Report on the Carrier Bags Bill (NIA 20/11-15)

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Executive Summary

1. This report sets out the Committee for the Environment’s consideration of the Carrier Bags Bill.

2. The Bill contains 10 Clauses, and its principal purpose is to amend the Climate Change Act 2008 to allow the current charging requirement on carrier bags to be applied to a wider variety of bags, and to enable these bags to be defined by reference to their price. This will allow the Department to apply the charge to the cheaper versions of reusable bags, as well as to single use bags.

3. Members sought a balanced range of views as part of their deliberations on the Bill and requested evidence from interested organisations and individuals as well as from the Department of the Environment.

4. The Committee was broadly supportive of the Bill and agreed the majority of clauses as drafted, but members expressed serious concerns about the proposed commencement date for the new provisions, which were intended to be introduced by regulations immediately following Royal Assent. In response to these concerns, the Department agreed to insert an additional clause at Consideration stage stipulating that the Bill would not commence before 5 January 2015.

Key issues

5. The following key issues were identified in the course of the Committee’s consideration of the Bill:

Commencement

6. In its consideration of the timing of the extension of the charging powers in the Bill, the Committee was mindful of the Department’s policy of a phased implementation of the carrier bag levy. The initial phase, whereby single-use carrier bags were subject to a 5p charge paid over by the retailer to the Department, was introduced in April 2013 and the Carrier Bags Bill represents the second stage in the process.

7. However, since the levy had only been in operation for a few months when the Bill was introduced, there was a significant lack of statistical evidence as to how the levy was actually impacting on consumer behaviour. Referring to returns submitted by four main retailers for the first two quarters, the Department reported a dramatic increase in sales of low cost reusable bags – around 800% for six months as opposed to the 70% forecast by the Department for the year – but it was unable to predict if, and for how long, this would be a continuing feature of consumer behaviour.

8. Additionally, these cheaper reusable bags are often marketed by retailers as ‘bags for life’ and many consumers believe that they are more environmentally-friendly than single-use bags. In fact these bags are made from a slightly heavier-gauge plastic and if they are immediately discarded rather than being reused, the environmental impact may actually be more detrimental than that of single-use bags. Many consumers are unaware that they can reuse ‘bags for life’ until they are no longer fit for purpose and have them replaced free of charge by the retailer where they were originally purchased.

9. The Committee agreed that a move to bring cheaper reusable bags within the charging scope of the levy at this point would appear counter-intuitive to many customers and that there is a significant need to educate consumers about the use of plastic bags. The Committee did not believe that the timescale which was originally proposed by the Department was adequate for an effective consumer communication campaign and that without successfully raising awareness of the purpose of the levy, there was a very real danger of consumers reverting to the purchase of single use bags.

10. The Committee also heard from representatives of both larger and smaller retailers who were opposed to the immediate extension of the levy. They detailed the extensive process that had preceded the initial levy - this involved the upgrade of IT systems, as well as staff training and customer education – and expressed their concern that the proposed changes to the operation of the levy within a comparatively short time scale would cause significant logistical problems for them.

11. The Department initially proposed delaying by around two months the operational date of the regulations that would bring the extended charging into effect; this would have deferred the charge on reusable bags from April 2014 until June 2014. The Committee supported a longer lead-in time and also preferred to have the date of commencement on the face of the Bill to promote certainty for both retailers and consumers. The Department subsequently proposed inserting an additional clause to the Bill to delay commencement until January 2015 and the Committee was content with this proposal.

Lack of Evidence

12. The Committee found that its scrutiny of the Bill was seriously impeded by a lack of hard evidence on how the first phase of the levy was impacting on consumer behaviour. Provisional results from the first quarterly returns suggested a significant drop in single use carrier bags, with a possible annual reduction well in excess of 80%, implying that the launch of the first phase of the levy went smoothly. It appeared, however, that the sales of reusable bags – the ‘bags for life’ – had increased very significantly. It could be suggested that the very high numbers of reusable bags sold within the first few months was an initial reaction to the introduction of the charge and would not be sustained indefinitely, but there was no real evidence surrounding this.

13. The Department commissioned an attitude and awareness survey on the levy in June 2013, two months after the charge had been implemented on single use bags; this survey indicated broad public support for the charge, but also that only 56% of respondents frequently reused carrier bags. A further survey is planned for June 2014. The gap between consumer perception and actual behaviour was also highlighted by a behavioural study carried out on behalf of the Welsh Government and Zero Waste Scotland. This study found that, although 79% of Welsh shoppers claimed that they reused their ‘bags for life’ when food shopping, only 51% were observed to be doing so – the level dropped to 18% for non-food shopping.

14. The Department also brought forward some evidence on sales of low cost reusable bags in Wales since the introduction there of the minimum charge on single use bags in October 2011. This indicated that the number and weight of ‘bags for life’ purchased in Wales between 2010 and 2012 more than doubled, whereas the number of purchases of these bags over the UK actually decreased during the same period. This study was based on a sample of five retailers only; similarly, the Department has been provided with information on sales of bags in Northern Ireland by just four retailers - as in Wales, there is no requirement for retailers to collate statistics for any bags other than those subject to the levy.

15. The Northern Ireland Retail Consortium commissioned an independent poll to research attitudes and opinions related to shopping behaviour and the usage of carrier bags between 24 October 2013 and 9 November 2013, and the results of this poll were made available to the Committee. The poll indicated that, although the vast majority of consumers were aware of the existing levy, they were not aware of the proposed extension of the charge to reusable bags and a significant minority suggested that they would revert to single use bags.

16. The Committee, therefore, urged the Department to put systems in place to monitor accurately not only the sales of low cost reusable bags, but also the number of times that these bags are actually reused by consumers.

Communications Strategy

17. Although the quantity and scope of evidence available was limited and, in many cases, anecdotal, there were strong indications of a lack of consumer awareness of plans to extend the levy to low cost reusable bags. Whereas the initial feedback from both customers and retailers was largely positive, the Committee agreed that a charge on ‘bags for life’ may well be seen as counter-intuitive by consumers. This reinforced the need for a widespread and effective communications campaign by the Department to ensure that existing support from consumers is underpinned by an understanding that ‘bags for life’ should be reused as long as possible and that these will be replaced by retailers free of charge.

18. The Department fully accepted that consumers are not generally aware of plans to extend the levy, or of the environmental rationale for this approach. It has recognised the need to address this issue and has recently provided a general outline of the main elements of its communications campaign. The Committee welcomes this campaign and would urge the Department to make best use of the additional time now available to it before the extension of the levy to ensure that its communication activities are timely and appropriately focussed.

Wider Environmental Concerns

19. The wider environmental implications of the continued use of plastic carrier bags of all types were not taken into account in this Bill, but the Committee believes that the Department should give further consideration to this. The European Union has recently adopted proposals requiring Member States to reduce their use of lightweight plastic carrier bags and these proposals recognise the introduction of an outright ban under certain conditions. Other suggestions included a move towards biodegradable bags (although the Department has indicated that a definition of biodegradable may prove problematic) and the use of a grading system, similar to the system currently in use to specify the energy efficiency rating of domestic appliances, that would indicate the environmental impact of the plastic carrier bags available from retail outlets.

20. The Committee’s concern in this area has been reflected in its recommendations.

Amount of the Levy and the Charging Threshold

21. The Department’s original proposals were for the levy to be increased from 5 pence to 10 pence per bag, and for this to apply to bags costing less than 40 pence. In response to the very large reduction in the number of single use carrier bags indicated by the returns for the first quarter from 8 April 2013 to 30 June 2013, the Minister announced on 9 September 2013 that he did not intend to follow through on the increased levy. He stated that there was no need for the increase as there had been a significant change in consumer behaviour in response to the introduction of the 5 pence levy. He also confirmed that the threshold for the cost of bags coming within the scope of the levy would be set at 20 pence, rather than 40 pence as originally proposed.

22. The Committee welcomed this response to stakeholder concerns and consumer behaviour, and agreed that it was an appropriate course of action.

Investment in Environmental Projects

23. A number of stakeholders raised the issue that the proceeds of the levy should be used to support local environmental projects, rather than being subsumed into the Department’s budget. This would avoid the levy being perceived as a tax-gathering exercise, rather than an environmental measure. There was further support for the notion that local businesses should be involved in the identification of suitable projects.

24. The Committee therefore welcomed the Minister’s announcement on 16 October 2013 that he had allocated a significant portion of the proceeds from the Carrier Bags Levy to the Challenge Fund to enable communities and organisations to deliver new local environmental projects across Northern Ireland.

Recommendations

Commencement of the Bill

25. The Committee expressed serious concerns that this Bill would be commenced, and the second phase of charging for carrier bags would be in operation, before the impact of the first phase could be properly assessed.

26. The Committee recommends that the commencement of Phase 2 charging is delayed and welcomes the Department’s proposal to bring forward an amendment at Consideration stage to specify that Phase 2 charging will not come into operation before 5 January 2015.

Lack of Evidence

27. The Committee recognised that existing legislation provides for systems to be maintained by retailers to record the sales of single use carrier bags only, but agreed that detailed information on the sales of other types of carrier bags and on consumer behaviour would be essential to inform the Department’s implementation of this policy.

28. The Committee recommends that the Department puts the necessary systems in place to collate accurate and statistical information on the sales and usage of all plastic carrier bags.

Communications strategy

29. Although the Committee recognised the significant part played by the Department’s communication strategy in the successful implementation in the first phase of the levy, the Committee became increasingly aware of the almost complete lack of knowledge of consumers about the extension of the levy to reusable bags. The Committee believes that an effective communications campaign is essential to ensure customer engagement with the environmental rationale behind the levy and to promote the successful reduction in the usage of low cost reusable plastic bags.

30. The Committee recommends that the Department utilises the additional time now available to it to ensure that its communication campaign is comprehensive and timely; and that the Committee is kept fully informed of the arrangements and activities which will form the main elements of the campaign.

Wider Environmental Concerns

31. In addition to the issues arising directly from its scrutiny of the Bill, the Committee considered further measures which could be used to minimise the quantity of plastic bags which impact on the environment. These included an outright ban on single use carrier bags, the introduction of biodegradable bags and a grading system for bags.

32. The Committee recommends that the Department should consider the wider measures available to it in order to reduce the quantity of plastic bags in circulation and should consider the inclusion of these within its overall waste management strategy.

Consideration of the Bill by the Committee

33. The Carrier Bags Bill was referred to the Committee for the Environment for consideration in accordance with Standing Order 33(1) on completion of the Second Stage of the Bill on 11 June 2013.

34. The Minister of the Environment made the following statement under section 9 of the Northern Ireland Act 1998:

‘In my view the Carrier Bags Bill would be within the legislative competence of the Northern Ireland Assembly’.

35. The policy context for the Bill is the delivery by the Department of its Programme for Government commitment to introduce charging for carrier bags. The Department has approached this on a phased basis. The charge on single use carrier bags was introduced in April 2013 by The Single Use Carrier Bags Charge Regulations (Northern Ireland) 2013 under the Climate Change Act 2008 as amended by the Single Use Carrier Bags Act (Northern Ireland) 2011. The second phase of the charging requirement, on low cost reusable bags below a certain price threshold, is implemented through primary legislation in the Carrier Bags Bill 2013.

36. The aim of the legislation is to apply the charge to a wider range of low cost bags and to enable these bags to be defined by their price. This will effectively increase the price of low cost reusable bags and deter consumers from treating them as single use disposable bags.

37. The Bill also makes amendments to the 2008 Act which will extend the Department’s ability to make provision for certain sellers; provide for changes to record-keeping and payment arrangements, including a requirement to pay interest on late payment of the proceeds; strengthen the Department’s enforcement powers; and require the Department to carry out a review of the carrier bag charging arrangements.

38. The Department briefed the Committee on 6 June 2013 immediately after the introduction of the Bill to the Assembly on 3 June 2013. Departmental officials provided a useful overview of the policy underlying the Bill, before taking questions from members.

39. The Bill was referred to the Committee after its second stage reading on 11 June 2013.

40. At its meeting on 13 June the Committee agreed to insert advertisements in the Belfast Telegraph, Irish News and News Letter seeking written evidence on the Bill; the Committee also agreed a motion to extend the second stage of the Bill until 30 November 2013 to allow adequate time for scrutiny.

41. The motion to extend was agreed by the Assembly on 25 June 2013.

42. Subsequently the Committee considered the Bill and related issues at meetings on 12 and 26 September 2013, on 3, 10, 17 and 24 October, 7, and on 14 and 21 November 2013. The relevant extracts from the Minutes of Proceedings for these meetings are included at Appendix 1 and Minutes of Evidence at Appendix 2.

43. The Committee had before it the Carrier Bags Bill (NIA 20/11-15) and the Explanatory and Financial Memorandum that accompanied the Bill.

44. The Committee referred the Delegated Powers Memorandum submitted by the Department to the Examiner of Statutory Rules for scrutiny. He reported back to the Committee on 19 September 2013 that he was satisfied that the subordinate legislation referred to in the provisions of the Bill will be appropriate for its purposes.

45. A total of 9 organisations responded to the request for written evidence. A copy of the written submissions received by the Committee is included at Appendix 3 and additional information submitted at Appendix 6.

46. The Committee had oral briefings from Departmental officials and from representatives of the Northern Ireland Independent Retail Trade Association (NIIRTA), the Northern Ireland Retail Consortium (NIRC), the Northern Ireland Environment Link (NIEL) and the Northern Ireland Local Government Association (NILGA).

47. NIIRTA emphasised the commitment of its members to the environmental objectives underlying the levy, but opposed the extension of the levy to reusable bags; NIRC also opposed the extension of the levy without any firm evidence to substantiate its effectiveness and expressed its concerns about the length of the lead time available to retailers to implement a new charging system; NIEL welcomed the success of the first phase of the levy and supported the introduction of the second phase; and NILGA discussed the waste management aspect of the disposal of plastic bags and suggested that further legislation should introduce the requirement for biodegradable bags.

48. At its meeting on 3 October 2013 the Committee was briefed by officials from the Carrier Bags Levy Administration Team. The Team outlined the level and range of support it had provided to retailers, and stated that the implementation of the first phase of the levy had gone relatively smoothly.

49. Departmental officials returned to the Committee on 10 October to address issues that had been raised by stakeholder evidence. The Committee was particularly concerned that the Department should consider some flexibility on the commencement date as this had been raised consistently by stakeholders.

50. On 17 October the Department provided draft Regulations which it proposed to lay in March or April 2014; officials indicated that it might be possible to delay the operational date for around two months so that the extended levy would not apply until June or July 2014. Officials also undertook to obtain information on the outcome of the carrier bag charge in Wales as the Committee was concerned at the lack of data available in Northern Ireland.

51. The Department provided the wording of an amendment to Clause 9 to provide for an ad hoc review of exemptions and this was considered by the Committee at its meeting on 7 November; the Committee was content with this proposed amendment. After noting information on the sales of low cost reusable bags in Wales, the Committee agreed to request the Department to consider an amendment to the Bill, rather than to Regulations, to specify the date of the implementation of clause 1. The Committee also requested detailed information on the Department’s plans and timetable for communicating the proposed changes to consumers.

52. The Committee considered the interim Departmental response to this request at its meeting on 14 November 2013.

53. A further Departmental response in relation to an amendment on the commencement of the Bill was discussed at the Committee meeting on 21 November 2013. The effect of the proposed amendment was that the start date for Phase 2 charging would be incorporated into the Bill rather than delivered by subsequent subordinate legislation. Although the Committee was content with the legislative mechanism to be used, the suggested start date – 6 October 2014 – was not acceptable to members. After some further discussion, Departmental officials agreed that the Phase 2 charging would not start before 5 January 2015.

54. The Committee also conducted its formal Clause by Clause scrutiny of the Bill on 21 November 2013.

55. At its meeting on 26 November 2013 the Committee agreed its report on the Bill and ordered that it should be printed.

Clause by clause consideration of the Bill

Clause 1 - Extension of the 2008 Act to carrier bags

56. Clause 1 represents a major change in current policy by omitting the term ‘singe-use’ from carrier bags subject to the levy.

57. This clause introduces the most significant change within the provisions of the Bill and there was considerable opposition to the policy behind it. The basic premise – that the levy was to be extended to low cost reusable bags because they were effectively being substituted for single use bags – was not accepted by many stakeholders.

58. Although retailers acknowledged that the introduction of the levy had resulted in a dramatic reduction in the sale of single use bags, they did not accept that there was any evidence how consumers would react to the levy being extended to ‘bags for life’. Retailers also raised concerns about the proposed time scale for the extension of the levy as they would be required to phase out the current IT system and adapt a new system to cope with different bags, as well as training staff and educating customers, within a comparatively short period of time.

59. Many stakeholders believed that extending the levy would send out a confusing message to customers who felt that they were already being environmentally aware by purchasing reusable bags, but NIEL supported the idea that consumers are now used to paying the levy and are familiar with the rationale behind it.

60. Serious concerns were raised regarding the lack of hard evidence as to how the first phase of the levy is impacting on consumer behaviour, as the charge on single use bags has only been in force since April 2013, and also in relation to how accurate the Department’s predictions on bag sales are likely to prove in the longer term.

61. The Committee asked the Department to bring forward an amendment to this clause to specify a commencement date later than the date on which the Bill receives Royal Assent. Instead, subject to Executive agreement, the Department undertook to insert an additional clause to the Bill at Consideration stage to specify that the Bill will not come into operation before 5 January 2015. The Committee has agreed that it would support such an amendment.

62. The Committee has also recommended that the Department should put in place formal monitoring systems to address the lack of available data; and that it should arrange for a comprehensive and timely communications campaign to overcome consumer confusion.

63. At its meeting on 21 November 2013 the Committee agreed that it was content with clause 1 as drafted.

Clause 2 - Regulations under Schedule 6 to the 2008 Act

64. Clause 2 gives power to the Department to (i) increase the minimum amount of the levy (through affirmative Regulations), and (ii) exercise discretion in how it applies the charging requirements.

65. The Department’s original intention was to use this clause to increase the levy to 10 pence, but following the Minister’s announcement on 9 September 2013 that he planned to retain the levy at 5 pence, there were no substantive comments on this clause.

66. At its meeting on 21 November 2013 the Committee agreed that it was content with clause 2 as drafted.

Clause 3 - Requirement to charge

67. Clause 3 clarifies that the charge will apply to bags whether or not they are actually used to carry away goods, provided that they are capable of being used to do so.

68. The Committee accepted the Department’s explanation that the purpose of the clause was to close a loophole in existing legislation.

69. At its meeting on 21 November 2013 the Committee agreed that it was content with clause 3 as drafted.

Clause 4 – Sellers

70. Clause 4 gives the Department the power to specify retailers by the number of full-time (or full-time equivalent) employees that they have.

71. Comments on this clause were broadly supportive as it provides a mechanism to exempt smaller retailers from the burden of administering the levy.

72. The Committee was broadly content with the Department’s explanation that this is a future-proofing provision.

73. At its meeting on 21 November 2013 the Committee agreed that it was content with clause 4 as drafted.

Clause 5 - Payment of the charge

74. Clause 5 gives the Department power (through affirmative Regulations) to stipulate how the proceeds of the levy are to be paid over, and to charge interest on payments received late.

75. Some stakeholders expressed the view that this appeared to be more about producing revenue than enforcing an environmental measure, and that small businesses may be disproportionately impacted by having to pay interest.

76. The Committee raised no real issues with the clause.

77. At its meeting on 21 November 2013 the Committee agreed that it was content with clause 5 as drafted.

Clause 6 - Carrier bags defined by price

78. Clause 6 extends the definition of carrier bags to be specified by price, as well as the existing technical specifications. The Minister has indicated that there will be a 20p minimum price threshold.

79. The Committee found that that the range of low cost reusable bags on sale was quite confusing and examined a number of bags for life available from local supermarkets.

80. The Committee raised no real issues with this clause.

81. At its meeting on 21 November 2013 the Committee agreed that it was content with clause 6 as drafted.

Clause 7 - Records and enforcement

82. Clause 7 gives the Department power (through Regulations) to require retailers to keep certain records, which must be produced to the Department upon request.

83. The Committee accepted the Department’s detailed explanation on the type and extent of information to be recorded by retailers.

84. At its meeting on 21 November 2013 the Committee agreed that it was content with clause 7 as drafted.

Clause 8 - Civil sanctions

85. Clause 8 removes the requirement for the Department to lay in the Assembly a review of the operation of civil sanctions where there has been a breach of the Carrier Bags Regulations.

86. The Committee accepted the Department’s explanation that this clause repeals existing review provisions which will be replaced by the wider requirements of clause 9.

87. At its meeting on 21 November 2013 the Committee agreed that it was content with clause 8 as drafted.

Clause 9 – Review

88. Clause 9 requires the Department to lay a report before the Assembly within three years of the commencement of the Act, assessing the effectiveness of the legislation and the need for any amendment.

89. The Committee asked the Department for its rationale for choosing a 3 year review period. The Department advised that this was to allow more time for an evidence base to be built up and also to allow the Department time to react to carrier bag charging being implemented in Scotland and England.

90. The Department also advised the Committee of an amendment requested by the First Minister to introduce a provision for an ad hoc review.

91. At its meeting on 21 November 2013 the Committee agreed that it was content with clause 9 as amended:

Clause 9 (Page 3, Line 30)

Leave out subsection (4) and insert-

“(4) Subsections (1) and (2) do not affect the generality of subsection (5).

(5) The Department may at any time review whether any description of carrier bag should attract the requirement to charge.

(6) Expressions used in subsection (5) and in the charging provisions have the same meaning in that subsection as in those provisions.

(7) In this section-

“charging provisions” means section 77 of and Schedule 6 to the 2008 Act and any regulations made under those provisions;

“the Department” means the Department of the Environment.”

Clause 10 - Short title

92. At its meeting on 21 November 2013 the Committee agreed that it was content with clause 10 as drafted.

Long Title

94. At its meeting on 21 November 2013 the Committee agreed that it was content with the Long Title of the Bill.

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