‘Latte levy’ could cost £819m and risk UK jobs, says industry group

The Paper Cup Alliance (PCA), which represents UK cup manufacturers, has claimed that a levy on disposable coffee cups could cost the economy £819 million and result in 11,000 job losses in the coffee retail sector.

The new research was commissioned by the PCA, an industry group representing the UK’s eight main paper cup manufacturers, and carried out by environmental research consultancy Ecuity, finding that the costs associated with a tax on disposable beverage cups outweigh the benefits.

A charge on takeaway hot beverages has been backed by Parliament’s cross-party Environmental Audit Committee (EAC), which has repeatedly called for the government to introduce a 25-pence charge on disposable cups in order to encourage the uptake of reusable alternatives, with revenue from the charge going to fund the UK’s recycling infrastructure. However, the government response to the EAC’s recent report on coffee cup waste stated that it prefers to support voluntary commitments by retailers over legislative action.

The PCA states that, given paper cups make up just 0.7 per cent of total paper packaging waste, a ‘latte levy’ would disproportionately hit the paper cup manufacturing sector and the hot beverage retail sector, rather than requiring all packaging producers to take equal responsibility for their waste. And according to the report, a 25-pence levy would result in just 5.7 per cent of consumers making the switch to reusable alternatives, while eight per cent of consumers would simply forgo making a purchase at all.

This predicted drop in sales has led to the PCA and Ecuity raising the prospect of redundancies at manufacturing sites in towns such as Wrexham, Gosport and Huntington, with 11,000 jobs said to be at risk. However, the report does admit that figures ‘may slightly overestimate the impact’ of a levy on the coffee shop industry, though explains that this is because it has not calculated losses expected in other industries. It also admits that the environmental benefits of a ‘latte levy’ are only modeled on the price of clearing litter, landfill costs and CO2 savings and ‘this may underestimate wider knock-on benefits for other forms of single-use plastic consumption caused by an environmental message on takeaway cups’.

Focus on improving collection

The PCA also states that ‘100 per cent of the paper cups produced in the UK are fully recyclable’, and asks the government ‘to fully consider the economic and social impact of a crackdown on paper cups that are 100 per cent recyclable’, implying that the government should focus its efforts on improving the infrastructure needed to collect more of the items.

Despite this stated recyclability, only 0.25 per cent of the estimated 2.5 billion plastic-coated coffee cups used in the UK every year end up being recycled, with the vast majority (95.75 per cent) going to landfill, while four per cent are littered. The problem is largely twofold: most takeaway cups are disposed of ‘on the go’, away from the kerbside system and where recycling infrastructure is lacking, while the composition of takeaway coffee cups – fibre with a plastic layer – make it difficult for recyclers to separate out the materials, despite them being technically recyclable.

There has, however, been a recent increase in paper cup recycling facilities in the UK, something the PCA points to as evidence that the infrastructure is already in place to vastly increase the recycling rate in this waste stream. The report highlights DS Smith’s Kemsley paper mill as a reason for optimism: the company announced in March that it has the capacity to recycle 2.5 billion cups a year, the UK’s entire annual consumption of coffee cups.

The issue, if the cups are 100 per cent recyclable, appears to lie in collecting the cups and getting them to the plants. There are currently 4,000 paper cup recycling points across 92 per cent of UK local authorities, and the PCA wants waste management companies and local councils to invest in better infrastructure to get cups from recycling points to recycling plants – although cash-strapped local authorities may baulk at the idea of a producers organisation calling on local authorities to spend more on infrastructure as opposed to offering to increase their own contributions to the costs of recycling.

In order to increase the rate of disposable cup recycling, the PCA has launched a five-point industry action plan, calling on concerned parties to:

• Increase the number of cups recycled to 85 per cent by 2030, a target in line with other recyclable paper products;
• Increase the number of bins in public places from high streets to stadiums, transport hubs to music festivals;
• Introduce a consistent, standardised approach across waste management companies and local authorities on separating recyclable materials and transporting them to recycling plants;
• Provide clear information for the consumer through consistent labelling on how and where paper cups are recycled, from public places to collection outside their front door; and
• Campaign to raise awareness that paper cups are 100 per cent recyclable.

Research a ‘wake-up’ call

Commenting on the research, Mike Turner, PCA spokesperson, said: “This research should come as a sharp wake-up call to policy makers and politicians calling for a latte levy. More can and should be done to increase paper cup recycling rates, but this needs to be balanced against the devastating impact that a 25-pence tax could have for thousands of people working in the British cup manufacturing industry, the towns they are based in, and the wider supply chain.

“This year alone we have installed 426 extra cup recycling bins across the UK, and they can now be found in 92 per cent of local authorities. However, to quickly boost these numbers further we need a wholesale commitment from government, councils, waste management contractors and other concerned groups to get more paper cups to the recycling plants.

“Further investment in infrastructure is the only way we can meet our important environmental obligations without dealing a blow to the UK manufacturing sector and our already struggling high streets.”

Chris Stemman, Executive Director of the British Coffee Association, added: “Whilst very supportive of increasing the volume of coffee cups being recovered and recycled, we do not believe that a latte levy is the right solution. Paper cups, including coffee cups, make up just 0.7 per cent of paper waste and any tax would be unfairly targeting coffee drinks to pay to fix an entire recycling system for all packaging. The PCA’s report is cause for concern and highlights again that just because policies such as the five pence carrier bag charge have been associated with some positive impacts in reducing plastic bag use, it does not mean that this will necessarily happen in other areas such as paper cups.

“The UK coffee industry is committed to supporting all circular economy principles, including those around packaging and waste. We support the scaling up of all recycling processes and infrastructure in the UK as the only sustainable way of creating a circular economy around paper cups, so that they are captured and recycled.”

Given the government’s seeming preference for voluntary initiatives, it is unclear whether the mandatory introduction of a coffee cup levy is forthcoming. Some coffee cup chains and retailers have already gone ahead with trialling or introducing a charge, while others have gone even further and banned takeaway disposable cups altogether.

Starbucks is currently trialling a five-pence charge for disposable coffee cups in 35 stores across West London, the City and the West End, while Boston Tea Party and Waitrose have both banned the provision of disposable takeaway cups. Coffee chain Costa has even announced plans to recycle up to 500 million disposable coffee cups a year by 2020, subsidising waste collection companies Veolia, Biffa, Suez, Grundon and First Mile to the tune of £70 per tonne of takeaway cups collected, with the aim of raising the value of the items and providing an incentive for their recycling.