I am thinking of plastic bags entering landfill or clogging up ditches and drains and being a nuisance in the country.
We reckon that the effect of the levy has been neutral with regard to landfill but positive with regard to litter. Before the introduction of the levy, plastic bags accounted for 5 per cent of litter. According to the national litter pollution monitoring system, that percentage had fallen to 0.32 per cent by December 2002, 0.25 per cent in 2003, and 0.22 per cent in August 2004. There has been a benefit to the environment.
Some of the panel members explained to us how the exemption for loose fruit and vegetables works. Is it the case that if someone takes a banana, two oranges and three apples in a basket to a till, they do not pay a levy on the bag that they collect at the till?
There is no levy as long as the product is not pre-packaged. People can even put the apples and bananas into separate bags. As long as the bag comes under the dimensions specified in the regulations—225mm in width, 345mm in depth, and 450mm in length, inclusive of any handles—is used solely to contain confectionery, non-packaged fruit and vegetables and meats and is available at the food counter and not at the till, it is exempt from the levy.
I am still trying to get a handle on the net environmental gain that Alasdair Morrison spoke about. As I understand it, the primary motivation for the legislation was to get rid of unsightly plastic bags hanging from trees and so on. The major thrust of the legislation was not aimed at coping with increased waste. Is that an accurate summary of the aim of the legislation?
That is correct; that is it in a nutshell.
Are you then missing the target for overall environmental gain? It has been estimated that the gain that you are making through plastic bags not going to landfill is only 0.3 per cent, whereas replacing plastic with paper could lead to as much as 17,000 tonnes of extra landfill. That does not sound like a net environmental gain to me.
We do not have hard data on the additional paper waste arising as a result of the levy. However, the quantity of waste that we send to landfill is being reduced. We have other measures in place, besides the plastic bag levy, to discourage sending waste to landfill. We have a second measure whereby there is a ?15 per tonne levy on waste going to landfill. That levy also goes into the environment fund. Those measures have been introduced over the past few years.
Do you have any statistics on the extra tonnage that is being transported around the roads because people are switching significantly from plastic to paper? Paper is much heavier than plastic. Have you looked at whatever overall net environmental effects there might be from the increased tonnage of paper that is being transported around the roads? I am thinking of the extra fuel costs, the problems of repairing roads, and that kind of thing.
As a large retail business in Ireland—we have about 25 per cent of the retail food sector in Ireland—we do not offer a paper alternative. Your assumption is that plastic will automatically be replaced with paper, but that has not happened, as far as we are concerned. We provide long-life, reusable bags and, in some stores, cardboard boxes, which are ultimately recycled anyway. There is now a large drive for recycling in Ireland. I would not imagine that fuel usage or transport usage for transporting large amounts of paper bags is a big problem. We simply do not offer the alternative.
One of the arguments that has been put to the committee is that the bill will help to educate people about waste and their impact on the environment and that it will push those issues further up the agenda. What were the ripple effects of the introduction of the levy in Ireland? Is there any evidence that consumer and retailer behaviour has changed in other ways as a result of the legislation, which gives a higher profile to people's behaviour and the impact of waste? Has the legislation had wider benefits?
The legislation brought home to the consumer the polluter pays principle. In that sense, it raised awareness among members of the public of the environmental cost. In addition, more than €10.6 million to date has been paid out of the environment funds towards awareness raising and initiatives on litter and general waste awareness.
If we put the levy to one side, is there any evidence of a change in consumer or retailer behaviour as a result of increased waste awareness? Retailers have implemented the legislation, but are there examples of them going further than that because they have realised that cutting down on waste is a bigger issue than they had previously thought it to be?
I will give you the Musgrave view of life. We are aware of much greater consciousness among the public nowadays of waste management, the need to recycle and the need to cut down on the amount of waste that we generate. We operate in both the UK and in Ireland, and we see different behavioural practices in recycling levels in stores and among consumers. In Ireland, much of the behaviour is driven by the fact that we have much stricter legislation on waste, much greater enforcement and much higher waste costs. The fact that it costs a lot more money to throw things in the bin in Ireland is a simple educator. When people have to pay more, they look to alternative means to avoid cost. The situation has improved not only with the plastic bag levy, but with a series of environmental regulations.
Your last comment was very interesting. Is that improvement coincidental? How many of the other changes in behaviour relate to the introduction of the levy?
A common theme runs through much of the legislation. People recognise that the throwaway society that we have become is no longer sustainable. Therefore, much of the legislation is about making people realise that there is a cost to throwing things away: there is an environmental impact and a financial impact. The same applies to businesses. Our retailers operate a franchise business. We have done a lot to educate our retailers that what they throw in the bin will cost money and what they recycle will save money. That is why our current recycling levels are at well over 60 per cent.
What is your general view of the impact that the levy has had on your business? We are aware that at the start of the levy process many retailers were nervous. Have they been won over or do concerns still exist in the retail industry? Is there a division between the supermarket sector and clothes retailers?
We are a food retailer, so I can comment only on food retailing. I anticipated that somebody would ask whether there had been an impact on sales and the answer is that there was no negative impact. There is a level playing field, because all our competitors are covered by the legislation too.
I gather from what you have been saying that the plastic bag levy is about litter. Although the other initiatives on waste that you mentioned are interesting, we are considering whether to introduce a levy on plastic bags.
The department is in negotiations with a number of sectors with a view to developing negotiated agreements, with some form of economic instrument. There might not necessarily be a tax, but those sectors would contribute to the prevention of litter and to any remedial work that would have to be done where litter arises. We are considering a number of areas, such as chewing gum and fast-food packaging; they are still under negotiation.
If the plastic bag tax is working well in tackling the litter problem, why would there not be a tax on chewing gum or the other kinds of waste that you mentioned? Why are you thinking along the lines of agreements, rather than a tax?
The policy in Ireland is that we work with social partners. We have a social partnership arrangement whereby, when we introduce new initiatives, we try to engage all the relevant stakeholders. The area is under discussion. With economic instruments, we have a broad range of options. If an adequate instrument can be introduced, the preference is for that to happen with the agreement of all parties concerned.
Did you consider spending the money on other ways of tackling litter—for example, on employing litter warders—rather than on administering the levy?
Unfortunately, the use of litter wardens comes at the wrong end of the spectrum, in that it happens after littering has occurred. The purpose of the levy was to prevent litter: basically, it was designed to change behaviour. A litter warden generally has an enforcement role rather than a preventive role.
Revenue from the levy seems to have been more than was expected. Is that because people are buying more bags than you thought that they would? Are they paying the tax rather than changing their behaviour?
There is a substantial rate of compliance with the levy, from the revenue point of view. Approximately 80 per cent of the bags come from the supermarket sector, mainly from the major chains, and from the major clothing stores, although they have generally moved to a paper product. Sorry—I have lost my thread. Could you please repeat your question?
I wonder whether the higher-than-expected revenue is a result of people continuing to buy bags instead of finding different ways of carrying their shopping, such as in boxes. Why are you getting more revenue from the tax than you thought that you would?
We have put in place a knowledge and compliance programme—that is set out in my written submission—which means that we are more effective in chasing people who are not sending in returns to us. The compliance campaign includes another programme, which has started to move in recent years. The regulations required each retailer to do a stocktake on the evening before the introduction of the levy and to keep separate records of purchases and dispersals of the bags. It is possible that, when the revenue commissioners carry out an audit, they will compare the consumption of the bags with the remittances through the system and will come up with any underpayments, giving a small allowance for wastage and so on. This year in particular, there have been several substantial back-duty settlements covering plastic bags. Those figures are not yet in the public domain, but I presume that they will be available next year. That is part of the reason why revenue from the levy has increased.
The levy is a flat-rate tax that applies to everyone. Does the tax hit lower-income groups harder? For example, people who have higher incomes might have cars into which they can put cardboard boxes, whereas people who have lower incomes may not be able to do that. Also, did you consider gender proofing the legislation before you introduced it? For example, does it hit women harder?
I do not think that any gender-proofing exercise was done. The levy applies to anyone who goes into any retail outlet and uses a disposable plastic bag. Often, supermarket shopping is a joint operation. What was your other question?
People in lower-income groups may not have the privilege of owning a car. In Scotland, women tend to be in the lower-income groups, so they may be the ones who have to pay for plastic bags in which to carry their shopping. That is why I asked about gender proofing—I wonder whether the tax hits women harder than it does men—and whether the tax hits lower-income groups harder, because they may not have the facilities to use other means. In addition, perhaps it is easier for better-off people to buy bags for life.
A bag for life generally costs only about €1.30 or €1.50, and they have a long lifespan, so they are not an issue for people on low incomes. In addition, when the levy was being developed it was considered that it would have an equivalent impact on men and women, and on urban and rural communities.
I have a few questions for John Curran. First, what was the attitude of the retail trade before the introduction of the levy, and in what way and how quickly has it changed? Secondly, we have heard that there has been a considerable increase in theft in supermarkets as a result of the levy. Could you comment on that? Thirdly, how simple is the scheme to operate for retailers?
I am not at the forefront of retailing, in the sense that we operate a franchise system and have many retailers—we operate 600 stores in Ireland—but the general feedback was that the levy was just another tax. Some saw the positives in the levy, but many saw it as possibly a negative, because there was an administrative element to it. However, given the initial reaction, people have gradually accepted the levy and the reason for it, and they have just got on with it.
I have a question for Seàn O'Súilleabháin. You state in your submission that 90 per cent of the levy comes from the top 10 customers, but go on to say:
As we mention in the paper, we used economic codes—NACE codes, which I understand are the standard European codes—to ascertain the number of retailers in the country. At the time, the Irish Revenue's maintenance system for the code was not very good. We had a lot of spurious registrations and there were people who should not have been in the system at all. At one stage, I said that an undertaker would ring us up and ask, "Why are you sending me this?" and sure enough one did. We sent out to everybody, no matter who they were, an insert in VAT returns stating that the levy was on the way and that we would be in contact with those whom we felt had an obligation. Using the NACE code scan, we were able to contact the people who we felt probably would have an obligation, bearing in mind that the code was not 100 per cent accurate.
One of my colleagues asked about the substitution of paper for plastic. You said that there had been quite a distinct shift away from plastic generally, particularly among the smaller retailers. Do you have any analysis of what types of paper bags people are using, or of whether there is a mix of paper bags and bags for life?
Anecdotal evidence—and my own experience of shopping, on my own and with my wife—is that there has been a huge increase in the number of people using bags for life. Those bags are not made of plastic; many of them are made from a cloth medium. After 10 fills, a bag for life has paid for itself. In the beginning—I am not sure whether the scheme has continued—some of the supermarkets would give people a free bag if a so-called bag for life wore out. In that way, once people are out of the plastic packaging mentality, and they are getting a free bag when their bag for life wears out—if it ever does—they stay away from plastic packaging. On principle I have never paid the levy, but I might get caught out from time to time when I go to the corner convenience store after hours. Plastic bags may still be used in that area.
We heard that a retailer who failed to charge a levy on their bags was prosecuted; I understand that it was South Dublin County Council pursuing Virgin Megastores, and that the fine was €150. Is that the only prosecution that has taken place to date? If so, why?
That is correct—that is the only prosecution case. There was an earlier case, but the company concerned went into administration so the matter did not go before a hearing. There is a high level of compliance. When complaints are received regarding non-compliance, the retailer is usually visited by an enforcement officer. Our aim is not to go in hard and to instigate prosecution, but to bring the retailer round by encouraging compliance. The fact that the revenue commissioners are involved in collecting the levies ensures that there is a high level of compliance. When we get complaints regarding non-application of the levy, it is generally a trading issue, particularly in the multiples. There are local control systems to ensure that levies are collected in each location, but we get complaints about the odd slippage, which can be put down to trading issues. When problems are brought to the attention of the management of the retailer concerned, they put matters right.
So the high level of compliance is achieved through inspectors working with retailers about whom complaints have been made.
That is it. When a complaint is received by the Department of the Environment, Heritage and Local Government, the revenue commissioners are informed. Likewise, when local authorities receive complaints they pass the information to the revenue commissioners. The publicity that was generated by the case that I mentioned has helped. Several retailers had received a number of warnings and proceedings were about to be taken against them by the relevant local authorities, but when the first conviction was made those retailers decided to co-operate and comply with the legislation. The fact that the revenue commissioners are involved also helps because retailers do not want to draw attention to themselves.
I understand that, in Ireland, it is local authorities' responsibility to administer the levy. Local authorities in Scotland are concerned that administration of the scheme will cost a lot of money and tie up a lot of time. Have local authorities in Ireland worked together across boundaries to reduce the burden? Are there examples of best practice?
We bring together enforcement officers from time to time to share their experiences and report on the work that they have done in the preceding period. The levy is a positive benefit to the local authorities, in that the bulk of the funds for enforcement are distributed to them. Various officers are engaging with retailers and some funds have gone to local authorities to cover training on awareness issues. Local authorities do not necessarily get the full costs for a specific operation, because the funding has to cover enforcement in relation not just to plastic bags but to packaging and other waste streams. Nevertheless, the levy generates funding for enforcement.
Are local authorities reimbursed entirely by central Government from levy funds for the cost of the enforcement work that they do?
No. Levy funds would not necessarily be released for specific types of enforcement work. Basically, how local government raises funds for services is a matter for local government. Services are funded through the rates and the local government fund. On top of that, local authorities get funds for awareness raising or for other areas of spending, such as infrastructure, on either a scheme basis or a case-by-case basis.
So local authorities do not get support for the enforcement officers. They have to fund that service as part of general local authority work, but they benefit from extra money for waste campaigns, which they would not have had previously. Is that right?
The funds that come into the department through the landfill levy and the plastic bag levy are not intended for specific purposes. However, the department has made funding available to local authorities that would not have been available to them otherwise.
I have another question about the amount of money that the levy raises. If you have managed to reduce the number of plastic bags by 90 per cent and people are not using as many plastic bags, why has the levy not stayed the same as it was when you first started collecting it but has gone up marginally over the past few years? I cannot square the two facts.
I would find it difficult to comment on that. I can put it down only to proactive working by the revenue staff, who are outdoors, and success in auditing. Perhaps seeing people being prosecuted—pour encouragez les autres—has made people more compliant. I do not have any details on why the money is growing, but I imagine that it is a combination of those factors.
It is partly about a more efficient collection of the levy over time, with more people being brought into its operation. You are reducing the number of bags, but you are ensuring that everybody who has used the extra bags is paying the levy. Is that interpretation correct?
Yes. We are removing spurious registrations from the customer base and concentrating on the people who are left. Therefore, our resource can be applied more efficiently to go after people who are non-compliant for reasons such as the non-submission of returns.
I do not want to extend this session forever, which we have the capacity to do, but two colleagues indicated earlier that they wanted to ask supplementary questions. They may ask a brief question each.
You said that people would probably pay for their plastic bags in, for example, small corner shops that open late in the evening. People have expressed concern about the safety of the staff in such shops—which often sell alcohol—because customers might start acting aggressively if they are asked to pay for bags. Do you have any anecdotal or other evidence of such incidents? Are such incidents a genuine concern, or did they happen initially until the levy was accepted?
We have no evidence of such incidents.
That was brief and to the point.
Am I correct in saying that there is little or no indigenous plastic film industry in Ireland?
There are some plastic bag manufacturers in Ireland. Before the levy was introduced, Irish producers supplied 25 per cent of disposable plastic bags.
I gather that the bulk of the plastic that is used in Ireland for bags is imported from the UK, the far east and Europe. Perhaps some special pleading was involved but, after examining the import statistics for the product in question, our own plastic bag manufacturers claim that there has been no reduction in the amount of plastic that is imported into Ireland. Moreover, they claim that there are inconsistencies in the Irish import and UK export statistics that "favour the Irish position", and indicate that there has been
As we said, the legislation's sole purpose was to solve a litter problem, which is what happened. We did not claim that it would have any other waste minimisation or prevention effects; that it would prevent the use of additional plastic; or that it would reduce the amount of plastic that goes to landfill. We simply had a very visible litter problem; when it became clear that retailers had a viable alternative in bags for life, we introduced the levy and the problem disappeared immediately.
We heard evidence that the levy might be challenged under European competition law. Was that issue ever raised in Ireland?
That issue was raised when the levy was introduced because of a legal claim on the continent—in Denmark, as far as I remember—with regard to aluminium drink cans. However, in Ireland, the consumer can still choose to use plastic bags. After all, we have not banned plastic bags; we have simply discouraged their use. The consumer can either pay the levy and use plastic bags or move to a more environmentally friendly form of packaging that carries no such obligation.
I thank the witnesses for answering our questions, some of which were quite pointed and difficult. We wanted to get a sense of how the levy is operating in Ireland and it has been useful to hear your different perspectives on the subject. I also thank you for your written evidence. I hope that you found the session interesting. The evidence will be available in the Official Report for others to read.
Meeting suspended.
On resuming—